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> 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 li
by 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.
- dsacco 9y agoI’m not talking about putting infinite value in a system or exponentially increasing investments. I haven‘t made a case for either of those. I’m sorry, I don’t really know how to express the point more clearly at this juncture, so I guess this will have to do: 1) in finite, discrete measurements of time, the activities of a game can be positive sum; 2) corollary to point 1, the aggregate market valuation trends upwards over time. You keep focusing on infinite or underspecified measures of time for your arguments, which is frankly incoherent for the discussion at hand. This indicates to me that you don’t believe anything can be zero or even positive sum, because according to your logic - as literally stated - the value of gold is negative sum because resources are finite and time is not, so gold will eventually be stolen. Not only is the probability of a thing being stolen outside the interactions of the game we’re considering, it’s not relevant to valuation unless you rigorously quantify its cost (such as through insurance) for a discrete measure of time. In essence, you’re conceptually refuting central tenets of game theory by invoking Murphy’s law.
- Retric 9y agoI have no objections to things being positive sum. Consider planting crops. The 'output' of the system over time is lower due to entropy, but the value of chemical energy in corn is vastly higher than the value of nuclear energy in the Sun. note it's the transformation that's providing value. The problem is coins and gold are not being transformed AND there are costs that are inherently part of the system. Poker with N players is ~zero sum, poker with N players and a house stake is negative sum among the players. Clearly, coins follow the second example with a house (equipment) taking profits off the table. Now, if you want to say commerce is positive sum and coins can provide value as a medium of exchange that's an argument around their relative utility. Which is currently generally* less than money as you go money > coin > stuff vs money > stuff. However, coins as an investment is a different argument. If I hold a coin for 200 years then it's not part of any transaction. * Coins as a means of circumventing currency controls is yet another argument.