3 ms·
> Ehh, crashing tomorrow or in 100 years is not necessarily different outside of the timing. Yes it is. The frequency of events occurring in a specific measure
by dsacco 9y ago
> Ehh, crashing tomorrow or in 100 years is not necessarily different outside of the timing.
Yes it is. The frequency of events occurring in a specific measure of time is both mathematically and financially meaningful. In particular, the periodicity (if any) of such events is very important.
> Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely.
At this point you’re introducing new measurements, and you need to rigorously define the “game” to determine if it’s zero sum or not. Proving that a set of objects and their actions on each other is zero sum is very difficult because it’s very rare. As a trivially obvious example, for any integer n in the infinite set of all integers Z, there exists only one -n such that the sum of the pair is exactly 0.
Most real world systems do not satisfy that property, and you’re sort of hand-waving to make it fit. When you model a bid and an ask, it satisfies a zero sum because trading is specifically designed to do that. But the aggregate activity of the market is not zero sum, because it results in net positive growth in aggregate financial value over time.
> Also, mining makes crypto coins negative sum, to be positive some they would need to generate more value than the cost of mining which is unlikely.
If you’re defining your game as the interactions comprising cryptocurrency mining and cryptocurrency trading, then mining generates net positive value in conjunction with trading. If it did not, it wouldn’t be sustainable due to gradual decay over time. Again, frequency and periodicity of profit and price movement here are meaningful. We don’t have to talk about what’s likely, because it’s demonstrated for us economically.
The only way forward for you to assert that cryptocurrency trading or mining is negative sum or zero sum is by introducing new, reasonable interactions to the game and quantifying their relationships with the existing interactions.
- Retric 9y agoIf I buy exactly 100 bitcoin style coins on a block chain I can't turn around and sell exactly 100 coins because of in network transaction costs. Making it literally negative sum. More abstractly miners must be paid to do work. Billions of hours worth of compute time has direct material and energy costs.
- Gargoyle 9y agoBut the coins stay in the system. They are transferred from one party to another party in exchange for a service.
- Retric 9y agoA physical object needs to operate in the real world to have a crypto currency. Yes, miners get paid in coins, but that just means the network is paying for that physical hardware.
- dsacco 9y ago> If I buy exactly 100 bitcoin style coins on a block chain I can't turn around and sell exactly 100 coins because of in network transaction costs. Making it literally negative sum. No, because the aggregate value of the market is increasing. And what you’re describing is a liquidity cost, not a value cost - those coins still exist and their value has not changed, your ability to capture their utility has. The conventional markets are very similar in this regard with respect to derivatives and trading fees. > More abstractly miners must be paid to do work. Yes, and at the same level or abstraction: if the activity was not positive, it would (by definition) not be sustainable, given that we are measuring interactions between miners (and their aggregate costs) and the market (and its aggregate costs). Which brings me to... > Billions of hours worth of compute time has direct material and energy costs. Yes, and the same principle - the compute time and energy costs have quantifiable costs, and those costs are under the potential profit of mining. Note that I’m not saying growth is sustainable in perpetuity (that’s thermodynamically impossible). I’m saying that the game, with the interactions and constituents you’ve described so far, is positive sum, and therefore sustainable with growth for the foreseeable future.
- Retric 9y agoI don't think you understand costs. Saying as long as people put infinite value into a system (constant * infinite time) ait can maintain finite value directly means it's negative sum. Worse you are proposing exponentially increasing investments forever.