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
(A) should not persist in the long run after people learn the thieving probabilities. (B) should not have a large aggregate effect, assuming the thieving rate is small enough. So (B) just causes the coins to shift from one hodler to another.
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:
- (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
(A) should not persist in the long run after people learn the thieving probabilities. (B) should not have a large aggregate effect, assuming the thieving rate is small enough. So (B) just causes the coins to shift from one hodler to another.