Publications

June 2017 Publications

The illusion of scale in segregated witness
Money gains value through use. As a limited quantity of money chases a set value of wealth, we see the price increase linearly with the velocity of the system. The more use, the higher the price. Likewise, as use cases are limited we can expect a decline in price. This effect can be coupled together with scarcity. Bitcoin is a scarce economic good. Its value is retained from its use factor which as a settlement layer alone is severely limited. When proposed changes such as segregated witness are introduced into the system, value is not added into the system, rather than value being added, it is distributed between aspects that are detrimental to the growth of the system. This occurs because schemes such as segregated witness allow for the introduction of fractional reserve systems into bitcoin. With these, the velocity of the system is lowered and bitcoin becomes a pure settlement system such as Swift. In this, value was transferred from bitcoin into sidechains.

By: Dr. Craig Wright

 

Proof of Work as it relates to the theory of the firm
One of the little-known aspects of bitcoin is the nature of the proof of work system. There are many people, especially those who support a UASF or PoW change that believe a distributed system should be completed as a mesh. In this, they confuse centralised systems with centrality. The truth of the matter, no matter which proof of work system is implemented, they all follow a maximal growth curve that reflects the nature of the firm is detailed in 1937 by Ronald Coase. In this paper, we address the issues of using alternate proof of work systems with regards to either incorporating alternate functions in an extension of simply securing the network against the use of proof of work systems in an attempt to create a one person one vote scenario in place of economic incentivisation.

By: Dr. Craig Wright

 

The irrationality defense of paternalism
In this paper, we investigate the challenges associated with the competing approaches of utility theory and behavioural economics. It has been become commonplace to argue that humans act irrationally. This fallacious argument provides the foundation for paternalism. The fallacy of course is the error in determining objective value and absolute measures of rationality. Everyone is subjective in their utility valuations and consumer behaviour varies over time and place even for individuals. There is no challenge to regulatory design. The problem is not the addition of regulations designed to objectively maximise selected outcomes but rather the introduction of subjective decisions imposed from above paternalistically.

By: Dr. Craig Wright