Bitcoin as a basis for John Nash’s Asymptotically Ideal Money

The ultimately launched concept of “ideal Money” became possible when I conceived of a practical basis of a standardization of the comparison of the value of the currency with an appropriate standard of ideal.

In 2002 John Nash published a paper in the Southern Economic Journal entitled “Ideal Money” in which he proposed an ideal basis for the global economy as an alternative to the gold standard.

The concept, which he called an ICPI, was a globally constructed price index which all existing national currencies would use as a target for price stability:

Nash went on to give examples of what kinds of prices might be most useful for such an index:

He did however note one problem that maintaining such an index would imply-changes in the world economy would need to be reflected in the index and this would require political intervention:

In an alternate version of Ideal Money Nash explains this admission of the need for political intervention is what caused him to consider what he called “asymptotically ideal money”-an evolutionary approach rather than a pure politically born system:

Thinking of a system in which legacy national currencies are “idealized” by using a set of global production prices as their basis for stability targeting it is interesting to consider the mechanism which regulates bitcoin’s supply issuance-the difficulty adjustment algorithm. In a basic sense the algorithm senses the total mining power of the bitcoin network and adjusts the difficulty of mining the next set of newly release bitcoins such that the new blocks which produce them are created every 10 minutes.

In light of Nash’s observation this creates a curious effect.

Consider Satoshi’s remarks:

This means, viewed over time, the the market price of a unit of bitcoin converges with its factors of production. In other words bitcoin is asymptotically ideal money, suggesting that it may be worthy for consideration as an ideal target for the legacy national currencies:

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