John Nash created bitcoin

[IadixDev]

With game theory it's not mainly about rationality, but how likely someone who want to get some reward from the game would act given this or that informations.

It works mostly for economic scenario, when there are interest engaged , and the only given is that the person want to make profits or "win the game" when all other actors are also willing to do the same.

It's a model to tell how likely a person is going to make this or that decision given this or that infos, and how the reward balance out the risk to decide on a strategy.

The higher the stake, the better it works, because it's very un likely someone would engage big stake without at least thinking twice to the potential benefits/loss.

Game theory are all about reaction to risk and unknown, it's not that much about rationality, but how a person can percieve his own interest, and the higher the stake, the better game theory will apply.

You can't exclude rationality from game theory analysis.

A person is expected to be perfectly rational in game theory but that's never the case in real life.

A lot of information can be given (and available) to a person but it is not necessary that he will always choose the most objective one.

In most cases he will choose the one that is most gratifying to his sensual satisfaction and desire, never mind if his decision will screw him up hard later.

Additionally, a person make decision not on the potential risk/reward because that would involve too much thinking for him, but on the most immediate risk/reward that he can receive within a short period of time, never mind if a delayed risk/reward will be much better unless he is 100% assured of it.

In terms of getting 100% assurance, nobody in real life really has it.

Everyone will have to make a decision based on lack of information.

Game theory is just too simplistic, and it works only in simplistic situations.

We can make as many fanciful equations to be associated with it but its just to make it appear fanciful as if it is relevant, because if equations are really relevant then we are just not including enough factors into the equations, and the factors involved are far more than we may realize we know.

Thus if we are not including enough factors into the equation to make the right analysis, can we claim that game theory analysis is valid?

It's like trying to compute what is e using the formula of mc instead of mc^2.


Let's say you're in a "massive stake" situation.
You are given 2 options to choose from:
Option A: Be given $1 trillion dollar worth of assets of your own choosing (in cash, or in gold, or in bitcoin, or in stocks, or in bonds, or in real estate, or a mixture of any of them) right away.
Option B: Your wife is killed right away.
Dilemma: If you choose one of them, the other one will be lost, i.e. if you choose Option B, you will lose Option A, and vice versa.
Which option will you choose?
Game theory does not factor in how materialistic you are, does not factor in how affectionate you are to your wife, does not factor in how merciful you are, does not factor in your current economic situation, etc etc etc.
But if game theory was to factor in all these factors of influence, the game theory would be much more complicated than it now is.
Most probably even you would not be interested to dabble in inxt by then.

Edit:
Sorry for any confusion. The options are supposed to say if you choose option A (i.e. be filthy rich), you will lose your wife. And if you choose option B (i.e. spare your wife), you will lose $1 trillion worth of wealth.

Im not sure what definition of rational you use

But people following emotion of what ever is included in game theory The case where game theory are move obvious is when there is high reward for low risk, let say you press A you gain 1m, you press B you get a kick in the but, how likely people will press A

When potential gain and reward are easy to see it works well. And it's made to deal mostly with economic interest, where is no quantifiable interest and risk it's useless, but btc is full of quantifiable interest and risk

Proba are used everyday in many area like insurance and there is lot $$ with it. Same for casino.  And it's not based on assumption of belief or "rationality". But playing rationnelly with good info is more likely to win.

[Dorky]

Im not sure what definition of rational you use

Rational = decision based on or in accordance with reason or logic. Example, you will not eat turd when you know turd is not edible. Irrational would mean you eat turd when you already know its not edible.

But people following emotion of what ever is included in game theory The case where game theory are move obvious is when there is high reward for low risk, let say you press A you gain 1m, you press B you get a kick in the but, how likely people will press A

That's not game theory. That's no-brainer theory.

When potential gain and reward are easy to see it works well. And it's made to deal mostly with economic interest, where is no quantifiable interest and risk it's useless, but btc is full of quantifiable interest and risk

Which is why I gave 2 options. To be richer by $1 trillion, or stays the same. You can quantify the rest, i.e. insurance, cost of cremation, lost of income due to disgrace, etc.

Proba are used everyday in many area like insurance and there is lot $$ with it. Same for casino.  And it's not based on assumption of belief or "rationality". But playing rationnelly with good info is more likely to win.

Like OROBTC has just pointed out, that Tversky and Kahneman (two famous Israeli psychologists) have proven over and over again that humans very often do NOT behave rationally, for a variety of reasons.  Even in experiments where the mathematical parameters are pretty clear.  Even psychologists have fallen for the irrational choices in those experiments. There is also a book titled "Predictably Irrational" by Dan Ariely. How can a thesis be made on the basis of "playing rationally" and be considered valid, when it is already scientifically proven and clear that is not even true?

