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The only meaningful definition of supply is how willing people are to part with their property. So, that raises a bunch of other questions, like whether being lax with security is the same thing as being willing to part with your property.
There's a bit of a paradox there, because being unwilling to spend on security could be seen as both a willingness and an unwillingness to part with your money.
Is lack of prudence the same as not valuing the thing you're imprudent about?
I hope @SimpleStacker weighs in on this, as he's always interested in the intersection between morals and economics.
coins that do not move to safe address types in the case of a real threat to an old address type are valued less than those coins that do?
by who?
wouldn't theft look exactly like a transfer of coins from a vulnerable address type to a safe address type?
On the chain, sure. They aren't the same thing economically though, unless the thief has exactly the same preferences as the victim.
every theft of coins by a cryptographic break is actually a transfer of coins to people who value them more highly than the previous owner
I don't think we can say either way, a priori. If the thief immediately spends all the bitcoin, then the transfer was to someone who valued it less (again, in the sense of willingness to part with it voluntarily). On the other hand, the thief may love hodling more than anyone else in the world and takes all of the stolen sats to his grave.
Hmm, I think this whole discussion highlights why mathematical modeling is still useful. We can talk till we're blue in the face, but until we write down some equations capturing all these diverse phenomena, we'll have a hard time making any kind of precise prediction.
I don't have time to work out any math, but my intuition says that, probably:
- There's an isomorphism between imprudence (cost of attention) and security (cost of security) such that they give rise to similar behavior
- In the long-run equilibrium of any of these systems, thievery becomes a steady-state churn rate that doesn't affect the equilibrium distribution of coins. The logic is that coins should still be held by the highest valued owners. If someone who values it highly loses their coins to thievery, they should still be willing to buy it back. The only thing that would change this is if the act of theft,
- (A) changes the person's beliefs about bitcoin, i.e. changes their beliefs about its security, or
- (B) meaningfully reduces the person's purchasing power such that their value of bitcoin shifts and/or they can't actually buy it back
@remindme in 2 hours
I think waxwing makes a point in response to this: isn't it the case that coins that do not move to safe address types in the case of a real threat to an old address type are valued less than those coins that do?
And wouldn't theft look exactly like a transfer of coins from a vulnerable address type to a safe address type?
So, I think we could say that every theft of coins by a cryptographic break is actually a transfer of coins to people who value them more highly than the previous owner...