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How Satoshi Nakamoto Used the 1950’s Game Theory to Design a $100 Trillion System

How Satoshi Nakamoto Used the 1950's Game Theory to Design a $100 Trillion System. thinkmaverickI went from trying to get rich quickly off bitcoin to spending roughly 10,000 hours for the past 2 years reading, listening after watching a 35-minute video on YouTube.

What is it that got me hooked and obsessed?

It’s the invention of a $100 Trillion U.S Dollar truth machine.

So you want to make a million dollars? Big deal.

Once you wrap your head around this phenomena, it’ll begin to dawn on you like it dawned on me and millions of people around the world — that this leads to a shift to a new paradigm.

No one believed it when Satoshi Nakamoto solved the “biggest prize” in computer science, the Double-Spend problem, let alone understood what it meant for the world.

This would put banks worldwide out of business, disrupt the $2 quadrillion a year foreign exchange market and possibly separate irresponsible governments from playing monopoly money.

Bitcoin is the endgame for the oligarchs and tyrants using money to hold people hostage.

In chess, you call this Zugzwang which in German means the “compulsion to move.”

A player gets put at a disadvantage (in zugzwang) because they must make a move when they would prefer to pass or not move.

The fact that government money is easy money whose supply can easily be inflated based on the whims of politicians, creates a condition whereby demand for bitcoin will only continue to exist because of its fixed supply of 21 million BTC.

Moving back to the gold standard (the only way to compete with Bitcoin) would mean giving up monopoly of money creation.

I doubt it.

On the other hand, continue with trying to scare, ban or regulate the hell out of Bitcoin, (which they can but to no avail) would give tremendous first mover advantage to governments that begin adopting the Bitcoin standard.

The situation is akin to trying to ban the wheel or a knife.

Any move is a move that would weaken their position.

The only way is to participate.

Gain the early advantage of Bitcoin appreciating further from mass adoption rather than waiting to see how it goes down the road.

China and India were the last to adopt gold from silver as the monetary standard and they end up suffering huge losses as silver-holders experienced a sharp demonetizing of their asset. People woke up one day to discover this rude awakening.

…If you can’t beat them, join them…

Now let’s get down to the very essence of this…

Understanding the history of money is the key to understanding Bitcoin.

What you realize after reading all this stuff is that this is a great invention.

It’s not a coin but a system.

Not the blockchain entirely but an invention as important as the internet, automobile or even electricity.

It could potentially re-organize the way humanity trade forever.

But what’s it worth?

The difficulty always lies whenever somebody tries to put a fair value on it.

I want to know what it’s worth today, or in 2, 5, 10, 50 years time.

What does this invention that tells the truth of accounting, that eradicates fraud, gives certainty, confirmation, validity and security for the world be worth?

What does a open, neutral and decentralized financial system that’s been running for 24 hours 7 days a week for the past 10.5 years without taking a single day off be worth?

Hard to get a real sense right?

Well, early adopters found it harder.

Consider all the fraud, scams, ICOs and snake oil salesmen using blockchain as a guise to push their own personal narrative.

So that certainly kept people away.

What about the volatility. Bitcoin went from essentially zero in 2009 to almost $150 by 2013.

It then fell 60% and rebounded to $1,150. By 2015, it was down 85% to $175 (although still above the high in 2013).

It then skyrocketed, peaking at more than $20,000 by the end of 2017.

In 2018, it again lost 85% of its value to $3,200 (but still above the 2015 high).

This year, Bitcoin rose to more than $9,000 and now hovers around $10,000.

You then have to wonder how is it a store of value or a reliable payment system when it’s so volatile?

A simple way to understand it…

Goods with no price are not scarce.

Bitcoin is something that is strictly scarce. Fixed supply of 21M units.

We will always know how many bitcoins exists. It’s supply is transparent, and the demand is apparent.

Therefore, the price action depends entirely on its demand.

For most types of goods, a price increase entices the producers to make more of it, thereby pushing the price back down. Likewise, a price decrease leads to a decrease in supply, making the price go back up.

