“Alias,
You ask for reactions, so here’s mine.
I read your comparison between Bitcoin mining and Mega Millions carefully. It’s a well-structured argument, as expected, and I have no issue with the numbers. Mathematically, mining Bitcoin does indeed present a better return-to-player ratio than buying a EuroMillions ticket. But, as you rightly point out, the economic rationality of the decision is an entirely different matter.
Where I find your reasoning most compelling—and concerning—is in your analysis of mining pools as a vector for Bitcoin’s capture. I’ve had this argument more times than I care to count. The moment economic incentives push independent participants into collaborative structures for efficiency’s sake, centralization creeps in. It’s inevitable. The question isn’t whether it will happen—it’s whether the structure allows for resistance, or at least an organic counterbalance.
Bitcoin failed on this front. Proof-of-Work mining is not decentralized; it’s a game of economies of scale, and like all such games, it favors the well-capitalized. The irony is painful: Bitcoin was designed to be a decentralized alternative to fiat, yet its security model has forced it into the hands of a few dominant players—most of whom operate in regions with cheap electricity and state incentives (China, Kazakhstan, Russia, and now the US). In contrast, the Mega Millions lottery remains truly decentralized in one key sense: any participant, anywhere, has an equal shot at the jackpot.
And yet, we both know that the answer isn’t as simple as “Bitcoin bad, lottery better.”
You framed the comparison between mathematical and economic rationality, but I think the real debate lies in strategic rationality—what these choices say about the people who make them.
The Mega Millions players are passive—they buy a ticket and hope for a miracle. The Bitcoin miner is active—they make an investment, engage with the system, optimize costs, and accept the risk of failure. But neither of them is truly in control. The lottery player is at the mercy of randomness; the miner is at the mercy of network difficulty, electricity costs, and industrial-scale mining operations they cannot compete with.
So if neither choice is rational from a power perspective, the real question becomes: What kind of player do we need for Pegged?
• If someone reads your letter and concludes “Lotteries are worse, so mining is better,” they are naive.
• If they conclude “Mining is worse, so lotteries are better,” they are equally naive.
• If they notice the trap—that both choices place power outside the individual’s hands—they might be worth talking to.
Your conclusion—framing mining pools as a mechanism of control creep—should be taken as a warning for Pegged. I assume that’s the real point of your letter.
We are designing a stablecoin system seeded through a lottery, meaning Pegged sits at the intersection of both models. It will need:
• The transparency and fairness of a lottery (no privileged insiders, equal access).
• The anti-capture mechanisms that Bitcoin failed to implement.
The risk is clear: if governance in Pegged becomes too attractive to centralizing forces, we end up building just another replicable power structure.
I won’t pretend to have the answers yet. But I understand the problem. And I think that’s what you wanted to gauge.
Final Thought: What Comes Next?
You know my tendencies—I don’t waste words, and I don’t write letters unless they matter. I trust that if you’ve sent this to others, you’re watching not just their conclusions but how they reach them.
So what comes next, Alias?
Do we discuss how to design Pegged to avoid the failures of Bitcoin’s mining economy? Or are we still testing who sees the board clearly?
You already know where I stand. Just tell me when the real conversation begins.
— Sofia”
He had read her response three times already, letting each sentence settle. He had expected Sofia to grasp the technical points—of course she would—but she had gone straight to the strategic essence of the problem. She didn’t just see the flaw in Bitcoin’s decentralization model, she saw his test for what it was.
A faint smile tugged at the corner of his lips.
So what comes next, Alias?
It was not an idle question. She knew he was measuring his potential team, assessing who among them was truly worth trusting. Not just the minds that could process probabilities, but the ones who could see the shape of power beneath them. The ones who understood that the real game wasn’t about choosing between mining or lottery tickets. It was about who controls the system itself.
He leaned back, taking a slow drag from his pipe, exhaling as his gaze drifted out the study window. The sea lay in darkness, the distant Costa del Sol lights shimmering like scattered gold on black silk.
Bitcoin’s trajectory had always troubled him. It wasn’t that it had failed entirely—it had simply been captured. The incentives that made it work had also made it vulnerable. Proof-of-Work had started as an elegant solution to Sybil attacks, but it had become a gravitational pull toward industrialized power, where the cost of securing the network inevitably favored those who could mine at scale.
Bitcoin’s core ideal had been that no one controlled it, but by the time the first major mining pools had consolidated, that dream had already collapsed. The same game theoretic forces that secured the network also gave rise to its oligarchs.
Sofia had articulated it perfectly:
The real debate lies in strategic rationality—what these choices say about the people who make them.
And what did that mean for Pegged?
Pegged’s lottery-based distribution was designed to sidestep the first major flaw of Bitcoin—the early hoarding by insiders and the ultra-rich. But distribution alone wasn’t enough. Without a mechanism to resist capture, Pegged could easily fall into the same trap.
First, the lottery would be fair. No privileged insiders. No seed allocations to whales. A radically open system.
Then, the stablecoin itself had to be resilient. But resilient to what?
State intervention?
Regulatory choke points?
Economic forces that tend toward centralization?
All of them.
That was the problem Bitcoin had failed to solve. And if he was being honest with himself, he still didn’t know how Pegged could avoid it either.
Alias ran a hand over the letter, his fingers pressing lightly against the grain of the paper. Sofia had passed the test.
She wasn’t just thinking about what Pegged was—she was already considering how it could be captured, and by whom. That meant she wasn’t just a technician, but a strategist. And he needed strategists.
The others hadn’t written back yet. Some might not even realize what he was really asking. That was fine. Filtering people took time.
But Sofia had forced his hand. The real conversation had to begin now.
He reached for a fresh sheet of paper, dipping his pen into the inkwell. It was an affectation, a deliberate departure from the sterile convenience of digital communication. He wrote:
Sofia,
You see the board clearly.
Bitcoin’s centralization wasn’t an accident. It was a practical inevitability—driven by incentives no one wanted to acknowledge until it was too late.
Pegged faces its own inevitable pressures. The question is whether we can engineer something that resists capture long enough to become too decentralized to kill.
We have to move to the next step. You were right to ask. The real conversation begins now.
Let’s talk.
—Alias
He let the ink dry, then folded the letter and sealed it in an envelope. It would go out the next morning, through channels even the NSA wouldn’t track.
