{"id":19372,"date":"2019-09-16T17:22:26","date_gmt":"2019-09-16T17:22:26","guid":{"rendered":"http:\/\/ci027cfe6fd00526c3"},"modified":"2025-01-27T21:24:24","modified_gmt":"2025-01-27T21:24:24","slug":"discovering-bitcoin-part-1-time","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/discovering-bitcoin-part-1-time","title":{"rendered":"Discovering Bitcoin Part 1: About Time"},"content":{"rendered":"
<\/div>
<\/figure>\n

As anticipated in the introduction to this series<\/a>, we will start exploring the period of monetary (pseudo)history prior to fiat money, which we call \u201cPlan A,\u201d focusing on the topic of time and on the question \u201cWhen?\u201d There won\u2019t be much cryptography or computer science in what follows: It will all sound very simple, even \u2026 primitive! Indeed, I would ask you, dear reader, to try to forget your advanced education and your civilized manners, and pretend, just for a few minutes, to be a fish-eating caveman.<\/p>\n

This is the first installment of bitcoiner Giacomo Zucco\u2019s series “<\/em>Discovering Bitcoin: A Brief Overview From Cavemen to the Lightning Network<\/em><\/strong>.” Read the Introduction to his series here.<\/a><\/em><\/p>\n

From Immediate Consumption … to Storage …<\/h2>\n
<\/figure>\n

Your caveman life is based on immediate consumption: You use your bare hands and a pointy stick to catch two fish every day, then you go back to the cave and you eat them immediately. One fish would be enough to survive, two are enough to feel \u201cThanksgiving full.\u201d Every day you catch and eat two. You don\u2019t save. It\u2019s always the same. Your \u201cutility function\u201d (this is what a fancy economist would call it) is constant with respect to time.<\/p>\n

<\/figure>\n

But let\u2019s try to think about the future for a bit! What if, instead of eating both fish, you eat just one and save the second (alive in a jar, for example)? Do it for two days in a row, and on the third day you will be able to eat your fill without even going out to fish! I will admit this is not a great improvement yet: You just give up some pleasure today and tomorrow, in order to get some rest on the third day. Not impressed.<\/p>\n

<\/figure>\n

\u2026 to Investment!<\/h2>\n

But what about spending that third day building a fishing rod (\u201ccapital good\u201d), which would enable you to catch four fish instead of two, every day, forever? That\u2019s called investment: You give up some pleasure for a while, but in return you get some productive and durable results. Congratulations, dear reader: You are a \u201clow-time-preference capitalist caveman\u201d now! With your brand new fishing rod, you can eat two fish every day and<\/em> rest every two days!<\/p>\n

<\/figure>\n

But why stop here? You could invest some of your day off in building a large fishing net, which you could use to get eight fish a day! By saving and investing, you can get more fish, thus have more time to build something more efficient, as long as there are improvements to achieve. The more time you spend saving and investing, the wealthier you get. <\/p>\n

The growth is not even linear: Every improvement can build on top of the previous one! Soon enough, you will be \u201cCaptain Caveman\u201d: commanding a huge fleet of wonderful fishing boats, getting 1,000 fish a day! <\/p>\n

<\/figure>\n

It\u2019s easy to underestimate the deep implications of this process. Predisposition to invest (after having saved, delaying consumption) is linked to something economists call \u201clow temporal preference,\u201d which is, in turn, connected to very important effects on the well-being of people and of entire civilizations! <\/p>\n

A very good account of the significance of these topics and of their relationship with monetary technologies and practices is given in the book The Bitcoin Standard<\/em><\/a> by Saifedean Ammous. Read it, if you haven\u2019t. Another great reference is the essay “Money, Bitcoin and Time”<\/a> by Robert Breedlove. <\/p>\n

Physical \u201cHardness\u201d<\/h2>\n

In order to be useful for this kind of process, a good must possess a good \u201chardness\u201d: Any unit of said good should not significantly lose its ability to provide utility if stored over some period of time. (This means the good does not easily decompose, deteriorate or degrade, or it does so comparatively less than other goods.) <\/p>\n

Other common terms for this attribute are \u201cdurability\u201d and \u201csalability across time.\u201d (In the context of your currently solitary condition, you should interpret the \u201csale\u201d part as \u201cyou selling something to your future self.\u201d) <\/p>\n

In all of the cases above, the expressions are often used beyond the physical scope to include the social and institutional attributes of goods as well. Since you are a lonely caveman, and there is no society or institution around you yet, we employ the term \u201chardness\u201d only in the narrower sense of physical resistance to deterioration of the units of good, delegating other aspects to Part 3 (coming soon).<\/p>\n

<\/figure>\n

The good we chose as our first example, fish, is not very \u201chard,\u201d comparatively, at least not if you don\u2019t perform some specific actions as soon as you bring it back to your cave. A trivial action would be to keep it alive in a jar, as mentioned. Without additional treatments, a fish kept alive is more durable than a dead one. A smoked or salted fish, though, would be even more durable than one kept alive. <\/p>\n

A New Attribute: \u201cScaleness\u201d<\/h2>\n

Even dismissing social considerations, there is another reason for which unitary physical durability doesn\u2019t really cover, alone, the broader concept of scalability across time. The fact is that the ability to store arbitrary quantities of a good is not dependant only on its unitary attributes!<\/p>\n

At the beginning of your virtuous cycle of saving and investment, you decided to eat one fish and to store the other alive. How convenient that, in order to survive, you needed to eat exactly one fish<\/em> and not, for example, one and a half fish, leaving you with half a fish to store! <\/p>\n

Indeed, a live fish isn\u2019t great for divisibility. Smoked, salted or refrigerated fish would fare way better. On the other hand, considering that by the time you appointed yourself \u201cCaptain Caveman\u201d you started storing 1,000 fish every day, keeping them alive in jars must be quite challenging. Again: Conserved fish would be way easier to store than living specimens.<\/p>\n

In these examples, the discriminant is not how well any unit of good maintains its value across time, but rather how well the overall good maintains it across \u201cscale\u201d: when you store smaller fractions of it vs. when you store larger multiples. <\/p>\n

The former case is usually addressed in monetary theory with the term \u201cdivisibility,\u201d the latter with the term \u201cportability\u201d (which often carries some movement-across-space connotations, but ultimately boils down to the fact that a portable good must possess high value in small bulk). <\/p>\n

<\/figure>\n

The composite attribute is sometimes called \u201csalability across scale,\u201d which, just like \u201csalability across time,\u201d is actually pretty neat. Since I like shorter terms, I will use the (almost made-up) word \u201cscaleness\u201d instead (I guess this is a case of terminology choice which would deserve a Trigger Warning as I described in my introduction<\/a>). This attribute has more to do with the \u201cWhat?\u201d column than with the \u201cWhen?\u201d one, to be fair.<\/p>\n

<\/figure>\n

It\u2019s interesting to note the nice link with the word \u201cscalability,\u201d which usually means something else entirely (it refers to the property of a system to handle a growing amount of work by means of additional resources). Within the context of Bitcoin, however, it has been used to address the technical limitations on the number of settlement transactions per unit of time and cost (related to the fact that blocks are limited in size and frequency). In this very specific meaning, the \u201csalability problem\u201d could be reduced to a divisibility one (basically, it doesn\u2019t make economic sense to transfer amounts that are less valuable than the transfer costs), thus the conceptual link is justified.<\/p>\n

So far, you\u2019ve learned:<\/p>\n