19: Game Theory
Game theory is another one of those topics that has many, many rabbit holes in bitcoin.
As I like to do, I’d like to shout out Micah Warren (@AchimWar) on Twitter who wrote (to my knowledge) the only Game Theory x Bitcoin book.
On a national level, whoever adopts & understands bitcoin first, wins. This is a bit of a tangent, but one thing I learned during my time in Beijing was that the US, China, and Russia have their own “triangle trilemma” happening. Only 2 sides can be strong a a time. We’ve seen China kick the miners out. We’ve seen Biden propose a 30% tax on bitcoin mining. We’ve seen the US kick Russia off of SWIFT. We’ve seen Russia’s Energy Minister issue support for the legalization of bitcoin mining. It’s important to pay attention to global events such as these.
Within the US, on the state level, there is much divide as well. You have states such as Texas and Wyoming leading the way and New York opposed.
On an institution level, you have firms such as BlackRock once firmly opposed to bitcoin, touting their ESG narrative, now supportive. of bitcoin saying it’s an international asset and could be a hedge against inflation. You have firms like JP Morgan’s Jamie Dimon calling bitcoin a “pet rock,” and France’s third largest bank, Societe Generale, approving bitcoin custody and trading to clients.
As Parker Lewis says, “Gradually, then suddenly.” Once all the big firms realize it would be their fiduciariy responbility to invest 1% of their AUM into bitcoin, it’s game-over. The “suddenly” will have arrived.
So, again, not financial advice, but given all that, the best time to buy bitcoin was probably yesterday, but today is pretty good, right?
An example from 2021 (the numbers are outdated but the point stands, even more so now):
The 21,000,000 bitcoin are our tools for the 21st century.
21,000,000 bitcoins / 7.753~ billion people = 0.00271 bitcoin/ person. As I write this post, each bitcoin is worth $19,247. So, 0.00271 bitcoin = $52.16~
Let’s put $52.16 into perspective:
3.37 months of Netflix (Standard) @ $15.49/ month
10.45 months of Spotify Premium (Student) @ $4.99/month
10.432 drinks at [insert your favorite beverage shop] @ $5.00/ drink
6.97 months of Amazon Prime (Student) @ $7.49/ month
If you skip 11, say Starbucks’ coffees, one a month for a year, you could buy your share of bitcoin (actually, more because the population is only increasing). Let’s lower our time preference and take small steps to start embracing long-term gratification.
I know this has gotten quite long already, but just wanted to pop in one more bitcoin x game theory article I wrote for a school assignment:
