🦃 [Analysis] Cryptocurrency and the turkey problem – Taylor Pearson

When resources are scarce (as they always are), there is a tradeoff between being more efficient and being more thorough. You can choose where on the efficiency thoroughness trade-off (ETTO) spectrum you fall, but you can’t get off the spectrum. If we’re deciding where on the ETTO spectrum to fall, we need to consider the impact of something going wrong. Is an error costly or cheap? Money is like a nuclear power plant, the cost of error is catastrophic. You want money to be maximally sound, and only more efficient if it doesn’t affect that soundness. Much of what seems efficient is not efficient, it is hiding risk somewhere out of sight (at least for the moment). &nbsp Bitcoin ($BTC) maximizes for soundness at the cost of efficiency. Currently the data supports two hypotheses: 1. Paul Krugman is right and the current fiat system is simply superior, both more efficient and more sound, than a system based on commodity money. 2. By ignoring the tradeoff between the efficiency and soundness of money, the monetary system has accumulated hidden risk with potentially catastrophic consequences.