Time as the arbiter for the value of currencies _0_0_ Follow Mar 10 · 4 min read

There are several elements in an economy which aid in the value appreciation of its underlying asset.

This (partly philosophical) article will go in to detail as to why time is the arbiter for value of a currency.

While the implications of this article are not limited to cryptocurrencies, it is written for an audience interested in cryptocurrencies and alternative economies.

Every cryptocurrency created typically has a way of releasing coins, usually this is autonomously regulated by the consensus rules, enforced by the participating peers. As long as no network participant can realistically gain control over 51% of the network, these consensus rules do not change and the reward schedule remains enforced.

Cryptocurrencies are an alternative to central banking and quantitative easing. Yet for anyone to consider exchanging fiat to an elusive, intangible asset of which the mere existence rests on the competence of a group of experimental developers, time has to pass.

Every second, hour, year that the network stays up and running provides an argument against those who are not convinced of its value. This is called the Lindy effect and is a theory often brought up in relation to the value of a particular cryptocurrency, such as Bitcoin.

While Lindy is an interesting theory, it only covers part of the story on why crypto assets appraise in value. The Lindy theory is a convoluted way of saying that time acts as the arbiter between value-less and valuable, as something that sticks around for longer is bound to become more valuable due to its perceived dominance in the competitional hierarchy.

If we imagine a currency as a business and its reward mechanism and consensus mechanism as the set of process flows within that business, it makes sense for a bad business to not exist as long as a good business, and for the good business to gain market share.