Re: [p2p-hackers] Bitcoin incentive on Kademlia networks
On Sun, 4 Nov 2012 16:11:31 -0700 Zooko Wilcox-O'Hearn wrote:
That's interesting. Do you know of a succinct English summary of this "Relative Theory of Money"?
No, and I asked the author, he doesn't either. Basically it just says that the only monetary system that respects everyone's freedom is the one that creates money on a regular basis at a fixed rate (temporal symmetry), and distributes it in equal shares to users (spatial symmetry). It also gives a way to calculate an "optimal" rate from the average life expectancy of people using the money.
So, Coase's Theorem is that it doesn't matter how the resource is initially allocated if transaction costs are zero, but that it *does* matter if transaction costs are non-zerob& and transaction costs are always non-zero!
How does that theorem apply to this question? The transaction costs of Bitcoin are probably significantly lower than any comparable system, but of course it is never 0. Is the initial (more precisely the "early) distribution of Bitcoin important or unimportant to the ongoing function of the economy?
Important relatively to which goal ? If the goal is freedom and equality, then it's important.
This, I don't really agree with. I know it is a common belief among certain schools of economics, and I admit the theoretical soundness of the Paradox of Thrift, but I'm not really convinced that it is a sufficiently important problem in practice, nor that an inflationary currency is a solution to the problem whose benefits outweigh its costs.
What costs ?
I mean: maybe! But maybe not. Who knows? How can one tell? All ex post facto empirical observations are inextricably entangled with confounders. In particular, I personally suspect that the *predictability* of a monetary policy is at least as important as what that policy actually is (today). Bitcoin (or perhaps some successor to Bitcoin that fixes some flaws) could have a policy about the aggregate monetary base that is predictable in a way that no other currency is.
Can't really do more predictable than a fixed rate.
I don't like the word "hoarding", because it is an emotionally laden word without, as far as I understand, a specific meaning different from "saving". "Hoarding" is you saving money (or other resources) when I think you shouldn't. "Saving" is you hoarding when I think you should.
English isn't my native tongue so I just looked up a translation and found "hoarding". I meant money that's neither spent on goods/services nor invested, money that doesn't change hands, which is bad if your axiom is that money is primarily a means of exchange.
Anyway I admit that you're basically right if you put it like this: a currency can't be *optimal* for long-term savings and optimal for a medium of exchange, but I'm not at all sure that this implies a single currency can't be *good enough* for both. I also kind of think that:
(a) It isn't just that any one currency can't be optimal for both, it is that it is impossible to optimize both simultaneously in any way! That is: it wouldn't matter if you had two currencies, or a million currencies (hello, Ripple), or any other system, you still couldn't simultaneously optimize both savings (and the associated safety/robustness) and growth.
(b) I'm skeptical of the idea that it is better to tune this trade-off further toward the growth side and further away from the savings side b by use of an inflationary currency b than to use the setting that results from having a non-inflationary or deflationary currency. The theoretical insight of the Paradox of Thrift is certainly a fascinating and provocative observation (namely, that the aggregate utility of everyone in the society is increased if they are somehow coerced or tricked into spending more than their individual self-interest would dictate), but it seems far too abstract and speculative a guide to improving the fortunes of a real, complex and dynamic, economy.
I have a few remarks. Firstly, inflation doesn't trick people into spending any more than deflation tricks them into saving. Note that I include "investing" in "saving". Secondly, I wouldn't use the term "growth" because it implies "something more", like "manufacturing more goods", or "increasing the quantity of services". Those aren't goals for me. Lastly, I don't see the link between "savings" and "safety/robustness".
Thanks for the conversation!
Likewise. _______________________________________________ p2p-hackers mailing list p2p-hackers@lists.zooko.com http://lists.zooko.com/mailman/listinfo/p2p-hackers ----- End forwarded message ----- -- Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org ______________________________________________________________ ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org 8B29F6BE: 099D 78BA 2FD3 B014 B08A 7779 75B0 2443 8B29 F6BE
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