Michael, would you consider market pricing dynamics an efficient way to measure the relationship between a bitcoin’s price and its negentropic information content?
Because there may be MANY reasons why a bitcoin is priced the way it is, so how would we represent that VALUE in an aggregate way across all variables besides a market pricing dynamic?
Rereading this and I may have misinterpreted the question. You’re saying, there is some intrinsic information content in Bitcoin based on the process of mining, etc. Can we value it based on this dynamic alone?
To think in more of that direction, I would ask, how can we value things in energy units and not necessarily information content. But I would love to hear you expand more on the question and your own thoughts!
Bernard Lietaer has a theory about Monetary diversity or pluralism and the economy. You can search this online and find videos or text on this topic. It is very interesting.
Thank you, Steph*.
Trying to compare with (natural) diamonds. They are rare and hard to find and mine, both vaguely hinting at the “information content”. In addition, they are “forever”. What are the analogs (if any) in the valuation of digital currency?
PS: Sorry, there was a typo in your name. I am taking another class with Seth 
Here’s a good question to discuss: "How important is the accuracy of timestamps used in blockchains? Could timestamp manipulation be a vector of malicious attack? Let’s discuss!
Two questions from this week about fraud, loss of funds, or other hacks that make headlines.. anyone willing to explain their thoughts?
One characteristic that one might like to have for “digital money” is that its price is stable. If price is determined in market place, then that would require that its supply was elastic - meeting exactly whatever was demanded. This is what Central Banks do with fiat currencies.
I can’t imagine that a diamond which is highly elastic in supply would be a good currency (volatile demand would lead to volatile prices). But it depends on what the currency is used for, and what characteristics and functions you would like the currency to have. I think that is where you must start.
Thank you, Leanne. I use the diamonds as an example of almost opposite do digital, but analogous in labor intensity of mining. Hope that comparison can bring some insights. This is quite a narrow question, about intrinsic value (that’s why I did not use a dollar bill as an example), and its relation to the “information content” (I am fascinated with the value being defined by the success in “problem-solving” ), and the “market value”. A side thought is that the methodology of valuation based on problem-solving and related gain of information would help to quantify the real value and show an adequate appreciation of the work done by, say, Andrew Wiles or Grigori Perelman. After all, this is also a matter of Justice. So, that’s where I decided to start
Hi Steph and Leanne
I have worked through the toy Bitcoin examples in the day 2 notebook and am now trying it out on real bitcoin data.
I am attempting to calculate the BlockHash for a block from the "header " Say Block 742266
BlockchainBlockData[742266, BlockchainBase -> "Bitcoin"] ["BlockHash"]
00000000000000000005d92d33ad5f884036b7b7adf9e519bd2de786589e9681
How would I go about calculating (the mathematica code ) this BlockHash using the "header " eg "Timestamp " ,“PreviousBlockHash” , " “TransactionSummary” and “Nonce”
To get the “TransactionSummary” I need to Hash the TransactionList then Hash all 4 parts of the "Header " to get the BlockHash.
I assume there is a way to extract this "Header " from Block 742266 and just Hash it to get the BlockHash
I see - you are using a ‘money is a commodity’ model of understanding the purpose of money.
So in the case of diamonds you are effectively “backing” the production of a unit of currency (if diamonds were the currency) with work. That marginal work in mining the marginal diamond is rewarded to the miner by then being able to spend the diamond. In the long run the supply of diamonds would stop at the point where the marginal cost of mining diamonds equalled the marginal benefit of spending the diamonds. If the economy demanded more diamonds the price of diamonds would rise and more miners were come in to mine more diamonds until its price went back down again to the cost of mining diamonds. This is the same theorizing as the use of a gold standard. (p.s. while this might be an interesting model for stabilizing the diamond or gold industry despite its erratic scarcity and rush in relation to the rest of the economy - it is not at all obvious that this monetary system is beneficial or stabilizing for the rest of the economy - indeed history tells us that it is not. Diamonds and gold would destabilize our economy - indeed the only reason the gold standard worked well was because it was a gold exchange standard i.e. huge stocks of gold were held off the market by central banks and used them to stabilize its price)
Now let’s flip this over to a knowledge standard unit of account. People who create knowledge should have the right to mint currency. It assumes that as a last resort people can use the currency to buy knowledge - maybe buy a patent or mathematics tutoring..? Anyway, let’s say that the currency is backed by knowledge (and it could be stabilized by a central bank of knowledge that helps to ensure a demand and supply with some buffer stock stabilization method).
