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Moneyball and Bitcoin

Moneyball and Bitcoin
Written by Jon Gulson @jongulson
Posted 25 June 2018
We must reinvent our paradigms on the game and on money and what money means Anon.

Moneyball: The Art of Winning an Unfair Game is a book by Michael Lewis, published in 2003. A film was made and based on the book in 2011, starring Brad Pitt and Jonah Hill – focusing on a sabermetric approach to assembling a baseball team; adopted by the financially disadvantaged Oakland Athletics.

Similarly, Bitcoin is a peer to peer and electronic digital cash system, invented by pseudonymous creator Satoshi Nakamoto (real identity, unknown) in 2009. It’s focused on an algorithmically verifiable approach to creating a new form of money - or digital gold - adopted by advocates, including hodlers.

Within their respective fields, both Moneyball and Bitcoin fly in the face of conventional wisdom; but conflate in finding apolitical solutions to the problems they are dealing with.

Moneyball

Before Moneyball, baseball teams were constructed on the intuitions and experiences of baseball insiders (coaches, players, scouts, managers and the front office). These evaluations tended toward more subjective judgements, such as player appearances and old century statistic considerations.

The basis of Moneyball is that the collective wisdom and methods (of insiders) are flawed and that Oakland A’s took advantage of better analytical gauges and rigorous statistical analysis to optimise performance against richer competitors in Major League Baseball.


Jonah Hill - Moneyball

Dramatisations within the film include scenes where Jonah Hill describes ‘epidemic failures in the game to understand what’s really happening, leading people to mis-manage teams’. And that ‘baseball thinking is medieval’.  The old coaches in their defence, argue ‘teams can’t be put together with computers’ and that ‘there are intangibles only baseball people understand.’

Moneyball has now entered baseball’s lexicon, used also in other sports. Baseball teams who use sabermetrics, are said to be playing Moneyball.

Bitcoin

Before Bitcoin, money was - and is still is - constructed on the intuitions and experiences of bankers. Commercial banks create it, Central Banks manage it; ensuring stability through [optimal money]. And Governments ‘let this be’ (fiat).

Central Banks manage money by locally (nationally) targeting an inflation trend, so they must therefore have a system to target with. Currently this is a consumer price index (CPI), which is political in nature as someone has to decide what a CPI consists of - for example which consumables, like sugar - and how often it's reweighted over time. This approach is loosely called Keynesian and can be open to short term political ends.

The alternative approach – loosely called Rothbardian – suggests moving to a production based factor (weighted on the things influential in the things we make, ie gold instead of sugar) as a more accurate predictor of a truly demand elastic (optimal) money supply. Whilst this is considered a longer term and more stable approach, it still contains the same political element as the CPI.

Here we can now see Bitcoin in light of a digital de facto gold standard: a hashing algorithm which is apolitical and self-adjusting in supply rate [to demand] which works to predictable issuance; therefore levelling the playing field in terms of world monies inflating against each other. 

Just as Moneyball became established in the baseball lexicon, so too Bitcoin has distrupted the traditional world of finance and economics. And where it is said ‘there is too much money in sport’; this ignores the imperceptible quality of money, money cycles and natural generation cycles; each occurring in close relationship to each other.

This invites the suggestion that Moneyball can only optimise on an apolitical monetary standard. It also leads us to contend the quality of our money reflects in the quality of our games.

Nash Equilibrium

John Nash is regarded as the godfather of non-cooperative game theory and established the Nash Equilibrium, amongst other accomplishments – some even say he is Satoshi Nakamoto. In Ideal Money, Nash wanted to move the political component from the money supply but still found the problems described above.


Russell Crowe as John Nash in biopic 'A Beautiful Mind'
 
A set of strategies is a Nash Equilibrium if no player can do better by unilaterally changing their strategy and (Nash Equilibrium) is applied to understanding many walks of life, including international law and different areas of commerce – for example, energy pricing.

Nash Equilibrium implies continual movement, but we can observe in the apolitical value trends of Bitcoin and Moneyball a superiority in comparison to their respective peers. For example, with Moneyball the idea was to buy wins and not players – and it worked; showing that understanding games in terms of individuals - and not the wider environment - skews resulting optimal strategy. With Bitcoin, the (Bitcoin) value trend dwarfs other major currencies over long enough time horizons.

Back to Moneyball and the Oakland A’s: Nash Equilibrium shifted as their rivals began to understand and use the sabermetric approach themselves. We can extrapolate from this, how Nash Equilibrium could optimise world money if Central Banks use Bitcoin as a value trend target.

This leads us into the blog’s concluding phase: by optimal, we mean trust and the level of trustworthiness in our games and money. Players should come together as much as is possible to bring the game to an unbeatable point. This is where Nash Equilibrium itself optimises.

If our games and money are a reflection of the trust worthiness of each other, then Moneyball and Bitcoin are perfect use-cases (for each other). Bitcoin has yet to find a use-case to propel mainstream acceptance, so if games can create parrallel trend signals to and from the Bitcoin standard; then benefits should become self-apparent in higher motivation of players to participate in trust optimising games at all levels and in all forms.

Nash showed us that all finite games have a solution, only he didn’t reveal what that solution was. And perhaps this is the point: that games and money lose any explicit purpose or meaning when such optimisation – or equilibrium – is reached.

Written by Jon Gulson @jongulson
Posted 25 June 2018
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