CarlShulman comments on [LINK] Raw Story: US seizes operator accounts of a subsidiary of Mt. Gox - Less Wrong

0 Post author: Cyan 24 May 2013 06:14PM

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Comment author: gwern 25 May 2013 01:43:06AM *  8 points [-]

I don't think it is; you can't even frame it as 'the beginning of the end' because the market doesn't seem perturbed at all - the current MtGox rate is $132!

However, this is a good excuse to post an interesting excerpt I found recently as any. On 11 January 2009, Hal Finney wrote:

As an amusing thought experiment, imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world. Current estimates of total worldwide household wealth that I have found range from $100 trillion to $300 trillion. With 20 million coins, that gives each coin a value of about $10 million. So the possibility of generating coins today with a few cents of compute time may be quite a good bet, with a payoff of something like 100 million to 1! Even if the odds of Bitcoin succeeding to this degree are slim, are they really 100 million to one against? Something to think about...

If Bitcoin goes to $10m per coin, does that mean we get an anti-anti-Pascal's-mugging rhetorical weapon where we can say '100m to one payoffs do exist in the real world, look at Bitcoin!'?

Comment author: CarlShulman 29 May 2013 03:29:37AM *  2 points [-]

Then the total value of the currency should be equal to the total value of all the wealth in the world. Current estimates of total worldwide household wealth that I have found range from $100 trillion to $300 trillion. With 20 million coins, that gives each coin a value of about $10 million.

Household wealth is mostly real estate deeds, stocks, bonds, bank accounts... There isn't much cash floating around. For instance, the U.S. Treasury estimates there is only about $1.1 trillion of American currency in circulation (which may not account for destroyed bills, I'm not sure).

Comment author: gwern 05 June 2013 12:52:15AM 0 points [-]

(which may not account for destroyed bills, I'm not sure).

The descriptions of M0 I see include holdings by the Federal Reserve of notes, and they seem to have a good handle on actively destroying degraded notes (http://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm), so I assume it does account for the destruction of old notes and printing of fresh notes to give a net M0. It wouldn't make much sense to count destruction but not creation, or creation but not destruction, or neither (since the first two guarantee an increasingly inaccurate M0 and the latter could cause accuracy issues if destruction were not pegged exactly to creation).

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