🏹 [Analysis] Bitcoin's incentive scheme and the rational individual - Hugo Nguyen

Hugo Nguyen examines Bitcoin's ($BTC) incentive structure using behavioral economics. Nguyen begins with Expected Utility Theory, showing that humans make rational choices according to incentives. Yet, Nguyen notes other behavioral theories, such as Prospect Theory and the Selfish Gene Theory, which imply nuance in human rationality: humans operate according to incentives, but within bounds. Bitcoin, then, takes the best of behavioral economics and puts it in code. Nguyen identifies the fixed supply cap, mining subsidies, and transactions fees as powerful incentives to keep Bitcoin both alive and dominant. The lack of development incentive, conversely, Nguyen notes as a positive: development is highly subjective and incentives are better off than on-chain.