The realistic possibility for sovereign adjustment to bitcoin in context of John F Nash Jr.’s bargaining theory
If an assumption is made that John F Nash Jr. was Satoshi Nakamoto, with bitcoin an implementation of Nash’s work in bargaining, “agencies” and (asymptotically) “ideal money”, there arise possibilities to understand how governments and nation sovereigns might adjust to bitcoin, in conjunction to Nash’s referencing technical coordination on new forms of regional currencies — and also a new form of money evolving before “an official establishment occurs” — resulting in a one world empire money becoming realistically foreseeable.
There is an analogy to draw in this from Ludwig Wittgenstein’s penultimate proposition in Tractatus Logico-Philosophicus, which has become known as Wittgenstein’s Ladder, that to understand the (bitcoin) proposition, is to eventually discard the senselessness of it and move on — but at this point (with bitcoin), we remain at the point of asking how it be climbed so such a (one world) context can be seen?
There are plenty of starting points to align bitcoin with Nash—such as an observation made in 2001 on the benefit of regular elections, in an experimental study to model cooperative game (coalition) formation:
This problem described by Nash of “conflicting election votes” has context with bitcoin, in that both (Nash’s agencies approach, and Satoshi Nakamoto’s bitcoin) address the problem of fraud, or possibility for dispute and reversibility, in establishing a true picture and version of events to be relied upon in a bargaining game.
Both Nash and Satoshi go one step further in this — they present their bargaining solutions in the language of representation:
“But the Nash theory of bargaining games for two players can, at least, give a guide for whether or not each party is well represented by his attorney or by his “bargaining agent” if they are so represented.” John F Nash Jr., Global Games and “Globalization”, 2007
In Nash’s Agencies method, Nash defines the quality of representation as attorney-agents (robots), measured by the payment:
“In principle, this work is equivalent to carrying out an exhaustive experiment on the behavior of specialized robot players that are designed to effectively bargain or negotiate for obtaining favorable outcomes in terms of “the division of the spoils” as regards the payoffs realized from the cooperative game.” John F Nash Jr., Studying Cooperative Games Using the Method of Agencies, 2008
This idea is reflected in the second problem bitcoin says it solves, where bitcoin nodes serve the function of Nash’s “robotic attorneys” in bargaining:
“The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.” Bitcoin: A Peer-to-Peer Electronic Cash System, 2008
Explaining John F Nash Jr.’s Method of Agencies
A condensed synopsis for Nash’s agencies procedure would read as removing verbal complications from the forming of contracts, where the possibility for coalition formation — and for where “coalitions” are differentiated from other forms of “get togethers” — i.e. alliances, clubs and unions — are possible from the basis of contracts — to where Nash, from the outset, lays parameters:
The parallel between Nash’s Agencies Method and the recursive, steady, and consistent nature of bitcoin block generation, is made clear in the calculating work Nash completed:
“I learned how to refine and improve the programming for these basic procedures which are mostly for finding numerical solutions to the game equations in 21 variables and for recursive improvements on the accuracy of such approximate numerical solutions” John F Nash Jr., Memo, 2003
“…if the defining payoffs data of the characteristic function made two of the players symmetrically situated then, to find similarly symmetric equilibria became a matter of solving 21 equations in 21 variables, and this is where most of our project calculating work was done.” John F Nash Jr., Studying Cooperative Games Using the Method of Agencies, 2008
The work in Agencies is redolent of Nash’s earlier work in The Bargaining Problem (1950), where Nash realizes (in The Bargaining Problem) he has to introduce further conditions, and where in Agencies, Nash is again working with conditions of symmetry and Pareto, to arrive at a deterministic outcome.
It is also noteworthy that “a game played repeatedly” is dependent on how it’s situated, according to Nash:
“Thus cooperation is expected to arise or derive, but this is expected to depend essentially on the context of repetition.” John F Nash Jr., Remarks on Cooperation as a Context, 1999
Deterministic adjustment
In addressing the possibility for sovereign adjustment to bitcoin, the similarity in Nash’s describing the inflation in his Ideal Money as steady and constant, in the way bitcoin has a difficulty regulating mechanism (adjustment) to keep its coin issuance steady and constant, it’s relevant that Nash didn’t wish for such a situation to be infinite and indeterminate i.e. it need not last forever:
“We can see that times could change, especially if a “miracle energy source” were found, and thus if a good ICPI index is constructed it should not be expected to be valid, as initially defined, into all eternity. It would instead be appropriate for it to be regularly readjusted depending on how the patterns of international trade would actually evolve.” John F Nash Jr., Ideal Money and Asymptotically Ideal Money, 2002
In Nash’s “context of repetition”, the language bitcoin uses doesn’t appear to normalize (or seek to) the usual terminology surrounding money, cash, economics, and payment systems; rather it might be considered more representative to a bargaining solution of non-cooperative players, which can scale from any level up to sovereign nation states.
The suggestion of equilibria being found in pro-cooperative games (rather than non-cooperative games) because of advances in computing technology has been considered before, and in the context of repetition seems useful to computational discovery if bringing forward the future, that it does so by deterministically limiting the “verbal range”:
“Then we seek to find for the players, which are parties that have quite limited actual opportunities for bargaining and negotiative actions (because they have nothing like the full range of human verbal communications possibilities that they could use in the process of optimizing), a type of equilibrium such that each of the parties to the game is not capable of making any refinement of his/her strategic behavior pattern that would improve his/her payoff expectations prospect.” John F Nash Jr., Studying Cooperative Games Using Methods of Agencies, 2008
On bitcoin mining
“Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange.
I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.” Satoshi Nakamoto, 7 August, 2010
In Global Games and “Globalization”, John Nash speaks as a game theorist looking to render problems facing the world — such as international trade, global warming, and weapons proliferation — as problems of mathematics in bargaining:
“Whether or not the scientific understanding of the cause and effect mechanisms is perfected here, the situation can be observed to involve a lot of “game structure”, if anything practical is to be done by the human populations in the various countries of the world.” John F Nash Jr., Global Games and “Globalization”, 2007
There is a paradox involving bitcoin that its critics are assuming the multilateral action required to overcome the problems bitcoin is thought responsible (such as wasteful energy consumption) are easy to coordinate— yet if bitcoin existed in a “one world” context, its decentralization would be senseless (in the way of Wittgenstein’s ladder).
“If global philanthropy were really TOTALLY easy to organize then we should already have the populations of all separate countries living at the same real level of average personal income!” John F Nash Jr., Global Games and Globalization, 2007
How bitcoin has subjected sovereign issuances to Pareto’s power law and associated long tail characteristic function probability distribution has been shown here and here. How Nash considered Pareto in Agencies, is to also mention how Nash considered the Shapley value in pay-offs proportionate to contributions to cooperation (in Agencies).
Nash’s work (in Agencies) didn’t cease with the release of bitcoin. If the original assumption holds true — that bitcoin is an implementation of John F. Nash Jr.’s bargaining experiments — the possibility suggests a solution involving multilateral sovereign coalitions indexing, orientating, or adjusting toward bitcoin, making a one world empire money a possibility as measured by the probability pay out potential, so the cost of bitcoin is understood as highlighting the problem of the absence of a “grand coalition”, rather than being that problem itself.
