Friday, March 15, 2024

Bitcoin as Entropy Engine?

The bitcoin blockchain, never transitioned to a proof of stake protocol.  It remained as a proof of work decentralized cryptocurrency, which I believe is superior.  The thing is as hardware more efficient at running the algorithm emerged, such as gpus at first, and later ASICs.  The energy consumption increased, this spending of energy increases entropy.  

It is conceivable that in some yet to be known mechanism, given that increasing price of bitcoin increases bitcoin calculations and thus energy expenditure and entropy, the increase in entropy somehow promotes an increase in price. That given that systems with persistent organization tend to produce even more entropy, than would otherwise occur, this is the case.

Such systems, or structures are called dissipative structures or dissipative systems.   Civilization may be such a system or structure.  For more on Dissipative system - Wikipedia follow the Wikipedia link.

But bitcoin not only increases entropy via energy consuming hardware being promoted in the search for bitcoin by miners, but also via its price increase.   How?  The increasing price of bitcoin generates wealth, as some individuals and companies can take loans against it or can sell the bitcoin at ever higher prices.   The movement of ever greater sums of money, can lead to the movement of lots of real-world resources. And any economic activity or movement of resources will in turn burn energy and generate entropy.

This virtuous cycle of price increases begetting entropy, which in some unknown way seems to foster even higher price, seems like an unstoppable cycle.   Like a flame some unknown factor may extinguish it, but it seems like it would be favored by physics.  And bar some catastrophic event such as societal collapse, a solar flare, or something highly disruptive, I think it may be the case that bitcoin will continue to thrive for years to come.