Numerai is a blockchain startup. with a cryptocurrency boldly named Numeraire. They have just proposed a marketplace for predictions called Erasure. The premise is that there are lots of people out there with some ability -- it may be divine or it may be that they have data and a good statistical model -- to …
A limit to Bitcoin scale?
Eric Budish has a new paper out on "The Economic Limits of the Blockchain." He demonstrates a potentially fundamental contradiction at the heart of 'proof of work' schemes to support cryptocurrencies -- the most famous of which is, of course, Bitcoin. It is an incredibly clear issue so I figured I would recount it here. …
What’s a Bitcoin worth?
Many people say nothing but that is the same of all money like assets to some degree. Bob Shiller says we can't actually tell as it is worth what people think it is worth and that could be anything. I wonder if we can do better. To be sure, "better" is not great. But I …
Ending the Bitcoin energy drain
Bitcoin uses energy. Lots of energy. It does this because as an incentive to 'run the network,' the Bitcoin protocol sets up a proof of work mechanism whereby to certify a block on the blockchain you need to win a computational contest. The great news is that this is a contest that everyone can have …
The Bitcoin Bubble Post Mortem
When asked about the current Bitcoin price increase, pretty much all economists agreed it is a bubble. This is not to say that we wouldn't have minded being given some bitcoin back in 2011 and have forgotten about it until now. But the massive volatility along with the exponential price movements over the past day, …
The Internet of Things, Dangers, Trust and the Blockchain
There is has been a bit of discussion this week regarding The Blockchain. This is the real innovation that powers Bitcoin but one that many see may be a way of generating trust and permissions. Here is a great summary in The Economist. This can be dry stuff -- you know, hard to motivate. But …
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The case against ‘investing’ in bitcoins
Over at Vox.com, Tim B Lee, Vox’s resident explainer on bitcoins invested in bitcoins (again) and told us why. He makes the following points:“Bitcoin is both a currency and a payment network.” I agree with this. There is lots of potential for bitcoin (and its ilk) to be a more efficient payments network and improve the ability of …
Digitopoly 