As a result, most goods tend to be relatively price-stable.

Bitcoin’s absolute scarcity (coupled with fluctuating demand) and the nascence of the market creates extreme volatility.

The market is trying to find the right bitcoin price in real-time. And it will do so until it hits maturity or efficiently absorbs most of the world’s capital.

“Volatile things are not necessarily risky, and the reverse is also true.” Nassim Taleb, Skin in the Game

Because bitcoin needs adoption to become price-stable, it means that at the moment, it’s 0.2 trillion market cap give speculators, risk-takers and venture capitalists a huge upside bet that they cannot find anywhere else.

And with every additional group of people it attracts, the less volatile it becomes.

Gradually making it more attractive for situations that require more pricing sensitivity.

A positive feedback loop.

For now, only the most visionary who can tolerate the cost of doing business in bitcoin terms can afford to adopt it as a consumer payment mechanism. The asymmetric bet is worth the risk.

Similar to how the world reacted to automobiles when they were first introduced. The rich were the first to adopt it, the majority of people thought:

Skeptical about disruptive technologyThose machines are crazy! These noisy, disgusting machines will probably kill us all.” 

“Why would anyone want to drive these horrible machines when we have perfectly good horses?”

When you introduce a new disruptive technology to the world, at first, there’s always huge resistance.

Right now, Bitcoin is facing similar resistance. Skepticism. Negative publicity.

All from pedophiles to drug addicts to even electricity consumption.

public trust in government - All-time low

The internet faced similar criticism during its formative years.

So, here I am thinking, how do I value it?

What is this secure, decentralized electronic network for the world going to be worth?

In a world where trust is at an all-time low, how much would it cost to build a transparent financial security framework governed by the laws of math and physics?

If you think deeply enough, it would be in the hundreds of trillions of dollars in today’s inflated economy.

According to the 2017 Edelman Trust Barometer:

Trust is in crisis around the world. The general population’s trust in all four key institutions — business, government, NGOs, and media — has declined broadly, a phenomenon not reported since Edelman began tracking trust among this segment in 2012.

With the fall of trust, the majority of respondents now lack full belief that the overall system is working for them. In this climate, people’s societal and economic concerns, including globalization, the pace of innovation and eroding social values, turn into fears, spurring the rise of populist actions now playing out in several Western-style democracies.

To rebuild trust and restore faith in the system, institutions must step outside of their traditional roles and work toward a new, more integrated operating model that puts people — and the addressing of their fears — at the center of everything they do.

Think about all the man hours, think about all the people who volunteered their time?

What is that worth?

All that time?

Because the sheer amount of intellectual capital – programming capital, the amount of people working in this space is massive. We’ve never seen anything like it.

This huge undertaking is analogous to building The Great Pyramids of Giza.

Only this time it’s built on a digital public ledger using massive amounts of work to secure the information for generations to come.

This is called Proof-of-work. And it’s an ingenious way to use energy to ensure no-one can alter the past.

Think about the structures we build today.

Barely anything is built to last. People build cheap. That way its cheaper to rebuild or alter in the short term.

When you look to the Pyramids, as you ride up the sand dune on a desert camel and see a monument that’s 481 feet in the air, taller than the Statue of Liberty, and go “Wow!”, that expression alone is a testament to what the builders of the pyramid 4,000 years ago understood. There’s no way that something like that can be built cheap.

It is a declaration to every civilization that visits or shall come to pass, “Behold! this is the measure of the Egyptian civilization.”

This is proof-of-work of our civilization. An intelligent race, rich and abundant. You cannot built this unless you can feed 100,000 mouths. Or commit resources for decades.

Today, while we don’t know exactly how it was built, what we do know is that they required massive amounts of energy and work.

This begs the question: How can a digital civilization build to last?

Will future historians look back and conclude that our civilization is nothing but “fake news, fake money, fake people” or will they find a digital artifact of immutability that is as good as written in stone?

Through Proof-of-Work (PoW) Bitcoin uses energy to stand the test of time instead of thick stones in the pyramids.

