I have to transscribe a couple of passages from a video for you guys. I like stuff to be in writing so it's searchable and more easily quotable.
From
Bitcoin is the perfect libertarian solution to the money enigmaAbout Shannon information and why the internet needs bitcoinNick: [what was your bitcoin aha moment?]
George: I had just written "Knowledge and Power" about information theory and I figured that Shannons information theory was [the?] perfect instrument for creating a network that could efficiently transmit bits and bytes. However to have a civilization you need more than just bits and bytes. You need contracts, you need transactions, you need provable facts, you need titles, you need notarization, you need identities. You need all these other factors that really can't be accomodated very well on the internet. So you have to have banks and all these other outside channel to conduct transactions. You have this comedy of bogus contracts you're supposed to sign. I mean the internet is full of junk. And it pretends that a lot of the stuff is free, which is not. So it's a lie. It's full of lies. It's a hussle. A lot of the characterisitcs of the internet are the result of having a pure Shannon information without higher...
Nick: what is shannon information?
George: Shannon identifies information exclusively by its surprisal: unexpected bits. That's how you measure information and bandwidth across the net. And Shannon is a genius. He created the perfect theory for the network layer. And you need more than 3 layers in the network. You got to have a whole apparatus on the network in order to conduct provable transactions.
Nick: so how does Bitcoin...
George: Bitcoin is a breakthrough in information theory that allows without reference to trusted third parties (people outside the internet) provable transactions. Timestamped transactions that can't be changed.
Nick: So Bitcoin is the currency the internet deserves.
George: It's the currency the internet deserves and needs
Bitcoin tends to be deflationary. About scarcity in a world of abundance: Bitcoin and time.Nick: let's talk about: how is bitcoin deflationary. Because if you were lucky enough to buy bitcoin a few years ago you're wealthy now. Especiall if you take out of the internet...
Georg: Satoshi's worth a billion bucks, baby! [chuckles]
Nick: when do we get to the point where Bitcoin is no longer a speculative currency?
George: You know the speculation is a big debate over what proportion of the worlds transactions Bitcoin will finally accomodate. Bitcoin is currently undergoing a market process. But when it reaches its full maturity with 21 million coins, which is the asymtotic cap which is imposed through the algorithm itself. This means that it will tend to be deflationary.
Nick: Because there'll be more goods chasing after the same...
George: That's right. But this is life. Really the other way I came to this insight is of the "zero marginal cost society", if you heard about that... that capitalist economics doesn't work any more because we live in a world of abundance. But money can't be abundant in the same way that goods and services are. Money has to be the foundation to prioritize and evaluate. So the question is: what is scarce when everything else becomes abundant? And what is scarce when everything else is abundant is ultimately the rediual resource, which is time.
Nick: we're going from Bitcoin to time, what, how does that...
George: because the production of bitcoin is rigorously regulated by the passage of time and the pursuit of irreversability. Satoshi, all through his original paper, talks about irreversible currency. That's the big goal. And the only thing in this universe that's irreversible in this sense is time.
Libertarian economics, Milton Friedman's wet dream. Velocity vs. Money Supply. Bitcoin: the perfect solutionNick: in a kind-of "Milton Friedman wet dream" you would have a government or a robot kicking out a certain amount of predetermined expansion of money on a regular basis no matter what.
George: an assumption of inflation. Miltion Friedman was the greates figure in libertarian economics and I don't deny it for a minute. But he did make a major error. MV = PT, that's his great formulat. The money supply times velocity equals output. But what we've learned overwhelmingly in recent years is: velocity is not a constant. Milton Friedman thought the money supply controlled. And because he thought the money supply controlled he though you had to have some centralized control of money and that the central body that controlled the emission of money should be regulated [and] accomodate economic growth.
Nick: And he was wrong in thinking that you'd need growth of the money supply in order to have economic growth?
George: Yes. And that money rules rather than velocity. He thought velocity was a constant and the money supply could be regulated by the government to actually favor outcomes. And I think that velocity rules and veolocity means we can rule. That Bitcoin as a currency on the internet, peer to peer, managed by the participants in it is the perfect libertarian solution to the money enigma.
backward-looking reactionaries?Nick: How do you tell the kind-of backward-looking reactionaries who are like "it's all about gold, it's all about silver, it's all about paper currency".. should they just give up?
Gilder: Gold is still important. Gold and Bitcoin share these fundamental roots in time. They aren't chiefly governed by the capital function. Capital changes and is volatile and is not a stable source of measurement. It's time that is the source of measurement and both gold and bitcoin share this feature.
There's more, like "my book is going to be called 'Bitcoin and Gold'", but I'm done typing for now.
relevant reddit post