Tenet, Bitcoin, and Time Travel Exchange
Being long overdue for a good mind-fucking, I recently saw Chris Nolan’s new movie Tenet. In true Nolanesque fashion, I left the movie with no idea what I had just watched, I just knew I liked it. But this won’t be a movie review. I instead want to go through a thought experiment based on an idea from the movie. The movie deals heavily with the concept of time, and in particular the ability of those in the future to communicate, and send items to, those in the present. One component of this is the need for the future folks to compensate those in the present.
This cross-time medium of exchange idea struck me as a fun concept to riff on: what is the best way to pay someone in the past?
Let’s set the stage for our thought experiment:
Future Frank is an international crime boss living in the year 2320. He has found a way to send items to Present Pam, who is living in the year 2020. Future Frank has given Pam a task to perform in the present, in which he will compensate her with $500 million worth of 2020 value. He now needs to decide the best way to pay her for her services.
Bitcoin
The year is 2320, Hyperbitcoinization has taken hold, one bitcoin buys you an island, and as an international crime boss, Future Frank has loads of BTC. Luckily for Future Frank, bitcoin is also valuable in 2020, and Present Pam is more than willing to accept it. But let’s get right to the punch — bitcoin is an awful way to pay someone in the past, from both a fungibility and economics standpoint.
The very way that Bitcoin works makes it almost impossible to be used by someone in the past. No one actually owns Bitcoin, you just own the keys that enable you to “debit” one account and “credit” another. These unspent transaction outputs (UTXOs) are just entries in a ledger, and every UTXO can be traced through the ledger history to the point that it was first mined. One of the value propositions of Bitcoin is that you can trace a coins history throughout time to its origin.
When a transaction is broadcast, it is independently verified by nodes on the network. A validation occurs on each transaction to ensure that the inputs to the transaction, or the old UTXOs, actually exist (If you want to keep me honest you can dust off the Ol’ Mastering Bitcoin and turn to page 218). This will be very problematic for Pam since her UTXOs won’t exist for another 300 years.
Present Pam would not be able to spend the coins, and even if she tried — the network would see that the UTXOs in the transaction Pam is relaying don’t exist. Not only do they not exist but the inputs don’t exist either. Hell, the original coins could not even have been mined yet. The network would look at this transaction as gibberish and would be no different than someone literally making up a transaction in an attempt to trick the network to give them coins.
HOWEVER — there is one scenario where it would work…
If Frank were to give Pam the keys to some UTXOs that had not been spent since before 2020, then Pam’s transaction would be valid. (I won’t touch our extremely apparent Grandfather paradox here: If Pam spends the UTXOs in the past, how does Frank have them in the future to send?). Now how many 300 year old UTXOs will exist in 2320 that haven’t been permanently lost? No idea, but probably not many.
Now let’s say that Future Frank sends Nick Cage to get Satoshi’s 300 year old unspent coins (National Treasure 17: The Genesis Block), and after much gun fire and hidden maps, he is able to obtain them. He could send the private keys to Pam, who would in turn be able to spend them — but would he even want to?
The very feature (deflation) that makes Bitcoin such an attractive investment in our linear world makes it awful when time is inverted (inflation). Remember that in 2320, one BTC can buy an island, but in Present Pam’s time, it takes 600 BTC to buy an island. Therefore, in order to fulfil Pam’s payment of $500 million, Future Frank would need to send her 50,000 BTC (83 islands), which for Frank is an opportunity cost of 50,000 islands!
I also considered some alternate ways that Future Frank could leverage bitcoin to pay Pam such as giving her the block hashes for blocks that haven’t been mined yet. But this also wouldn’t work since changing the coinbase output address would change the merkle root making the block hash invalid.
Future Frank could also send Pam some insanely fast ASICs, allowing her to basically monopolize block production. This one gets a little sketch because whatever ASIC (or CPU for that matter) Frank sends Pam will probably enable her to win all the remaining block rewards. Also considering all the other damage that Pam could do with an all powerful CPU, he decides to scrap this idea.
So having gone through the details, Future Frank has decided against paying Present Pam in bitcoin. Let’s now look at cash.
Cash
Being the head of an international crime organization, Future Frank surely has plenty of physical cash. Cash being inflationary in our linear world makes it actually deflationary when time is inverted (opposite of btc). This makes it so that every dollar Frank owns is significantly more valuable to Pam than it is to him. In the year 2300, $500,000,000 is San Francisco’s median home price, but for Pam — that’s fuck you money.
Awesome! Cash looks to be a no brainer for Future Frank to use to pay Pam, right? Wrong. Like bitcoin, Cash is not cross-time fungible. In Frank’s time, Uncle Sam realized he needed to add some larger bills to accommodate 300 years of inflation. So most of Frank’s cash is in $1000 notes that have a picture of Hal Finney on them. While these notes may hold some value as collectibles to Pam — she can’t spend the “Hals” as actual tender since they literally don’t exist in 2020. They wouldn’t work anymore than those Statue of Liberty million dollar bills would. The funny thing is that this is pretty much the EXACT reason bitcoin doesn’t work either — go figure.