Now what…
Is this the labor intensity in knowledge in a market system, that you are looking for?. Clearly it would attract those who could mine the knowledge the fastest as they would get the fastest rewards.
But how do we measure knowledge, compare it, standardize it into units?
“But how do we measure knowledge, compare it, and standardize it into units?”
That’s a great question! Sorry I did not pose it this way. Apparently, this is a kind of question that WR can handle.
Thank you, Leanne.
Thank you, Steph. Great discussion topics. With respect to the second,…
could it be possible to turn some kinds of fraud into a blessing, so that it benefits everyone? I mean some fraudulent activities involving intense problem-solving. By adding incentives for turning them into legal but still highly rewarded tasks. Are there any examples of this take on the problem?
Hi Doug, I do believe there’s a tiny bit more needed to manually calculate. I’m looking here, here and here for more information.
The transaction summary should be provided in the block data by using the MerkleRoot
BlockchainBlockData[742266, BlockchainBase -> "Bitcoin"] ["MerkleRoot"]
Will follow up with more info!
Wolfram has a guide " Working with Blockchains" but it needs a tutorial on how to integrate these functions to work with blockchains eg Bitcoin.
On computational contracts: A World Run with Code—Stephen Wolfram Writings
It is strange that Stephen’s article called “A world run with code” doesn’t have a line of code in it! At the moment Mathematica does not allow the specification of Blockchain contracts using the WL. Instead one has to use the language Solidity, see for instance in the documentation ref/blockchain/BlockchainTransaction-bloxberg. Also Blockchain is not the only environment where one can specify a computational contract. If you ask a bank or exchange to set up a specialized instrument, in addition to the usual legal requirements which Cryptos don’t have, they will also insist upon either a mathematical description or some code or simulation results.
Hi Michael! Yes, the lack of standardization across the ecosystem for writing smart contracts means that each one requires a custom structure to get from WL to bespoke chain to execute. It will take time, but this is definitely a big area of interest for us at Wolfram Blockchain Labs.
If you are new to the Wolfram Language but eager to try something elaborate, you can check out Aton Atonov’s post on “Cryptocurrencies: correlations, clustering and data analysis”
It’s just a vague thought. Can a chain of sci/math discoveries (or “improvements”) in a field be described a la blockchain? Say the research from Aristotle, Galileo, Newton, Einstein… Another chain is the development of combinators (see Stephen W.), or the line from Fermat through Wiles… The mining is really intense and costly, the previous steps (at least the reasonably recent) are well documented and all (usually) included in the current “block”. Is it completely out of touch?
Hi David and Peter, my own definition of a digital currency is much like Peter’s, or maybe broader, any electronic account, that is serving at one of the functions of money (unit of account, store of value, medium of exchange or standard of value which was emphasized by Jevons and Keynes particularly relevant for international comparisons). So the public has had digital money since at least online banking and even before that with credit cards tied to electronic accounts, but perhaps if we limit our subject group to consumers we could call that plastic money. I would call it e-money.
Central Bank digital currencies is an interesting new and potentially radical departure from our current system, or it might simply look identical to the consumer as our current system. The more radical version would have us have our account at the central bank.
This later version dis-intermediates banks, and removes their power to create money. It could potentially unite fiscal and monetary policy into one category, similar to the way that MMT (Modern Monetary theory) describes their theory of money.
It would be interesting to hear your opinions. As a public good it could reduce transaction costs and even apply a veil of confidentiality if it was blockchain based or if you trusted your central banker to do that. I’m sure it would be a permissioned blockchain. I believe that Cambodia already has (or had) a blockchain sovereign central bank currency.
It is great solution for many government policies, especially in developing countries, as it solves their current inability to tax, it can make immediate and real time payments to anyone or everyone (like Biden’s Corona Virus rescue payments), it could include claw backs for all those companies that cheat on their information, and monetary policy could be direct to main street and not wall street which is currently a stimulus for excessive speculation.
Obviously there are downsides but I leave others to list those.