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Invented in 1788 by James Watt, the centrifugal governor is a small, clever device that made steam engines viable in an industrial context. Effectively it takes rotational input from a steam engine and applies it to weighted balls. As they spin, the centrifugal force pushes them upwards, moving a lever connected to a valve. As they spin faster, the valve closes. In this manner the governor takes input from a steam engine and mechanically regulates the flow of steam and hence the speed of the engine.

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This innovation made steam engines suitable for industrial processes which required stability and predictable speeds, like mechanical looms. The key idea is that as the system gains in energy, a negative feedback loop develops which caps its growth. For steam engines, this is part of their design and is a very good thing. …


Concerns about Bitcoin’s long-term supply credibility are overblown — but not for the reasons you might think

There’s a popular view within the non-Bitcoin crypto industry that the more educated Bitcoiners are at best naive, or at worst completely in denial on the topic of Bitcoin’s long-term supply. Put simply, Bitcoin skeptics are fond of claiming that, because in their view it’s unlikely that Bitcoin will muster sufficient fees in the long term to compensate miners, Bitcoin will eventually be forced to add inflation in excess of the rate ordained by Satoshi. …


What we can learn from distorted maps

As the crypto markets continue their transition from a retail-focused, unrestricted global altcoin casino, to a more constrained and regulated environment, it’s worth zooming out and pondering what long-term allocative outcomes this market is likely to witness. Cryptocurrency purports to allow commerce and capital to flow freely, independent of artificial nation state boundaries. However, when securities are involved, the state tends to intervene.

There is a good reason for this: securities are high-stakes markets governing the allocation of productive capital, and for them to function, the state needs to enforce fairness, disclosure, and information symmetry. In fact, the best example in favor of securities laws I can think of is the anarchy and carnage exhibited in the Initial Coin Offering boom in 2017. If blockchain-lubricated capital markets mature from these early hiccups and some of these equity-like assets become viable, they will surely be indexed to their local jurisdictional rules. …

About

Nic Carter

Partner, Castle Island Ventures. Cofounder, Coinmetrics.io

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