6 ms·

Money is a form of energy, where conservation and the laws of thermodynamics apply. I'm surprised that there isn't widespread understanding of this. The common

Money is a form of energy, where conservation and the laws of thermodynamics apply. I'm surprised that there isn't widespread understanding of this. The common understanding appears to be that money is just an imaginary human-thing and that often "we would be better off without it". Consider the case of a crypto mine being established in a remote and isolated location in the desert (or on the moon) with plenty of sunshine and solar power. As long as the mine has an internet connection, it can use the available solar energy to mine crypto and send them to anyone on earth. This physically results in the mine being able to transmit energy wirelessly across vast distances. Almost like magic. Sure, it's not in an electrical form and there is energy loss, but at the end of the day, the result is a very real physical capacity to do work.

fennecs 4y ago
I too burn $100 notes for fuel.
copperx 4y ago
The metaphor breaks down when you realize that there is barely a correlation between the amount of work produced and the amount of money spent.
elisharobinson 4y ago
I share a similar belief . I think we can have physics like discussion for money . where joule ~ money and joule / sec ~ value , i am making a distinction between money and value where money is more discrete(quantized) and value is continuous . The second secret ingredient is compute. OP(like FLOP) ~ money and OPS ~ value . putting it together we get , M = OP * E * K where OP -> total no of operations E -> energy spent K -> some constant . Dimensionally money has same SI unit as Joule , Total operation is a dimensionless variable . V = M / T {having same SI unit as Watt} value is money per unit time and Goverments / services / business should be seen as value generators the same way we describe the power of an engine as horsepower or watts . This model is completely different than market analysis of prices / value . Not to mention that majority of value traded is done outside of open markets . This model makes the assumption that all players in the value chain (producers and consumers) are agents with repeatable instructions ie put,Get,push,add,mov,etc. Since there is No SI unit for instructions I propose the Unit for measuring instructions be MOV operator , This is because of my belief taking inspiration from the X86 MOV operator which was proven to be turing complete with the movfuscator(https://github.com/xoreaxeaxeax/movfuscator https://github.com/xoreaxeaxeax/movfuscator). What this means IMO all computable operations can be broken down to move operations. Lastly this system views markets as interaction between agents . And makes the assumption that agents that do not sustainably price their goods / services will fail to operate in the longrun. And views variance / volatility in prices as a outcome of chaotic interaction between agents rather True indicator of value.
woodruffw 4y ago
The laws of thermodynamics do apply, which is why this sentence: > This physically results in the mine being able to transmit energy wirelessly across vast distances. ...is complete bunk. No energy is transmitted when you mine and then transact in Bitcoin: you've used the energy to produce a proof of work, one that others arbitrarily value and exchange for different energy. Restructured: it should be clear that no trust scheme can magically transfer energy; it can only transfer tokens than can be exchanged for energy. In other words, any trust scheme that has extraordinary power requirements is strictly worse than one that only consumes energy once (i.e., when ultimately purchased).
AgentME 4y ago
>Consider the case of a crypto mine being established in a remote and isolated location in the desert (or on the moon) with plenty of sunshine and solar power. As long as the mine has an internet connection, it can use the available solar energy to mine crypto and send them to anyone on earth. This physically results in the mine being able to transmit energy wirelessly across vast distances. When the person wants to spend the crypto to get energy later, then new energy still has to be produced in addition to the energy used for mining (either by burning fossil fuels or using some of the capacity of renewables). If they're producing 100 units of energy to run their miner to get enough crypto to buy 100 units of energy later, then there's twice as much energy having to be produced than if they didn't run their miner. Money is a tool for humans to allocate resources between themselves. It's not energy storage. If there was only one person on Earth that could freely use any resources available to them, then they wouldn't ever have any use in "saving up energy" by crypto-mining to spend later because it's not saving up energy. It's making energy and spending it on IOU notes to trade to other people for energy they make. It's only when you add other people to the system that it makes any sense to do. Though ideally, the people would be able to coordinate together to come up with a solution that doesn't involve twice the energy being made with half of it going into making IOU notes.
stephen_g 4y ago
I think it is actually a valid criticism of mainstream macroeconomics that they mostly ignore thermodynamics and energy. But the 'cryptocurrency is energy storage' just clearly errs far, far more in the wrong direction, given that (assuming PoW), the energy is permanently consumed in using it, and even more energy is consumed in transacting, with no energy actually ever being able to be returned. You can't say that something that uses a huge amount of energy, and then lets you pay for even more energy to be used has "transferred" that energy, it's just unnecessarily consumed much more energy than was required...
shoo 4y ago
"money is a form of energy" is nonsense. yet it is an interesting kind of nonsense that contributes to the discussion. I think it makes more sense to regard money as a kind of messaging technology that enables decentralised coordination and prioritisation of economic activities in the real economy. But you have to remember that the messaging technology of money is not itself the real economy. It is certainly not energy. Messaging and coordination systems cost energy to run. Adding a better messaging and coordination system might allow a society to run its real physical economy more efficiently, but the messaging and coordination system in itself does not produce energy. Here's a dumb thought experiment: Suppose there is a pre-industrial society on island A. The economy is based on agriculture and livestock. The citizens of island A society develop a system of currency using conch shells, which they can use to track debts accrued and favours owed. Adjacent to island A is the nearby uninhabited island wilderness of island B, filled with natural resources. Inconveniently, a very deep 20 metres wide chasm separates island A from island B. After years of effort with several fatalities and misadventures, the citizens of island A manage to traverse the gap and build a sturdy bridge allowing people, livestock and goods to cross. Some economic activity spreads to island B, but the terrain is not productive for livestock and livestock remain on island A. You are one of the pioneers on the frontier of island B, attempting to establish a farm. You would like to rent some of the livestock belonging to your business partner on island A, to provide energy to clear land and establish your new field more easily. Calamity strikes: there is an earthquake which causes bridge between island A and island B collapses! People, livestock and large trade goods can no longer cross the chasm until the bridge can be repaired. However, the gap is small enough to communicate across by shouting. If you really want, you could also bundle up a sack of conch shell money and sling it across the gap. Rather inconveniently for the pioneers on island B, there were no livestock on island B at the moment the bridge collapsed. Even without a bridge, to hire your business partner's livestock, you are still able to make a payment of money across the chasm to your business partner. You can choose to sling over a bundle of money across. Alternatively, the central bankers of island B and island A can shout across the 20 metre gap to negotiate the transaction and ensure the transaction is recorded consistently in each island's clay tablets in the traditional manner (Paxos). However, there is no way for your business partner's livestock to get across the gap until the bridge is reconstructed. It may take years of very dangerous work to rebuild it. The system of money and financial transactions still functions across the chasm, but it is completely unable to transfer livestock-powered energy. The messaging & debt-tracking system (conch shells, clay tablets, shouted agreements) is not the same thing as the real economy (oxen energy to plough your fields).

