Comment on Bitcoin value and small probability / high impact arguments

Tue, 31 Mar 2015 17:32:42 GMT

So a wager is about a positive outcome, but there is a standard knockdown argument saying that the wager argument is incorrect precisely because of the possibility of negative outcomes, ie. G' sending you to hell for worshipping G, if it turns out the G' and not G is real. A mugging is about avoiding a negative outcome, but my proposed argument shows how not cooperating with the mugging can also avoid a negative outcome. Bitcoin is actually a third category: investing in BTC has a probability of a very positive outcome, but it is not the case that either (i) investing in BTC has a probability of a very negative outcome (well ok some future government may do a witch hunt of BTC holders, but everyone agrees that's 5 orders of magnitude less likely than BTC taking over), or (ii) not investing in BTC has a probability of a very positive outcome. It's very specifically a question of how to weigh a small probability of a large gain ($34k per coin) versus a very high probability of a small loss (-$245 per coin from BTC dropping to zero).

you were making the gold comparison as a way to determine the scale of the mentioned large positive outcome, correct?

Precisely.

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