The bills essentially act as a lump sum that pays out in 300 years once the bill gets “invented”. So even if she could find someone who would be willing to take the bills, the NPV would be so low that it would kill all the deflationary benefits for Frank.
The same issue is true if Frank uses his modern $100 bills, since the bill itself would have changed from Pam’s time to his. This also all assumes that the US dollar is still a currency in 2300.
Frank’s one option would be to find some bills that existed in 2020 (similar to the virgin UTXOs). Finding 300 year old dollars would be very difficult given how the government takes old bills out of circulation. Even if Frank were to find some — they would be massively expensive since they would most likely be sitting in a museum or a private art collection.
Despite initially having promise, Future Frank will decide to look elsewhere for his payment to Pam.
Gold
To get right to the point, the money of kings is Frank’s best option for paying Pam. The issue that plagued both bitcoin and cash was their cross-time fungibility, which is just not an issue with gold. There is no one to say that your gold is from the future or not.
The economics are more of a toss up. The first scenario, the gold bull scenario, is that gold consistently maintains its store of value properties and steadily increases in value over the next 300 years. In this world there is a chance that we get the same deflation-in-reverse (inflation) that bitcoin saw. However, based on gold’s current size relative to bitcoin it probably wouldn’t be as bad. Ok so we’ll leave the gold bull scenario at “Future Frank will lose some value in transferring gold to Pam, but it’s not nearly as bad as bitcoin”.
The bear scenario is much more fun. As Future Frank is deciding on how to pay Present Pam, a huge asteroid containing millions of tons of gold plummets into Sutter’s Mill, fucking up California and crushing the price of gold. The second greatest inflationary event in gold’s history, the discovery of the Americas, pales in comparison to this, all existing gold essentially becomes worthless. (The “nuclear transmutation becomes affordable” situation would work too but much less exciting).
Gloomy outlook for the gold bugs, but this is great news for Future Frank who personally doesn’t hold any gold. Frank can now buy up very cheap gold and send it to Pam, who lives in a time where gold is still highly valuable.
To tie a bow on this, out of Future Frank’s options so far, SoV-gold is good, meteor-transmutation-gold is best.
Profitable Information
The last way that we will look at to pass value to the past is profitable information. Let’s get a little intangible for a second — by far the most valuable thing that Frank can give Pam is the knowledge of things that have yet to come. There is no heavy ass gold to move, just a few sentences written down on a piece of paper. It’s like hearing “buy bitcoin” in 2010 — act on it and you never need to work again. No fungibility problems, or inflation, just some good old fashioned words.
And perhaps most importantly, Future Frank doesn’t have to pay a damn thing. Frank wins, Pam wins, perfect, right?
Not so fast, while yes hearing “buy bitcoin” or “lever up and short Enron” would have been great — there are a few reasons Pam may not be so inclined to take the offer. First, whatever the 2020 version of this is, Pam needs to have the wherewithal to pull it off. Something about needing money to make money? Without the capital and the knowledge of how to combine the two, the information loses its value.
Now let’s say that Present Pam is a highly capable international crime lord too, capable of taking Future Frank’s information and turning it into millions if not billions of dollars. Why the hell should she trust him? The most lucrative financial bets don’t happen very often, she may need to wait years. Future Frank lives a life of crime, and this costs him nothing, he could easily make something up.
And even if Future Frank tells the truth, what about the butterfly effect? This guy clearly doesn’t give a shit about his grandfather so why should we even expect this event to happen (my head hurts).
So while Future Frank likes the idea of giving Pam information, in the end he’s a good guy and understands Pam’s reluctance to accept profitable information as payment.
Conclusion
After some well thought out analysis, Future Frank decides to pay Present Pam with a few pallets of gold bars. Yeah, they are a bitch to move but they make by far the most sense for both parties.
As for bitcoin, it’s just not a good medium of exchange for time traveling criminals. But that actually makes it good for us holders. If you hold bitcoin you can be confident that some asshole from the future won’t be able to dilute your coins. Working title but I think we should either go with “future-resistant” or “inversion-resistant”.
On the other hand gold has some potential issues for those in the present. Move over asteroid/transmutation enthusiasts, hyper-inflation through gold from the future is much worse. Sadly we will have to say gold is not future-resistant.
As for Tenet, which cross-time payment medium did Nolan choose? You’ll just have to find out yourself.
Anyway, the moral of the story is if you need to pay someone in the past and they won’t accept your good word, choose gold; but if you want a future-resistant store of value, go with bitcoin.