It serves to protect every block of information to ensure no one can simply alter valuable information.

Especially when it involves money of the people.

It’s going to be expensive because it’s giving us something intrinsic, neutral, open, borderless, immutable and censorship-resistant at a cyber-planetary scale.

Historical Bitcoin transactions | Data Economy Lab

Today money is used as a system-of-control.

It ensures that political dissent can be effectively extinguished at the bank, without appeal or recourse.

Now people have a choice.

Stick to fiat and be held hostage when a war on currency is upon us.

Or simply exit with Bitcoin. Your choice.

Ask an entrepreneur or a visionary, what would it take to build that? What would it cost in today’s terms?

How much did it cost to put a man on the moon?

How much did it cost to put a supercomputer in every pocket?

Gold is $8.5 trillion purely as a store of value. You cannot transact gold on the internet.

Amazon, a centralized corporation that runs basically half the internet is worth a trillion dollars, they can even cut off the lifeline of oppositions who do not please their masters.

How much would it cost then to touch the lives of every single human being on the planet unconditionally and allow them basic access to financial services? A Universal Access to Basic Finance.

The World bank defines “unbanked” as 2.5 billion people who have zero access to financial services.

For convenience, they only count the heads of households meaning that spouses and children are unimportant in their equation. That means it’s not just 2.5 billion, but many others.

Four billion living in cash-based societies.

Cash is available to everyone without vetting. And now governments are trying to get rid of it. The only mechanism that has provided basic financial services to everyone for centuries.

Being unbanked is not simply life in a cash-based society. The greatest weakness of cash is range and scale. Two people have to meet face to face in order to trade. There’s geographical constraints and locality.

What the unbanked is lacking, is real connectivity to the world. Unable to participate in trade and commerce.

Unable to get a job or find people who want their services.

Unable to improve one’s standard of living is to be condemned to poverty. To struggle to build a better future for their children.

When we look at them and think, ‘They don’t have money, that’s why they’re unbanked.

Wrong. Absolutely wrong.

They don’t have access, documentation, or the necessary literacy to fill in an application form.

Sometimes they don’t even have the clothes, shoes, or appearance to be able to enter a bank…without being kicked out by a security guard.

That is what it means to be unbanked.

mobile technology to improve financial inclusion

With mobile ownership skyrocketing, the unbanked can now download an app and instantly access digital cash without vetting.

It can be used everywhere in the world, whenever and whoever, whether we like them or not. Neutral and Open.

That is the real revolution here.

It’s a massive endeavor, something that can touch every single human being on the planet. All they need is a phone.

When you really start to think about it, It’s incredible – could a company even develop something like this?

Bitcoin has been running 24/7, not just the trading aspect, but the maintenance of a global decentralized financial system that cannot be shut down by anyone.

This invention had to go unnoticed for the first few years to allow its decentralized roots to take hold before gaining public attention.

Satoshi knew that the creation of money is a monopoly of the State. It challenges the government and the central bank head-on.

Creating a centralized system is to shoulder all of the risk in one place. A corporation is not fast enough.

It will be shut down.

Attacked. Co-opted. Coerced. Distorted. Censored.

Sharing the risk with participants of the system — spreads the risk among individuals who are incentivised (with bitcoins) to accept the personal responsibility of securing their own money.

Bitcoin’s Public-key cryptography allows effective military grade encryption technology for the masses.

You and I can now secure our own money without needing to trust ANYONE.

It’s hard to really believe that someone invented this and gave it to the world for free.

If you had done some digging and you realize the nature of this invention, it could be worth hundreds of trillions of dollars.

You can get to very reasonable numbers per bitcoin (BTC) – the Winklevoss Twins number is a million per bitcoin and Tim Draper’s 250,000 within five to eight years.

Insane numbers? Well, you can start to see it because Amazon, a corporation that’s selling cheap plastic goods on the internet is worth a trillion dollars on itself.

Is that as valuable as a new invention for humanity? 

Most people can’t see this early on.

