On the scarcity of Bitcoin
|Jimi Smoot||Sep 3, 2019|
Lately I’ve been thinking that cryptocurrency depends on scarcity.
Yes there is the monetary scarcity built in to fixed supply currencies like Bitcoin —there can only be 21M Bitcoin ever mined. But that’s not what I’ve been thinking about.
Crypto’s underlying security mechanisms ECC (Elliptic Curve Cryptography) assumes that both the cryptography never be cracked and that machines will never get fast enough to allow for brute force attacks. This assumption implies that technology in a future with Bitcoin (and other cryptoassets) would look very similar to what technology looks like today.
This terrifies me because tech that has yet to be invented is our best hope at solving real problems —climate change, housing affordability, feeding the world, etc. Call me naive but ideally anything we pull out of the urn of invention would be something that could be used to move us closer to a post scarcity world. I’m a big believer in crypto’s ability to redefine banking, but there are times when I gaze at crypto skeptically, and question if it is one of the things that will help us get to a world where scarcity is only a memory.
I’m still thinking about how this all could shake out. I’d love to hear from you so reply and let me know your thoughts.
Now on to the fun stuff.
What to check out this week
You can make 10% lending Dai through compound: What if you could lend electronic money, peer to peer, trustlessly, and without a bank? That’s what compound is trying to figure out. They’ve built a protocol for people the crowd fund collateralized loans using stablecoins. If that sounds like a bunch of jargon to you then shoot me a note and I’ll be happy to walk you through it. Nonetheless, this is pretty exciting.
Izaak Meckler’s hack.summit talk about The Coda Protocol: The Coda protocol folks launched their testnet about a month ago and I’m fascinated by it. If you know me this is saying a lot —I think 99% of all crypto projects are garbage. The cool thing about Coda is that they use “Zero Knowledge Proofs” to shrink the size of the blockchain state to under 300kb. This is amazing when compared to Bitcoin’s ~250GB blockchain size. Hell the coda chain could be stored “in a few tweets”. If this can beat out Lindy then it will be pretty revolutionary because pretty much any computer will be able to run a node —phones, televisions, even a refrigerator. Izaak does a good job distilling the complexity of how Coda works in this talk.
Crypto derivatives conference call: The Alameda Research team has made a splash with the launch of their new exchange “FTX”. This is a great video on “why” they decided to move in the direction of creating products vs continuing to print money by prop trading. The meat of the presentation is in the first 10 minutes or so and its chalked full of insights.
Visual Information Theory: “Information Theory” is a field that can be a bit unapproachable. If you, however, have an intuition about the concepts you will have a very powerful tool to help think critically about the world. This old post (which I discovered recently) helps quite a bit in understanding the core ideas. It’s a long read but worth the work.
Let’s Build An Ocean: Wow what an absolutely amazing episode of the “Anatomy of Next” podcast. This is an older episode but still a very good one. I could go into a long explanation but I’ll just leave you with the topic: How we could go about terraforming Mars.
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