fennecs 4y ago

I too burn $100 notes for fuel.

copperx 4y ago

The metaphor breaks down when you realize that there is barely a correlation between the amount of work produced and the amount of money spent.

elisharobinson 4y ago

I share a similar belief . I think we can have physics like discussion for money . where joule ~ money and joule / sec ~ value , i am making a distinction between money and value where money is more discrete(quantized) and value is continuous . The second secret ingredient is compute. OP(like FLOP) ~ money and OPS ~ value . putting it together we get , M = OP * E * K where OP -> total no of operations E -> energy spent K -> some constant . Dimensionally money has same SI unit as Joule , Total operation is a dimensionless variable . V = M / T {having same SI unit as Watt} value is money per unit time and Goverments / services / business should be seen as value generators the same way we describe the power of an engine as horsepower or watts . This model is completely different than market analysis of prices / value . Not to mention that majority of value traded is done outside of open markets . This model makes the assumption that all players in the value chain (producers and consumers) are agents with repeatable instructions ie put,Get,push,add,mov,etc. Since there is No SI unit for instructions I propose the Unit for measuring instructions be MOV operator , This is because of my belief taking inspiration from the X86 MOV operator which was proven to be turing complete with the movfuscator(https://github.com/xoreaxeaxeax/movfuscator https://github.com/xoreaxeaxeax/movfuscator). What this means IMO all computable operations can be broken down to move operations. Lastly this system views markets as interaction between agents . And makes the assumption that agents that do not sustainably price their goods / services will fail to operate in the longrun. And views variance / volatility in prices as a outcome of chaotic interaction between agents rather True indicator of value.

woodruffw 4y ago

The laws of thermodynamics do apply, which is why this sentence: > This physically results in the mine being able to transmit energy wirelessly across vast distances. ...is complete bunk. No energy is transmitted when you mine and then transact in Bitcoin: you've used the energy to produce a proof of work, one that others arbitrarily value and exchange for different energy. Restructured: it should be clear that no trust scheme can magically transfer energy; it can only transfer tokens than can be exchanged for energy. In other words, any trust scheme that has extraordinary power requirements is strictly worse than one that only consumes energy once (i.e., when ultimately purchased).

