Bitcoin: Nash Equilibrium for Late Modernity

By Jon Gulson on ALTCOIN MAGAZINE

Dr John Nash was a pure mathematician who made small but influential contributions to modern economics, in founding the theory of non-cooperative games and instigating literature on bargaining.

A depiction of modern economic life.

In an interview given in 2004, Nash talks about his Ideal Money — a subject he recognizes enters deep waters — in relation to comparative living standards and in respect of nation trading.

“So much of this living of the modern human is very, very, recent. Man has existed for much longer than this technology.” John Nash:

The meaning of Nash’s remark isn’t completely clear and leaves the interviewer momentarily dumb-founded.

The Unsuitability of Formal Economic Theory to Bitcoin

Alongside Ideal Money, Nash also undertook work on an agencies method for coalition formation in experimental games, which built upon a previous study where proposing the agency of players (in games) being simply accepted.

This has drawn a parallel with Satoshi Nakamoto’s statement in Bitcoin that merchants in internet commerce can’t just accept such agency, requiring trust and further information before transacting:

If the ideal in Bitcoin is the small casual transaction, it’s observed that just as how Nash removed the inflation postulate from his Ideal Money — the ideal rate being zero — Satoshi removed the mediation postulate from his bitcoin — but that such an agency couldn’t be communicated by central banks in their formal operations:

A coalescing of major currencies from targeting the same formal ideal inflation rate would require the pre-existence of such an Ideal Money to formally cooperate and coordinate on such a target:

In a time where it’s believed formal ideology and formal ways of thinking have expired — where trust stabilizes in a de facto fashion rather than de jure — the logic and reason may be founding, but it’s the flow of thinking proving residual.