David Orrell: “Cryptocurrency is the future, but the future might be a long time coming”

David Orrell quantum money bitcoinBesides being a mathematician by training, Orrell has a doctorate focused on the prediction of nonlinear systems, with applications to weather forecasting. “One of the things I enjoy about math is that you can apply it to many different areas, and I have worked in everything from particle accelerator design to building predictive models of the effect of anti-cancer drugs on tumours,” he told 99Bitcoins.

Bitcoin reduces reliance on both the state and the private sector.

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When did you become interested in cryptocurrency?

Do you think cryptocurrency is the money of the future?

You have developed a “quantum theory of money”. This sounds quite interesting.

Close up of hands catching pile of coinsA key part of the theory is the idea of “money objects” which can be real, like a coin, or virtual, like a Bitcoin transfer. Prices are seen as emerging dynamically from the use of money objects. This changes the way we see money: instead of being a passive medium of exchange, as treated in mainstream economics, it is an active force that drives the economy. The two sides of money are always present (coins denote virtual debt; Bitcoins might be virtual, but you can still lose your hard drive), but their relative importance has alternated throughout history. So, for example, now we are in a virtual age.

  1. Money is seen as a fundamental quantity (from the Latin quantum), a word which captures both the numerical aspect of money, and its existence as a kind of stuff.
  2. Money objects contain a fixed amount of monetary value, in the same way that an electron contains a fixed amount of charge.
  3. Money objects bind the virtual to the real, and abstract number to the fuzzy idea of value, in a way similar to the particle/wave duality in quantum physics.
  4. Just as the properties of a substance such as water emerge from the quantum interactions of molecules, so prices emerge from the use of money objects.
  5. Money serves as a means to quantify value, in the sense of reducing it to a mathematical quantity – but as in quantum measurement, the process is approximate.

We need a new theory of money to make sense of things like Bitcoin.

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Your company uses math and other techniques to make predictions in different fields. DO you believe cryptocurrency could become mainstream?

A lot of people consider traditional money primitive. Do you agree?

weekly round upSome aspects of it, such as the way that money transfers are handled, certainly seem primitive in comparison with something like Bitcoin. However my main criticism of traditional currencies is that as mentioned above they were designed during the gold standard era, and maintain many of the same trappings. One is the central involvement of the private banking system (they create most of the money in the system by making loans of new money), which goes back to when the Bank of England was formed to loan money to the monarch. The original idea was that the private sector had to lend money to the King because the King was too big to fail; now the state has to rescue the banks because the banks are too big to fail. Bitcoin reduces reliance on both the state and the private sector.

You are publishing a book about money. What can you reveal about it?

Can you make any prediction regarding what you think will happen to Bitcoin in 2016?

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