 

[IadixDev]

You see , you use proba term "very often" and you make game theory based on how likely, or how often a person would do this or that  

And neurology can very well show how "irrational choice" also have their functiun with physiology and all, even if they are "unconscious", aka we are  not conscious of them, but it doesnt mean their reaction to certain situation is completely random and unpredictible. Animal dont have reason, their behavior is only more predictible.

Skynet always trick human with their émotions, they are much easier to predict than reasoned strategy

But game theory works when there is clear manner for players to see how likely this decision will be rewarding vs another, taking in account the likelylness of the outcome.

[Dorky]

"Likely" is a form of probability.

Unless it is deterministic, in which it won't be called "game theory".

[IadixDev]

"Likely" is a form of probability.

Unless it is deterministic, in which it won't be called "game theory".

Bitcoin is not deterministic

[IadixDev]

For example, let's take world cup final of football, there is high stake , and good players on both sides.

You think players are going to just be following their emotion in their corner, of course not, they have strategy, plans, information on the other, because it's like this you win.

It's same with poker and with trading.

From the moment there are interest engaged, it make in sort understanding of the game rule and making strategy to gain advantage out of the game will increase the likelylness of winning.

And people who play emotionally or without plan will loose their stake to better player, and in any case are not really a huge variable factor to consider in the final outcome.

The highly volatile proba are on world cup final with good player who have experience and strategy, it's where the probabilities are very sharp , and the stake high , because the risk is higher and the outcome is less predictible.

The thing with huge pow & high speculative value drive to this sort of model of un stability on this surface match, but the behavior induced by the stake to follow the rule will prevail, and in any case you know there is money to be made in any case through the constant that emerge like people will still buy seat to see the match, and it's how smart game theory works


http://www.thehardtackle.com/2012/penalty-in-football-follows-nash-equilibrium/  




A penalty in football is the epitome of unpredictability – one which affects both teams on the field. After being introduced by William McCrum in 1891, penalty kicks have been analyzed and dissected by almost anyone who has played or watched football. The sense of unpredictability also attracts bookies, and it is common to place a bet on any penalty kick almost anywhere, legal or otherwise.

Penalties have often decided World Cups, European Cups and even heated derby matches. From Roberto Baggio in 1994 to John Terry in 2008, penalties have gotten the better of the bravest minds. Should he shoot left, or right? Or should he shoot straight? On the face of it, it appears as a totally unpredictable course of action. However, as we will see, even such an unpredictable action follows the laws of Equilibrium, more specifically the Nash Equilibrium.

Penalties in football can be thought of as a zero-sum game. That means, for one to win, the other has to lose. If we think of this in terms of the Probability Theory, assigning arbitrary values like 1 for victory and -1 for defeat, we can easily see how this is a zero-sum game. Penalty taking, in essence follows a Mixed Strategy Nash Equilibrium. That means, even if a player knows in which direction the keeper will jump, he will not change the direction of his shot. Whether that action leads to a goal or a save is irrelevant to this article as here we are trying to understand the dynamics of the underlying equilibrium.

[Dorky]

To me, game theory is simplistic.
It may be alien-tech advanced AI analytics to some, but not to me.
Game theory is fanciful and sounds sophisticated to some, but not to me.
Sorry.

[IadixDev]

To me, game theory is simplistic.
It may be alien-tech advanced AI analytics to some, but not to me.
Game theory is fanciful and sounds sophisticated to some, but not to me.
Sorry.

It's simplistic but it works well to model situation with reward and risk estimation and how likely a person is going to choose to win.

But im not super fan of it either, but still the pow scheme of bitcoin is plain game theory. Reward vs risk estimation. Risk = mining difficulty.

And it's not so easy to exclude for me that there could be a mathematical model behind it, intentional or not.

[Dorky]

It's simplistic but it works well to model situation with reward and risk estimation and how likely a person is going to choose to win.

But im not super fan of it either, but still the pow scheme of bitcoin is plain game theory. Reward vs risk estimation. Risk = mining difficulty.

And it's not so easy to exclude for me that there could be a mathematical model behind it, intentional or not.

The original point of my argument was that iamnotback's argument for a very high fee that will push non-whales out of the blockchain because the whales will be colluding to force the miners to charge high fee on the non-whales to make up the difference based on his version of game theory analysis is invalid.

