The Capital
Published in

The Capital

Waste, Gold, and the Environment, in John F Nash Jr.’s Ideal Money and Bitcoin

The phrase as good as gold is usually taken to mean well behaved and obedient. Strictly speaking, however, gold is no longer considered good or obedient in the manner of things past but is still believed genuine by being difficult to counterfeit in relation to a promissory note, which by optimal standards, becomes gilt edged (or as good as gold).

It might be further conjectured it is better to say as ideal as gold, but this perhaps is a futuristic expectation rather than a reflection: both John F Nash Jr. and Satoshi Nakamoto regarded gold as psychology in respect of its behavioural and physical properties.

Transporting Gold

In a thought experiment, Satoshi Nakamoto discounts gold except for the magical property of it being transported over a communications channel, where anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.

In 2015 John F Nash Jr, when speaking with Yanis Varoukis on the correct selection for a base or index for an Ideal Money, Nash acknowledges transportation costs in shaping such an index.

Going back further, and by 2002 (in the forming of Nash’s works in Ideal Money) gold had already been spoken of in this way:

John F Nash Jr.

The Waste of Gold

The similarity in John Nash’s and Satoshi Nakamoto’s writings on gold is striking: it is perhaps the one area where both Nash and Satoshi are almost words identical in describing gold as a waste, but with the benefit of having either gold or bitcoin available as a medium of exchange, outweighing that waste:

John F Nash Jr.
Satoshi Nakamoto

The Environmental Trade-Off in Gold and Bitcoin Mining

Satoshi’s description of not having bitcoin available as a medium of exchange being the “net waste” was made in response to the accusation that bitcoin is thermodynamically perverse, in the requirements of it effectively “mining” electrical energy.

This line of enquiry leads into John F Nash’s work in game theory, specifically how an Ideal Money — money intrinsically free of inflation, by introducing a steady and constant rate of inflation — would serve in providing for transferable utility.

A demonstration of a problem this would solve is given by Nash in 2007, where Nash acknowledges to not being an expert in matters of international trade economics or politics, but states:

“My personal area of recognized qualification is that of the applications of Game Theory to situations or contexts of an economic character, which may involve “bargaining” or the areas of competitive (or non-cooperative) and cooperative games.” John F Nash Jr., Global Games and “Globalization,” 2007

It is further elaborated by Nash, the international problem of global warming is not to be understood or resolved by “perfecting the science,” but by understanding the “game structure” of an internationally coordinated response:

“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

Nash goes on to render this problem as one of bargaining and representation:

“…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

The Gold Clause

In Two Person Cooperative Games (1953), Nash makes the definition of cooperative (in the games theoretical sense) as being an enforceable rational plan of action between individuals: thus the idea of contracts and agreements are linked.

In Ideal Money, Nash alludes to the old fashioned gold clause used in contracts, where gold was used and trusted as a reliable medium of exchange involving long time periods for the complete performance of the contract or exchange, and for where gold was used in this way, that objective was consequently achieved:

“The existence of a standard provided comparative certainty contrasting with the gamblers’ situation that results when a lender must lend money without much of an assurance that in 30 years the value of it will not have been greatly eroded by inflation.” John F Nash Jr, Ideal Money and Asymptotically Ideal Money, 2010

Therefore we have this idea in bitcoin, that its inflation schedule is steady and constant such that it can provide a trusted, decentralised, picture of play universally observable and suitable to index, benchmark, or form the basis for adjustment in contracts or agreements, giving a premium to contractual integrity, to the extent the phrase as good as gold becomes supplanted by a realistic expectancy and anticipation in bitcoin as an apolitical basis for John F Nash Jr.’s “ideal money,” by solving the problem of determining representation in majority decision making.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store