_Good Morning_ ☕ 📖 🌞 `Credit Expansion Fallacy` - **Credit Expansion Fallacy**: Credit expansion occurs when credit is multiplied against money through lending, giving the appearance of inflation. It's often mistakenly attributed to banking, with a theory suggesting Bitcoin could eliminate this effect. - **Savings**: Encompasses hoarding (consumption via depreciation) and investing (lending for production), with no economic distinction between debt and equity. - **Hoarding vs. Investment**: Hoarded money is fully controlled by its owner, while lent money isn't, despite being considered savings. Both lenders and borrowers need liquidity, leading to a cycle of lending until all capital is hoarded. - **Reserves**: The term "reserve" in this context refers to the owner's hoard, not to be confused with reserve currency. Fractional reserve banking refers to the ratio of a bank’s hoard to its issued credit. - **U.S. Dollar Circulation**: M0 includes tangible and intangible currency, with M3 being M0 plus all bank account money, showing significant credit expansion. - **Credit Expansion Ratios**: The total ratio of money to credit in the U.S. is ~3.46%, with bank credit expansion at 9.0x money, and other financial instruments at 48.0x money. - **Eliminating Credit Expansion**: Would require eliminating credit, halting production. The theory that Bitcoin can eliminate credit expansion is invalid as Bitcoin can also be lent. - **Risk of Credit**: All credit carries default risk. The idea of bank credit being risk-free stems from state intervention, not banking itself. - **Money Market Fund (MMF) vs. Money Market Account (MMA)**: MMFs adjust unit prices to reflect investment losses, while MMAs absorb losses with reserves, potentially leading to bank runs if reserves are insufficient. - **Fungibility and Risk**: Bank credit isn't truly fungible due to settlement risks. Credit expansion and money substitutes will persist under free banking based on people's preferences. - **Time Preference**: Determines whether individuals hoard or invest, influencing the economic interest rate and credit availability. Infinite time preference would end all production. - **Lending in Bitcoin**: Bitcoin lending doesn't limit credit expansion; lending rates are determined by time preference, not the nature of the currency. - **Consequences of Eliminating Credit Expansion**: Equivalent to infinite time preference, leading to no capital for production or products for consumption. Legal restrictions on credit lead to alternative investment forms or cessation of production. **Cryptoeconomics by [Erik Voskuil](https://github.com/evoskuil).** *The book can be found on [GitHub](

GitHub

Home

Bitcoin Cross-Platform C++ Development Toolkit. Contribute to libbitcoin/libbitcoin-system development by creating an account on GitHub.

The rest of the summarized chapters are at

A Blog by Expatriotic

A Blog by Expatriotic

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_Good Morning_ ☕ 📖 🌞 ### Consolidation Principle - **Consolidation Principle**: The need to exchange between coins to trade with merchants incurs a cost, making one coin with higher utility preferable over two. - **Utility**: One coin is always better than two unless the resulting coin becomes fee-bound, as per the utility threshold. - **Thiers' Law**: In the absence of state controls, the better money will eventually replace the other, leading to consolidation. - **Market Pressure**: There's a natural market pressure towards a single coin, though this doesn't prevent the creation or existence of new coins over time. - **Contextual Utility**: The utility of a money can vary by situation; for example, gold isn't useful for electronic transfers, and bitcoin needs a network to be functional. The better money prevails in scenarios where it excels. **Cryptoeconomics by [Erik Voskuil](https://github.com/evoskuil).** *The book can be found on [GitHub](

GitHub

Home

Bitcoin Cross-Platform C++ Development Toolkit. Contribute to libbitcoin/libbitcoin-system development by creating an account on GitHub.

The rest of the summarized chapters are at

A Blog by Expatriotic

A Blog by Expatriotic

...

_Good Morning_ ☕ 📖 🌞 `Collectible Tautology` - **Collectible Tautology**: Postulates Bitcoin started as a collectible due to interest from monetary theorists, gaining use value from their preferences. - **Transition**: This value led to barter, then to Bitcoin becoming a medium of exchange based on its barter history. - **Regression Theorem**: Suggests money must originate from a commodity with barter value before monetary value. If commodity value can arise from money potential, the theorem becomes tautological. - **Mises' View**: According to Ludwig von Mises, the theorem explains the emergence of monetary demand from non-monetary use value. - **Commodity Definition**: Economically, a commodity is fungible, typically raw materials or mass-produced goods. The theorem uses "commodity" to denote something with original use value beyond money. - **Implication**: If anything can be considered a commodity, the theorem loses its specificity, implying anything could be money, which contradicts its original assertion. **Cryptoeconomics by [Erik Voskuil](https://github.com/evoskuil).** *The book can be found on [GitHub](

GitHub

Home

Bitcoin Cross-Platform C++ Development Toolkit. Contribute to libbitcoin/libbitcoin-system development by creating an account on GitHub.

The rest of the summarized chapters are at

A Blog by Expatriotic

A Blog by Expatriotic

...

_Good Morning_\ ☕ 📖 🌞 **Cryptoeconomics**\ **by [Erik Voskuil](https://github.com/evoskuil).**\ **The book can be found on [GitHub](

GitHub

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Bitcoin Cross-Platform C++ Development Toolkit. Contribute to libbitcoin/libbitcoin-system development by creating an account on GitHub.

**Cockroach Fallacy** - **Cockroach Fallacy**: Suggests aggregation doesn't reduce security via risk sharing because miners and the economy will disperse if needed, like cockroaches. - **Implication**: This implies security exists because it potentially could, ignoring the Threat Level Paradox where security evolves under threat. - **Grinders and Allegiance**: Relies on miners switching allegiance, based on the Balance of Power Fallacy, which incorrectly sees miners as the threat. Shifting hash power doesn't reduce pooling risk. - **State Control**: States can co-opt large hash power, reducing attack costs. Assuming large mines can exist outside state control is flawed. - **Increasing Miners**: Reducing pooling requires more covert miners, increasing costs for grinders (_grind is a tool that performs hashing_). - **Economic Irrationality**: People won't act against financial interest; reversing financial pressures is needed for increased risk sharing. - **Ignoring Centralization**: Ignores economic centralization and delegation. Rapid decentralization or de-delegation is unlikely, especially under state attacks with currency controls. The rest of the summarized chapters are at

A Blog by Expatriotic

A Blog by Expatriotic

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