Thread by @hasufl

"The average lifespan of a currency is 50 yrs, and the USD is almost 50 years old, so..." (implying that time is running out for the dollar)

I'm seeing tweets like this a fair bit so here's a short thread on the life expectancy of money, and what that means for Bitcoin.

Thread

As humans, our life expectancy decreases the older we get because we are physically "running out of time". A German newborn has on average 90 years ahead of her. But on her 90th birthday, her new life expectancy is only 5 more years.

Life expectancy decreasing proportionally to age applies to almost all living organisms, so it's an easy heuristic to over-apply. And indeed, some things are different. Enter the Lindy effect.

"The Lindy effect is a concept that the future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy." (N. Taleb)

While increasing mortality applies to all biological or mechanical things, decreasing mortality tends to apply to the non-physical: ideas, technologies, institutions, religions, networks... the categories are overlapping but money falls squarely into several of them.

A currency that is still going strong after 50 years tends to be widely recognized, distributed and integrated into our societies. In fact, it offers far more benefits than a new currency - which is why the network effects of money are so hard to break.

As a result, we can easily tell that a 50-year-old currency has a longer life expectancy than a newborn currency. After 50 years, it could have a new life expectancy of 100 years or more!

What does it all mean for Bitcoin?

The most important thing Bitcoin has to do to become recognized as money is

survive.

Would you trust a money to store your wealth for 10 years if it hasn't already proven to store someone else's wealth for 10 years?

If you adopt the survival-is-everything model for money, I promise you will start appreciating more the careful developer attitude behind Bitcoin.

100% improvements in efficiency might not be worth it if there is a 5% chance that it kills you in the process.

Imagine for a moment what happens if Bitcoin died tomorrow after 10 years. It doesn't just reset the Lindy timer for all cryptocurrencies to zero. It sets it far below zero.

All cryptos fight an uphill battle against established fiat currencies. And they compete less on features than you think and more on survival.

Most people will not start trusting Bitcoin's architecture. They trust their experience with it. And experience requires time.

The takeaways:
- future life expectancy of money and other Lindy goods goes up over time, not down
- the USD might well have another 50-100 years ahead of it
- new money competes on survival, not features
- so appreciate Bitcoin's defensive developer attitude