Money 2.0 Stuff: With no rally in sight, Bitcoin must consider loose monetary policy

Some people and Presidents conflate the stock market with the economy and those people are wrong. The stock market forecasts economic growth, sure, but it’s intraday movements have no direct bearing on the underlying. Apple’s 6% decline over the past 24 hours does not signal its impending doom. To my knowledge, Tim Apple has yet to schedule an emergency meeting with exchange owners nationwide, imploring them to delist Apple stock to prevent any further down moves for fear of total bankruptcy. It’s basic stuff, really, (oh, and I’m also simplifying significantly, sure) but it bears repeating.

Cryptocurrencies are different in this respect. The very value proposition of blockchains are their ability to serve as credibly neutral, immutable ledgers. The extent of neutrality and immutability that a blockchain can offer is a function of the network’s security, where security is measured as the value that miners are willing to spend solving sudokus on a per-block basis. As the value to be captured from solving a sudoku increases, so does the network’s security, and thus its value proposition. The opposite is true when the value to be captured from solving a sudoku falls. The sole determinant of the value of solving sudokus is the market.