Safe-money: Money in the type system where it belongs (2017)
ren.zone
ren.zone
This is assertion may be invalid when the problem domain includes either (a) compound interest calculations that require calculating a rational number raised to a rational power, (b) expected value calculations with random variables drawn from a probability distribution such as the normal or exponential that is defined using transcendental functions, (c) any formula involving e, pi or the mathematician's favorite, those three little dots ...
For example, the asserted feature of rational arithmetic does nothing for one facing the 6th grade arithmetic problem that introduced us all to the shortcomings of decimal numbers when I went to school: One quart of paint covers 5 square feet; paint costs $2.75 per gallon; how much will it cost to paint a circle 4 yards in diameter?
This doesn't make any sense. The value of any currency is measured constantly by its users conducting trades: when you buy a coffee, you're measuring the value of the currency used; when you pay for a haircut, you're measuring the value of the currency used. That is far more frequent and larger than FX trading.
In aggregate across a large population, however, a bottle of water has a fairly stable price.
Haircuts and coffee are also not commodities, there are quality factors involved so variable pricing based on location, supply/demand, and the like is expected.
Right now, in your situation, would you rather have a coffee or a haircut?
Would you rather have 2 coffees or 1 haircut?
And so on. There are plenty of exercises to determine how you (personally) value things, and also the shape of your utility curve. That was one of the most interesting classes I ever took: decision and utility theories.
A lot of the work was understanding the impact of different personal (or institutional) utility curves, how to determine your own and how to maximise you return not in absolute terms, but in relative terms using your utility curve.
When you take in account non-linearity of utility curves, lotteries make sense, for example, since for most people the utility of $1 is far less than 1 millionth of the utility of a million dollars.
The same with insurance. Insurance always has a negative expected value in absolute terms, but when you take in account that U(-$1) << U(-$1M)/1M, they make sense, since your utility-adjusted expected return is positive. That's also why your insurance should always have the maximum possible deductible.
Insurance works because companies and people have different utility curves.
Can you expand on that? My intuition is telling me that $1 has exactly 1 millionth the utility of a million dollars. I must not understand.
Let's say that you a running a risk of, for whatever reason, having to pay $1M in any given year with a 1 in 1M probability.
Your expected outcome is -$1 per year, which isn't much. So if someone came and offered for you to pay $1 for year for that risk to go away, you'd be indifferent.
But utility isn't linear. Losing $1 wouldn't make a difference in your life, but having to pay $1M would most likely destroy your life financially, leading to significant hardship.
So the cost, to you, of -$1 isn't the same as [1/1M]*-$1M, the latter is much higher. With that in mind, if someone offered you to pay $1 to get rid of the risk, you'd most likely accept.
In a similar way, let's look at the positive side.
Let's say you're broke, you have $0, and I offer you $10 for 1h of your time. Would you accept? Most likely, yes.
Now imagine you had $1M in the bank. Would you still accept $10 for 1h of your time? Probably not. And if you had $10M in the bank, the odds of you accepting would be even smaller.
That's because marginal utility (of pretty much anything) has diminishing returns. The value of a thing to you is different if you have zero of it, or if you have plenty of it.
The result is that even if you think that rationally the value is all the same, it isn't, and you'll actually be valuing things differently. And there's nothing irrational in that.
Like if someone gave me 3 coffees I’d be good for the day, but 10 and I’d either be too wired to cut your hair well or drink 3 and watch the other 7 get cold and stale.
A quick search for pinned currencies brought up this nice list: https://www.investopedia.com/articles/forex/061015/top-excha...
1. except for underflow, which reasonable financial computations never encounter, because their inputs are well-scaled.
And transitively that boils down to time - expenditure of the finite lifespan of humans.
It's a proof of burn system.
That's a spurious deduction. Inheritance is a mechanism of passing value store. Purely living off inheritance, reduces the stored value. This is a demonstration of the concept, not a violation.
2) (Inheritance requires no or marginal effort in acquisition)
c) "Inheritance is worthless, then."
That allows us to include inheritance of wealth and finding bags of gold in the street without dismantling our understanding that a given amount of money represents a given amount of effort that we can expect others to be willing to exert to acquire that money from us.
And then walk through a house and look at it not as $X00,000 dollars, but rather as the amount of human work it represents.
That's projection. No definition was offered and the existing was discounted. Still a strawman. Good luck with whatever.
> The value of a currency is the effort required to obtain it.
TL;DR: The article is Too Long; Don't Read.
Cryptocurrencies have intrinsic value? Did the author intent to write that or was it an accident? S/he has grouped precious metals, which have purposes from engineering to jewellery - with solutions to arbitrary cryptographic problems, which are useless for everything except swindling.
Isn't using crypto as a currency equivalent to using precious metals as jewellery? Something like <10% of gold is used for industrial purposes and the rest is jewellery (superfluous personal adornment) and investment (value-storage). But compared to something like gold, cryptocurrencies at least have some valuable characteristics when used as an investment or financial tool: verifiable transactions, low-transaction cost, etc.
The answer to "What is this item [the bits comprising your private wallet key] worth on its own?" is "Nothing" for cryptocurrencies, much like a 5 Euro bill is worth essentially nothing on its own. A gold bar or a bucket full of copper cents has an intrinsic value: it's metal that can be used for many engineering purposes.
That is: The value of copper is set by its industrial usefulness. Gold? Not so much.
The price of gold, in my view, is set primarily by worldwide demand for a short on fiat currencies. Even if you don't buy that interpretation, though, financial (and therefore non-industrial) demand pretty clearly sets the price for gold.
> That's a property of the network (if it works, that is), and not an intrinsic value.
The value of a cryptocurrency can be a property of the network and be intrinsic.
intrinsic, adj.: belonging to a thing by its very nature.
Gold has more alternative purposes (teeth, electronics, jewelry, etc.), but a cryptocurrency provides bookkeeping, even to some effect after its network dies. Bookkeeping, and not the assets kept track of, has intrinsic value.
I know what I'll hold on to, though, when the great blackout comes in 2022. And that's wood.
I need to think about this some more...
Cryptocurrencies likely follow a similar model. Useless to the lay-person except as decoration. Representing a "colossal waste of resources", but having access to the refining tools / techniques also has some commercial value.
Is gold useless except for swindling? Was trading land for gold (or vice versa- gold for land?) was that swindling?
I'd love to hear your rebuttal.
We also use around (again allegedly) 220 TWh/year mining Gold.
When gold is mined from the ground, planet Earth has less gold.
When a coin is mined, there's a bit less solution space for the class of crypto problem.
But when a Blockchain/protocol is forked, nothing of value is lost. In fact there's a gain in solution space. Eg BCash fork doubled the quantity of BCoin protocol solutions.
> Gold is practically useless day-to-day for a lay-person except as decoration,
And vehicles, phones, computer chips, the industrial applications that keep the planet functioning etc
Then why does every imagined new application of blockchain also create a new coin-type? If someone really does come up with the killer app for blockchain personal banking...well then why would they deploy it on the existant bitcoin network. And the next killer app, and so on. Now everyone is using the killer-app coin, why would bitcoin maintain value, or any of the clones.