[manselr]

I agree with $500,000 prediction being too high, even $100,000 is still to high. Gold is a 5000 year asset, no way Bitcoin will surpass it in 13 years from now, just not possible! Sorry, but it's nonsense.

[AngelSky]

I agree with $500,000 prediction being too high, even $100,000 is still to high. Gold is a 5000 year asset, no way Bitcoin will surpass it in 13 years from now, just not possible! Sorry, but it's nonsense.

You could check the speculation thread and news about the bitcoin. Adoption rate increasing in sky rocket speed. Therefore, we will see the price value as 10000$ with in 5 years. I agree that Gold is traditional and long term asset, but it being use a ornament but bitcoin is a asset, money and payment mode. None of the thing was in history which have features like bitcoins.

[stomachgrowls]

I agree with $500,000 prediction being too high, even $100,000 is still to high. Gold is a 5000 year asset, no way Bitcoin will surpass it in 13 years from now, just not possible! Sorry, but it's nonsense.

You could check the speculation thread and news about the bitcoin. Adoption rate increasing in sky rocket speed. Therefore, we will see the price value as 10000$ with in 5 years. I agree that Gold is traditional and long term asset, but it being use a ornament but bitcoin is a asset, money and payment mode. None of the thing was in history which have features like bitcoins.

Gold and Bitcoin does really have the difference and shouldn't really be compared regarding to their value and movement of their prices.Features would really be different from one another. $10k might be possible but 100k wouldn't be realistic already to consider on these very high price range and back to topic There are lots of people do always claim that they created bitcoin which no one really could able to surpass satoshi.

[AngelSky]

I agree with $500,000 prediction being too high, even $100,000 is still to high. Gold is a 5000 year asset, no way Bitcoin will surpass it in 13 years from now, just not possible! Sorry, but it's nonsense.

You could check the speculation thread and news about the bitcoin. Adoption rate increasing in sky rocket speed. Therefore, we will see the price value as 10000$ with in 5 years. I agree that Gold is traditional and long term asset, but it being use a ornament but bitcoin is a asset, money and payment mode. None of the thing was in history which have features like bitcoins.

Gold and Bitcoin does really have the difference and shouldn't really be compared regarding to their value and movement of their prices.Features would really be different from one another. $10k might be possible but 100k wouldn't be realistic already to consider on these very high price range and back to topic There are lots of people do always claim that they created bitcoin which no one really could able to surpass satoshi.

It has the difference in value, usage around the world and in many more views. It is realistic but that time we may not alive. No one has claimed that bitcoin is invented by one person. If real satoshi come out and claim the copy right of bitcoin. They it will be under controlled about any organization or Government. This is why he is also hided and not been revealed truly. Still I hope this price rise takes to that value soon.

[iamnotback]

I agree with $500,000 prediction being too high, even $100,000 is still to high. Gold is a 5000 year asset, no way Bitcoin will surpass it in 13 years from now, just not possible! Sorry, but it's nonsense.

Lol. Bitcoin and gold are roughly the same price. Gold is going to $5k max, Bitcoin to $500k.

Buying gold is an impoverishment plan.

Crypto-currency and blockchains will subsume everything.

Tinfoil hats and @dinofelis will be left behind.

Now we know why the Bible says we will throw our gold and silver into the street. Precious metals will become relatively worthless. Remember iron used to be a precious metal (it's documented in Rise of Knowledge, Decline of Finance essay). Commodities are on inexorable trend of lower value (because we can increase their supply at lower costs with new technologies for mining). And gold can't compete with Bitcoin's better attributes.

[noormcs5]

I agree with $500,000 prediction being too high, even $100,000 is still to high. Gold is a 5000 year asset, no way Bitcoin will surpass it in 13 years from now, just not possible! Sorry, but it's nonsense.

Really 500,000$ is almost next to impossible for the bitcoin to attain such a price, not even in decade. We are only 1200$ dollars now and 500,000 is like a dream which may never come true.  I think we should be realistic in predicting the prices.

[iamnotback]

I agree with $500,000 prediction being too high, even $100,000 is still to high. Gold is a 5000 year asset, no way Bitcoin will surpass it in 13 years from now, just not possible! Sorry, but it's nonsense.

Really 500,000$ is almost next to impossible for the bitcoin to attain such a price, not even in decade. We are only 1200$ dollars now and 500,000 is like a dream which may never come true.  I think we should be realistic in predicting the prices.

Incorrect!

Read the fucking thread before you post. I am not your damn secretary!