AgentME 4y ago

>Consider the case of a crypto mine being established in a remote and isolated location in the desert (or on the moon) with plenty of sunshine and solar power. As long as the mine has an internet connection, it can use the available solar energy to mine crypto and send them to anyone on earth. This physically results in the mine being able to transmit energy wirelessly across vast distances. When the person wants to spend the crypto to get energy later, then new energy still has to be produced in addition to the energy used for mining (either by burning fossil fuels or using some of the capacity of renewables). If they're producing 100 units of energy to run their miner to get enough crypto to buy 100 units of energy later, then there's twice as much energy having to be produced than if they didn't run their miner. Money is a tool for humans to allocate resources between themselves. It's not energy storage. If there was only one person on Earth that could freely use any resources available to them, then they wouldn't ever have any use in "saving up energy" by crypto-mining to spend later because it's not saving up energy. It's making energy and spending it on IOU notes to trade to other people for energy they make. It's only when you add other people to the system that it makes any sense to do. Though ideally, the people would be able to coordinate together to come up with a solution that doesn't involve twice the energy being made with half of it going into making IOU notes.

stephen_g 4y ago

I think it is actually a valid criticism of mainstream macroeconomics that they mostly ignore thermodynamics and energy. But the 'cryptocurrency is energy storage' just clearly errs far, far more in the wrong direction, given that (assuming PoW), the energy is permanently consumed in using it, and even more energy is consumed in transacting, with no energy actually ever being able to be returned. You can't say that something that uses a huge amount of energy, and then lets you pay for even more energy to be used has "transferred" that energy, it's just unnecessarily consumed much more energy than was required...

shoo 4y ago

"money is a form of energy" is nonsense. yet it is an interesting kind of nonsense that contributes to the discussion. I think it makes more sense to regard money as a kind of messaging technology that enables decentralised coordination and prioritisation of economic activities in the real economy. But you have to remember that the messaging technology of money is not itself the real economy. It is certainly not energy. Messaging and coordination systems cost energy to run. Adding a better messaging and coordination system might allow a society to run its real physical economy more efficiently, but the messaging and coordination system in itself does not produce energy. Here's a dumb thought experiment: Suppose there is a pre-industrial society on island A. The economy is based on agriculture and livestock. The citizens of island A society develop a system of currency using conch shells, which they can use to track debts accrued and favours owed. Adjacent to island A is the nearby uninhabited island wilderness of island B, filled with natural resources. Inconveniently, a very deep 20 metres wide chasm separates island A from island B. After years of effort with several fatalities and misadventures, the citizens of island A manage to traverse the gap and build a sturdy bridge allowing people, livestock and goods to cross. Some economic activity spreads to island B, but the terrain is not productive for livestock and livestock remain on island A. You are one of the pioneers on the frontier of island B, attempting to establish a farm. You would like to rent some of the livestock belonging to your business partner on island A, to provide energy to clear land and establish your new field more easily. Calamity strikes: there is an earthquake which causes bridge between island A and island B collapses! People, livestock and large trade goods can no longer cross the chasm until the bridge can be repaired. However, the gap is small enough to communicate across by shouting. If you really want, you could also bundle up a sack of conch shell money and sling it across the gap. Rather inconveniently for the pioneers on island B, there were no livestock on island B at the moment the bridge collapsed. Even without a bridge, to hire your business partner's livestock, you are still able to make a payment of money across the chasm to your business partner. You can choose to sling over a bundle of money across. Alternatively, the central bankers of island B and island A can shout across the 20 metre gap to negotiate the transaction and ensure the transaction is recorded consistently in each island's clay tablets in the traditional manner (Paxos). However, there is no way for your business partner's livestock to get across the gap until the bridge is reconstructed. It may take years of very dangerous work to rebuild it. The system of money and financial transactions still functions across the chasm, but it is completely unable to transfer livestock-powered energy. The messaging & debt-tracking system (conch shells, clay tablets, shouted agreements) is not the same thing as the real economy (oxen energy to plough your fields).