It's been a while I haven't been here, I just decided to take out time to open my Read.cash today after a long time of no activity. I decided to write on the Physics behind bitcoin's monetary overling.
The inherent characteristic of Bitcoin is inevitability, not probability. It is based on the laws of nature.
Everything in the universe is ultimately governed by the laws of physics. This includes everything from observable phenomena at the cellular and molecular level to everything we can observe in the most distant galaxies. At the simplest level, it is centered on energy, and energy can also exist in a material state. Energy cannot be created or destroyed, but can only be transferred between entities.
One of the most unimaginable ways of energy in the world today is how the concept of energy is applied to money. Until the emergence of bitcoin. Nevertheless, monetary energy can be said to be the most important energy transfer method in the world today, because it is the signal of all work output by people individually and collectively, from our material self to the world.
Today, we are faced with the problem of currency energy. The currency energy in the world is fundamentally distorted and the signal is completely interrupted. Central banks often bail out insiders and manipulate interest rates to distort the actual cost of capital. Monetary energy can only play its best role in a completely free and unconstrained market. The more the market is distorted, the fewer "real" signals the currency can generate, so actual productivity becomes more distorted.
In practice, this means that monetary energy can no longer be transferred across time in a reliable manner. The saleability of energy is the key factor for the currency energy not to be distorted, because I need to know that the value of my purchasing power today and tomorrow will be relatively the same. Otherwise, it will naturally force me to climb the risk curve in an attempt to preserve my monetary energy.
How do these ideas relate to physics?
Bitcoin combines the first and third laws of thermodynamics. It is a completely emerging system, originating from the greatest chaos. This is not only correct in theory, but also in fact, as the state of the fiat currency world has proved.
Bitcoin will absorb most of the value on the earth to store energy, because it has the hardest currency properties. Saleability, substitutability, anti-censorship and proof of workload. Proof of work is the most important of them, because it satisfies the first law of thermodynamics, and therefore guarantees that the third law of thermodynamics will bring most of the currency energy that exists into the network.
Bitcoin is not a perfect currency system. It's just that it is the best currency system ever seen in the world. Bitcoin does not work based on a probability function, but based on a deterministic function. Short-term prices represent a collective discount to the laws of thermodynamics. However, anyone who understands these basic truths knows that the conclusion is built into the Bitcoin protocol and the new system developed around it.