All the $billionaires and $trillionaires will be doing their settlement in BTC.

It will be $500,000 per BTC.

That is obvious.

You don't seem to understand money very well. And I am not going to write a treatise here. It isn't my responsibility to fix your ignorance about money. I say this forcefully because it behooves you to do some learning so you stop spouting off incorrect judgments.

You said this in that other thread where the first Snapchat investor said it's going $500,000 by 2030, that you agree with that prediction.

2030 is 13 years from now

Current price: $1200

That's $498,800 to go in 13 years, which according to my third grade math means BTC should raise around $38369 per year if your theory is correct.

Isn't this a bit nuts? How can BTC grow so much in 13 years? It would need to go parabolic in an unprecedented way. It would redefine the meaning of going parabolic. Nothing ever has grown this much, not even Berkshire Hathaway Class A stock. We are looking at insane levels of growth in a parabolic way in the last 3 years before 2030 is hit and by the time the curve of coin release starts being flat:



So if this is of any guidance, by about 2025 we would need to start seeing some serious shit, like legit insanity of price growth. And I say parabolic, because I don't see anything near $38369 per year happening any time soon if the growth was more or less linear, so it must be next-level parabolic. We would need to be seeing gold whales, stock whales, fiat whales, everything, moving money onto bitcoin to hodl there (or transact within the blockchain but never leaving BTC).

We are talking about 5 figures of growth per day in the last period... this is insane and would cause heart attacks left and right from hodlers that become rich in such a extreme way.

We are looking at current mega whales (considering they don't sell along the way) becoming the richest men on earth, maybe surpassing Rotchilds? I don't know how many BTC the mega rpietila and MP tier whales have, but at $500,000 per BTC they would become stupid rich, maybe first trillionaires ever (as a single guy owning +trillion).

I don't know, the growth required for $500,000 in 13 years seems too much. It would be something never seen before, books would be written about it, kids would learn about it in schools. It would be all over the planet, minds would explode, people that didn't buy at $1000 would hang themselves with a belt.

"The greatest shortcoming of the human race is our inability to understand the exponential function". Al Barlett on Growth and Sustainability

Compute: (500000÷1200)^(1÷13) = 1.59

Thus to reach $500,000 in 13 years from a starting price of $1200, a compounded rise in price of 59% per year is all that is required.

Do you understand now why I think @dinofelis is very mathematically near-sighted.

The chart you showed is not constant compounded growth, but rather logistic growth. Indeed we should expect Bitcoin to be logistic, because nothing can grow at a constant exponential rate forever. Since the $10 entry price in early 2013 to the recent $1300 price, Bitcoin has averaged 237% gain per year compounded. So we can see that Bitcoin's price is rising much faster than 59% per year right now and so by 2030 the price rise can slow down to much less than 59% per year and still reach $500,000. I believe @rpietila did some logistic models of potential BTC prices.

If we assume a 75% compounded rate (for the equivalent logistic model) from now until 2024, then the BTC price will rise 50X, thus $60,000 and the market cap will be $1.2 trillion.

Of course no one can surpass the elite in BTC wealth, because they mined most of the first 10.5 million Bitcoins.

Most of us won't have enough BTC to stay on chain that long so we will be kicked out to currencies (altcoins or what ever) which are regulated and many of us will have our wealth confiscated by governments gone bezerk with the severe sovereign debt collapse that Bitcoin is going to help cause and make severe.

You say you won't give your private keys, but the government can throw you in jail and torture you. Also I expect by 2024 or so, the elite will have control over the mining and can blacklist addresses they want to.

Why would the elite want to create thousands of new trillionairs?

They aren't. See above.

Why would trillionares need BTC when they own offshore banks?

Offshore banks aren't a reserve currency.

[iamnotback]

In other words, the main difference in opinion between @iamnotback and me is that I think that bitcoin was simply badly designed, and that all the bad things we see are simply due to "stupidity" (everything is relative).  @iamnotback thinks that instead of stupidity, it is evil genius.

@dinofelis, the guy who argued in an Altcoin Discussion thread (about Dash) that there is no such thing as a 'scam', because everything is a free market (even fraud).

And now he changes his philosophy and duplicitously decides that the criteria for "desired design properties" is not determined by the goals of the designer even if the design matches perfectly to a diabolical plan.

@dinofelis everything you've written is incorrect. And I think it is pointless to refute you again, because you refuse to acknowledge that which was already written.

You repeat the same incorrect technological errors over and over again. And thus you continue to willfully lie.