We are moving from a world where people have to trust institutions, to one where people have the ability to verify everything.

From football’s Video Assistant Referee technology, to transparent salaries…

We have even reached a point where police officers have to wear body cameras. Their word is no longer taken as fact.

The Man is now scrutinized down to every last detail. Everything is on record. What they do, what they say is verified, rather than trusted.

Think of this as policing built on TRANSPARENCY rather than TRUST.

This paradigm shift is gaining foothold.

The Internet broke the cartel of knowledge.

Bitcoin is breaking the cartel of money.

During the recent House Committee on Financial Services’ hearing about Facebook’s, Libra, Rep. Patrick McHenry described Bitcoin as an unstoppable force: “The world that Satoshi Nakamoto — author of the Bitcoin white paper — envisioned, and others are building, is an unstoppable force. We should not attempt to deter this innovation, and governments cannot stop this innovation, and those who have tried have already failed. 

The world that Satoshi Nakamoto envisions is based on transparency rather than trust.

This ecosystem is built on a single idea — “Don’t trust, verify.


5 Attributes of Rocketship Ideas

Victor Hugo — ‘Nothing is more powerful than an idea whose time has come.’

You cannot resist an invading army, you cannot resist an idea whose time has come. This is a critical skill for anyone looking to identify and tactically navigate the evolving story of humanity.

But… identifying rocketship ideas is easier said than done. While I work hard to suspend disbelief and get on board with wild visions, I still look for five specific things in every idea:

🎒 A lust for learning. People who are obsessed about learning every aspect of the idea and the world at large are better prepared to lead.

🚀 Competitiveness. Elon Musk approaches life like a man who’s competing with a thousand parallel selves in a thousand simulations. He’s determined to win, but also somewhat bored by it all.

😠 Resilience. Successful ideas solve difficult problems; inventors and visionaries never get things right on their first or second try, so they’ve got to embody resilience into the system.

📝 The ability to evolve. Taking feedback over time is to continue to improve — its essential for having a timeless and universal understanding of how things work in the real-world. This requires lots of humility and self-awareness.

🏆 Unbridled ambition. This one speaks for itself.

You’ll also need to analyze the fundamentals and technology itself.

What problem are they trying to solve? Focus on ideas that people “need to have” products, rather than “nice to have” solutions. Crisis-stricken Venezuela where money is devalued into irrelevance by an autocrat.

Who is the biggest competitor, and what are they doing differently? Most founders say they don’t really have a competitor, which is short-sighted.

It would be an error to assume these advantages flow from the existence of a more efficient technology than employed by monopoly monies. Bitcoin technology is far less efficient, yet it helps people resist state controls. It is this resistance that provides the value.

What are their biggest challenges? Be self-aware, thorough, and “know what they don’t know” as far as roadblocks are concerned.

What are the future plans? If it hits every green light on the path to success, what would it look like in 5 years, 10 years? If you can’t see this palpably, then it will be tough getting over the aforementioned road blocks.

If you’re ready to ride a rocketship, here it is. 🚀

We’ve only just begun…

In the world of Bitcoin, there’s so much more to delve into. That’s why I created The Zodiac Collection, that tells the story of Bitcoin and the cryptocurrency revolution from every angle you can dream up.

There’s a lot of exciting stuff to read — I’ve selected a few of the stories, to start with, below.

To read a curated list of the most important news stories, subscribe for FREE. It will be everything you need to know, in your inbox. No brainer 🙂

I certainly don’t want to overload your brain with the library of Bitcoin resources we have here.

Here are some special picks:


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Winson Ng

I Started hearing about bitcoin only in November 2017. As a solo-preneur who has build around the Maverick Philosophy, I found bitcoin to be just the tip of the spear. I watched to see who was getting into it, some of the smartest entrepreneurs who has made their fortunes being the first movers allocated portions of their investment portfolios to Bitcoin. I studied and realized that if it worked, bitcoin was going to be the first global decentralized currency. And that has never existed before. Ever. I was Hooked!

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