Did the work of mathematician John Nash affect the appearance of Bitcoin?
- Transfer
Travis Patron, author of The Bitcoin Revolution: The Internet of Money , explains how famous American mathematician John Nash could influence the creation of the Bitcoin cryptocurrency.
Can we attribute to John Nash, who was at the forefront of mathematical and economic thought with his idea of " ideal money ", the merit in the formation of electronic money, known as "cryptocurrencies"?
In one of his lectures, he argued:
Nash described the concept of ideal money as a unit of measurement standard, that is, something like watts, hours or degrees.
He argued that ideal money should provide an acceptable solution to the Triffin paradox (a key contradiction of the Bretton Woods system):
Thus, ideal money should serve both local and international goals. And ordinary currencies in this sense turned out to be insolvent (the average lifetime of fiat money is 27 years).
Ideal money should come close to ensuring that the inflation rate is as close to zero as possible, while not falling into deflation. Currently, Bitcoins have this property - money, in its technical essence, is not subject to inflation, as block rewards are periodically reduced.
Bitcoin inflation is asymptotically tending to zero as we approach the currency limit of 21 million units.
According to Nash, ideal money could become a global means of saving for those people who would otherwise suffer from the use of "bad money" - those whose value decreases over time due to inflation and other reasons.
In his work, Nash described a non-political price standard for comparing values, arguing that the industrial consumption price index can be “appropriately regulated according to the evolution of international bidding.”
On the Bitcoin network, the mining difficulty index, which can be considered as a type of consumption price index, is cunningly tweaked based on an algorithm that regulates the complexity of mining new blocks.
In addition, most network miners (51%) could spoil the standard that prevents double debit, but the Bitcoin standard describes why miners will choose to maintain the integrity of the transaction standard - otherwise their positions in the network would be undermined.
Is it possible to say in this way that since the Bitcoin network is regulated by an algorithm that corrects the consumption index every 10 minutes, then the standard tool for measuring the network is time?
Hal Finney, one of the first developers of the Bitcoin protocol, is regarded by many as one of the creators of the technology thanks to the mathematics optimizations of elliptic curves that he made with Satoshi Nakamoto.
As the first recipient of a Bitcoin transaction, Finney played a key role in launching the system, and can rightfully be considered one of its founders.
But in the same way, John Nash can be considered as a key figure, which, although not directly, influenced the appearance of bitcoins, standing behind decades of scientific research.
Nash's work on ideal money is one of the main aspects of the economic nature of bitcoins. His ideas about the type of money that could be used as a real-life measurement tool that resolves the Triffin paradox, working as a viable source of money for both domestic and international needs, led to the creation of such a bitcoin system, which we observe today. They have become a practical opportunity to achieve the international standard of ideal money.
Is Bitcoin the closest approach to the concept of ideal money?
The work of John Nash really helped a lot in creating cryptocurrencies. And although it was not he who most likely was hiding under the pseudonym Satoshi Nakamoto, his work continues to live and work in the principles on which the Bitcoin protocol is based.
Can we attribute to John Nash, who was at the forefront of mathematical and economic thought with his idea of " ideal money ", the merit in the formation of electronic money, known as "cryptocurrencies"?
In one of his lectures, he argued:
A particular product, or tool, which we call money, has a long and interesting history. And since we are so dependent on its use, and are influenced by the desire to have more of them and not to lose what we already have, we are prone to irrational thinking about them. Therefore, we may lose sight of the technological aspects of their use and the ability to use them more or less effectively.
Nash described the concept of ideal money as a unit of measurement standard, that is, something like watts, hours or degrees.
He argued that ideal money should provide an acceptable solution to the Triffin paradox (a key contradiction of the Bretton Woods system):
In order to provide the central banks of other countries with the necessary amount of dollars for the formation of national currency reserves, it is necessary that the balance of payments deficit is constantly observed in the USA. But a balance of payments deficit undermines confidence in the dollar and reduces its value as a reserve asset.
Thus, ideal money should serve both local and international goals. And ordinary currencies in this sense turned out to be insolvent (the average lifetime of fiat money is 27 years).
Ideal money should come close to ensuring that the inflation rate is as close to zero as possible, while not falling into deflation. Currently, Bitcoins have this property - money, in its technical essence, is not subject to inflation, as block rewards are periodically reduced.
Bitcoin inflation is asymptotically tending to zero as we approach the currency limit of 21 million units.
Worldwide Savings Facility
According to Nash, ideal money could become a global means of saving for those people who would otherwise suffer from the use of "bad money" - those whose value decreases over time due to inflation and other reasons.
In his work, Nash described a non-political price standard for comparing values, arguing that the industrial consumption price index can be “appropriately regulated according to the evolution of international bidding.”
On the Bitcoin network, the mining difficulty index, which can be considered as a type of consumption price index, is cunningly tweaked based on an algorithm that regulates the complexity of mining new blocks.
In addition, most network miners (51%) could spoil the standard that prevents double debit, but the Bitcoin standard describes why miners will choose to maintain the integrity of the transaction standard - otherwise their positions in the network would be undermined.
Is it possible to say in this way that since the Bitcoin network is regulated by an algorithm that corrects the consumption index every 10 minutes, then the standard tool for measuring the network is time?
People Affecting Bitcoin
Hal Finney, one of the first developers of the Bitcoin protocol, is regarded by many as one of the creators of the technology thanks to the mathematics optimizations of elliptic curves that he made with Satoshi Nakamoto.
As the first recipient of a Bitcoin transaction, Finney played a key role in launching the system, and can rightfully be considered one of its founders.
But in the same way, John Nash can be considered as a key figure, which, although not directly, influenced the appearance of bitcoins, standing behind decades of scientific research.
Nash's work on ideal money is one of the main aspects of the economic nature of bitcoins. His ideas about the type of money that could be used as a real-life measurement tool that resolves the Triffin paradox, working as a viable source of money for both domestic and international needs, led to the creation of such a bitcoin system, which we observe today. They have become a practical opportunity to achieve the international standard of ideal money.
Is Bitcoin the closest approach to the concept of ideal money?
The work of John Nash really helped a lot in creating cryptocurrencies. And although it was not he who most likely was hiding under the pseudonym Satoshi Nakamoto, his work continues to live and work in the principles on which the Bitcoin protocol is based.