Lol, you don't even understand that PoS and Byzantine agreement fundamental distill down to a generative essence of stake based voting, no matter how you try to obfuscate that fact from your blind eyes.

I would never hire you for any job related to computer science. You are incompetent.

[BitcoinHeroes]

It could actually be something like this.nash described the ideal currency concept as a standard function.I have come across this article on the internet before, perhaps as if you were searching for it on the internet.

[thejaytiesto]

I was just wondering: Lets say we hit 2030 and price is around that $500,000 prediction. Fees insanely high at $600,000. Only dollar billionaires (or trillionaires at that point) are using the bitcoin blockchain anymore.
In this scenario, who would be the bitcoin developers?

I imagine that whoever is still developing bitcoin publicly will be extremely hated by the rest of 99.999999% of population that cannot afford 6 figure fees and got left behind with was once was supposed to be "internet money for the people". These guys sure don't look like illuminati trilionaires:



Will any of the current developers still be around? I wouldn't be able to defend with a straight face a coin that is only used by some insanely rich weirdos. I guess they will continue developing it anonymously?
Well I imagine by 2030, or near 2030, at this rate maybe not version 1.0 but BTC will be near "completion", definitely no more exciting features to be added, but all software needs a certain maintenance.

So let me get this straight.

Even people holding millions of dollars worth of bitcoin, will see their bitcoins trapped because transaction fees will be worth millions of dollars? What fees are we talking about by 2030? (at supposedly around $500k price)

Well we can estimate given that BTC trades 1/100th of its market cap daily. So @ $500k per BTC thus a $10 trillion market cap, thus $100 billion transacted daily. Given 144 blocks per day, that is $600 million per block.

Let's assume that whales will put complex settlement transactions on the blockchain with many inputs and outputs so perhaps only 100 transactions per block. Presuming that whales are willing to pay 0.1% fee for security (i.e. $600,000 per block), that means a minimum transaction fee of $6000. If whales are willing to pay more for security, say 1%, then minimum transaction fee of $60,000.

However, I think whales will end up demanding a kickback from miners for their transaction fees, so that miners can jack up fees on non-whales. Whales can make this demand because they can refuse to send their transactions to miners which won't deal. Yet non-whales can't make a credible threat, because miners who generally offered lower fees would end up losing hashrate relative to those miners who didn't defect from the fee market. Thus I think you will probably see miners colluding to extract the maximum fees that gouge non-whales.

So perhaps 10% fees so $600,000 per transaction. You'll pay it because you have no choice, whereas the whales will have exempted themselves from the fee. So in other words, we will be paying the fees for the whales, eventually the millionaires paying exorbitant fees in order to transact unregulated.

You'll of course be able to avoid that exorbitant fees by going through a regulated option as I explained previously.

So the bottom line is the whales will be free from regulation and we will not. We remain slaves.

Well in that case I will be able to cash out. Anyone with at least 2 BTC will be able to make that one-time-only transaction and cash out. I was just worried that I couldn't even make that one-time-only transaction to send the coins into an exchange and dump for dollars. Being a dollar millionaire sure beats not being able to do anything with your BTC because the fees are insanely high. There's just no point in having money in an unregulated blockchain when you can't do nothing with it.

Also, can't whales find cheaper ways to move their billions? I think if I was a billionaire, I would still be a bit pissed off at having to pay $600,000 for a transaction.
They will have 0 alternatives even in 2030?

[Dorky]

Well in that case I will be able to cash out. Anyone with at least 2 BTC will be able to make that one-time-only transaction and cash out. I was just worried that I couldn't even make that one-time-only transaction to send the coins into an exchange and dump for dollars. Being a dollar millionaire sure beats not being able to do anything with your BTC because the fees are insanely high. There's just no point in having money in an unregulated blockchain when you can't do nothing with it.

Also, can't whales find cheaper ways to move their billions? I think if I was a billionaire, I would still be a bit pissed off at having to pay $600,000 for a transaction.
They will have 0 alternatives even in 2030?

Contrary to what someone said that we will be paying exorbitant transaction fee, I have already invalidated such thesis.

No, in my most sincere opinion and intelligence, there will NOT be any high fee for us to pay. The fee we pay will commensurate with the price of bitcoin.
And if we will pay $600,000 fee, that will probably because each bitcoin will be worth $600,000,000, but we probably won't be seeing bitcoin price exceeding $1 million in our lifetime because bitcoin has a short lifespan.
Thus, don't worry about the fee.
The fee is insignificant.