How Sports And Bitcoin Exemplify Low Time Preference And Efficient Energy Expenditure

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Preface: All human action stems from the desire to increase our supply of accessible energy reserves. Humans act to transform energy from inaccessible to accessible. We seek to acquire energy reserves to provide security for an unpredictable future. The more energy reserves we have access to the higher the likelihood we are able to survive periods of stress or hardship.

If our main goal is increasing energy reserves then this can be the lens through which we view all human action. Knowing the end game provides clarity on the value of every action.

The simple question that needs to be asked before any action is the following:

If we commit “X” amount of energy to producing “Y” result, will we have access to more energy in the future or less?

The more energy output for the less energy input, the higher the value of an action to the individual and to the group.

With that basic understanding we can now direct our attention to professional sports and the question of why they exist in the first place.

Why Do Professional Sports Exist?

What is the baseline utility that professional sports provide to society at large?

Phrased another way: How do we increase our accessible energy reserves through the existence of professional sports?

It sounds simple enough at first but as always there is more to it than meets the eye.

The most common response you’ll hear if you ask the general public is that sports are entertainment (often criticized by intellectuals as the “circus” element of the Roman poet Juvenal’s now-famous ”bread and circuses” observation).

Let’s unpack that idea to get a better understanding of exactly what that idea is alluding to:

Entertainment, as defined by the Merriam-Webster Dictionary, is:

— “the action of providing or being provided with amusement or enjoyment.”

If sports exist to provide enjoyment than we need to be precise as to what enjoyment refers to:

— “the state or process of taking pleasure in something.”

If you have the patience to go through this process with a sports fan you will quickly discover that they themselves realize the power of sports without fully understanding “the why” behind it all. It is true that most fans experience pleasure via their relationship with a specific team or player. The nuance is that many don’t understand why exactly and just how important that “why” is.

The pleasure we experience from sports is directly linked to the utility it provides to society at large.

Fans are drawn to the pursuit of perfection by the athletes. They have an underlying desire to see low time-preference behavior manifest it’s positive outcomes in front of their eyes whether they realize it or not.

Sports produce value (accessible energy reserves) to the community by showcasing what can be achieved through hard work, dedication to a practice or skill, teamwork, specialization, division of labor, innovation, investment through energy spent on training, grit, resiliency, delayed gratification, organization, and mastery, all of which are contained in an easily digestible format lasting a few hours.

These are important concepts but they are not easily visible in the day-to-day activities of the modern world.

Sports provide an opportunity to display the positive benefits of harnessing a low time preference disguised as pure entertainment.

Excess energy reserves are made accessible by expanding the minds of fans, creating a community that fosters an appreciation for the above attributes, and if it all works properly, sports unlocks energy by showing individuals that they can achieve more with their minds and bodies than they thought possible.

Where Does Bitcoin Fit?

So what role does Bitcoin play in all of this and how can Bitcoin improve professional sports?

Again, another way to frame this question so as to maximize our time diving into this topic is:

How can Bitcoin help unlock more energy reserves via sports?

There are many ways that Bitcoin impacts the efficacy of sports and the goal of this series is to highlight some of the most important.

Let’s start by looking at one of the more basic concepts and the one I used most often when orange-pilling the Perth Heat baseball team (the world’s first team to fully embrace Bitcoin and operate on a Bitcoin standard).

At the start of this article I laid out how important understanding energy is in order to fully grasp Bitcoin and here I hope to expand on that further.

Energy is transformed from inaccessible to accessible through innovation and/or technology. Professional sports highlight the importance of competition to fuel innovation in a very real and tangible way.

Athletes (and teams) are rewarded for their risks (the opportunity cost of the energy spent perfecting a specific skill) based on how well they allocate their energy. In real terms this means that the more energy a team directs at improving specific aspects of their game, the better the results will be on the field. Each organization has the same number of hours in a day/week/month to prepare for a game so the outcome rests on how well they organize energy allocation to ensure preparedness across the board.

Any energy expenditure which is not directed towards improvement of skills, strategies, tactics, and the like is energy that is less productive than the alternative.

Professional athletes are a unique subset of the population. They are generally required to be young, capable of developing a high level of functional fitness (which requires low time-preference behavior to attune), and if successful will control abnormally large calls on accessible energy (aka wealth) in the future.

By the very nature of their chosen profession, athletes are among the most prepared to understand how Bitcoin operates and why it is important. This is, without a doubt, why we have seen so many athletes announce their interest in Bitcoin by either taking a portion/all of their salary in bitcoin or via select partnerships opportunities with companies in the space.

Bitcoin can improve athletic performance by removing the need for athletes to expend energy outside of their chosen profession in maintaining their future value. The larger your reserves, the more apparent any leaks become in your value storage.

It is incredibly risky behavior to dedicate the amount of energy necessary to develop the skills required to excel in professional sports. The last thing athletes want to do is be rewarded for their input only to see it drained away via loose monetary policy and inflation.

In the fiat system it has been mandatory for successful athletes to make their money work for them by developing investment opportunities on the side so as to avoid becoming another statistic of failed wealth.

The Best Strategy – Set And Forget

For a number of years famed investor (aka “monetary energy allocator”) Warren Buffet has argued that for the vast majority of individuals, the most productive use of their stored energy is to invest the majority of it in broad-based index funds like the Vanguard 500 Index ETF (VOO).

The investments thesis behind this recommendation is that most people are better off not wasting their energy researching individual opportunities because they can be more productive by focusing on what they do best rather than splitting their precious time between work and a side hustle as an investor.

The investment into a basket of the top 500 companies is essentially betting that some of the companies will find ways to innovate and develop technology which will then allow for more energy reserves. There will be some winners and some losers but overall these companies will become more efficient over time.

Up until 2009 this was the best you could do from an investment standpoint if you wanted to expend the least amount of energy for the largest potential return.