The Benefits of Cooperation: Nash Bargaining and Bitcoin

The Significance of "The Bargaining Problem"

"The Bargaining Problem" is a seminal paper in game theory written by John F. Nash Jr. in 1950. It introduced an axiomatic approach to the social sciences and presented a new treatment of a classical economic problem. Nash proposed a solution for the fairest way to split a financial transaction or contract between two participants. This paper laid the foundation for Nash's later works on Ideal Money.

Nash Equilibrium versus Nash Bargaining

Nash's subsequent paper, "Non-Cooperative Games," introduced the concept of Nash equilibria. This idea earned Nash a Nobel prize in economic sciences and was later popularized in the film A Beautiful Mind. Nash equilibrium assumes that each participant acts independently, without collaboration or communication. On the other hand, Nash bargaining is a cooperative game theory that deals with nonzero-sum games and the existence of contracts. Nash extended his axiomatic treatment in "Two-Person Cooperative Games" and introduced a threat approach with an umpire to enforce contracts.

Ideal Money and Asymptotically Ideal Money

In his later works, Nash focused on the concept of Ideal Money. He defined it as money free of inflation or inflationary decadence. Nash criticized Keynesianism and advocated for a stable value of money over long periods of time. He introduced the missing axiom that the central authorities should handle the money supply to maintain this stability. However, Nash later realized that completely inflation-free money could have circulation problems and introduced a steady rate of inflation for lending and borrowing contracts.

Bitcoin as an Axiomatic Design

Given Nash's critique of centrally managed currencies, it is worth considering if the axioms present in Bitcoin align with his ideals. Pareto efficiency, scale invariance, symmetry, and the independence of irrelevant alternatives are some of the characteristics of Nash bargaining that can be found in the Bitcoin system. These characteristics contribute to the cooperative nature of Bitcoin and its potential as a fair and decentralized form of currency.

Characteristics and Benefits of Cooperation

Cooperative games require reduced participants, enforceable contracts, and communication based on trusted information. The benefits of cooperation include reduced mediation, less border friction in trading, win-win outcomes, intuitive decision-making, and the possibility of coalition formation. Nash's Ideal Money proposal can be seen as a cooperative game that provides a stable medium of exchange for traders. It eliminates the need for continual inflation and promotes savings and thrift.

Concluding Remarks

The Bitcoin system exhibits characteristics of a cooperative game in a non-cooperative setting. While it may not strictly adhere to all the axioms required for a Nash bargain, it incorporates certain morals and ideals that Nash considered desirable. The simplicity and honesty of Nash's approach to money can be seen as a valuable perspective in the context of Bitcoin.


  • A Beautiful Mind – S Nasar
  • "The Bargaining Problem" – J Nash
  • "Non-Cooperative Games" – J Nash
  • "Two-Person Cooperative Games" – J Nash
  • "The Essential John Nash" – H Kuhn & S Nasar
  • Nash Bargaining Solution – Game Theory Tuesdays – P Talwalkar

Frequently Asked Questions

How much of your portfolio should you hold in precious metals

This question can only be answered if we first know what precious metals are. Precious metals are those elements that have an extremely high value relative to other commodities. They are therefore very attractive for investment and trading. The most traded precious metal is gold.

But, there are other types of precious metals available, including platinum and silver. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It is also unaffected significantly by inflation and Deflation.

The general trend is for precious metals to increase in price with the overall market. However, the prices of precious metals do not always move in sync with one another. If the economy is struggling, the gold price tends to rise, while the prices for other precious metals tends to fall. Investors are more likely to expect lower interest rates making bonds less attractive investments.

Contrary to this, when the economy performs well, the opposite happens. Investors are more inclined to invest in safe assets, such as Treasury Bonds, and they will not demand precious metals. They are more rare, so they become more expensive and less valuable.

Therefore, to maximize profits from investing in precious metals, you must diversify across multiple precious metals. Additionally, since the prices of precious metals tend to rise and fall together, it's best to invest in several different types of precious metals rather than just focusing on one type.

Who owns the gold in a Gold IRA?

The IRS considers an individual who owns gold as holding “a form of money” subject to taxation.

This tax-free status is only available to those who have owned at least $10,000 of gold and have kept it for at minimum five years.

Although gold can help to prevent inflation and price volatility, it's not sensible to have it if it's not going to be used.

If you plan on selling the gold someday, you'll need to report its value, which could affect how much capital gains taxes you owe when you cash in your investments.

To find out what options you have, consult an accountant or financial planner.

How can you withdraw from an IRA of Precious Metals?

First, you must decide if you wish to withdraw money from your IRA account. After that, you need to decide if you want to withdraw funds from an IRA account. Next, make sure you have enough money in order for you pay any fees or penalties.

If you are willing to pay a penalty for early withdrawal, you should consider opening a taxable brokerage account instead of an IRA. If you decide to go with this option, you will need to take into account the taxes due on the amount you withdraw.

Next, you'll need to figure out how much money you will take out of your IRA. This calculation is dependent on several factors like your age when you take the money out, how long you have had the account, and whether or not your plan to continue contributing.

Once you know what percentage of your total savings you'd like to convert into cash, you'll need to determine which type of IRA you want to use. Traditional IRAs allow you to withdraw funds tax-free when you turn 59 1/2 while Roth IRAs charge income taxes upfront but let you access those earnings later without paying additional taxes.

Once you have completed these calculations, you need to open your brokerage account. A majority of brokers offer free signup bonuses, as well as other promotions, to get people to open accounts. It is better to open an account with a debit than a creditcard in order to avoid any unnecessary fees.

When you finally get around to making withdrawals from your precious metal IRA, you'll need a safe place where you can store your coins. Some storage areas will accept bullion, while others require you to purchase individual coins. Either way, you'll need to weigh the pros and cons of each before choosing one.

Bullion bars require less space, as they don't contain individual coins. But you will have to count each coin separately. You can track their value by keeping individual coins.

Some people prefer to keep their coins in a vault. Some prefer to keep them in a vault. No matter what method you use, it is important to keep your bullion safe so that you can reap its benefits for many more years.


  • Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (
  • Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (
  • This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (
  • If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (

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The History of Gold as an Asset

From the ancient days to the early 20th Century, gold was a common currency. It was popular because of its purity, divisibility. uniformity. scarcity and beauty. In addition, because of its value, it was traded internationally. Different weights and measurements existed around the world, however, because there were not international standards to measure gold. One pound sterling, for example, was equivalent in England to 24 carats, and one livre tournois, in France, to 25 carats. A mark, on the other hand, was equivalent in Germany to 28 carats.

In the 1860s, the United States began issuing American coins made up of 90% copper, 10% zinc, and 0.942 fine gold. This resulted in a decline of foreign currency demand and an increase in the price. The United States began minting large quantities gold coins at this time, which led to a drop in the price. Due to the excessive amount of money flowing into the United States, they had to find a way for them to repay some of their debt. They sold some of their excess gold to Europe to pay off the debt.

Since most European countries were not confident in the U.S. dollar they began accepting gold as payment. After World War I, however, many European countries started using paper money to replace gold. The price of gold rose significantly over the years. Today, although the price fluctuates, gold remains one of the safest investments you can make.


By: Jon Gulson
Title: The Benefits of Cooperation: Nash Bargaining and Bitcoin
Sourced From:
Published Date: Wed, 03 Jan 2024 21:03:44 GMT

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