The future of economics is quantum, not bitcoin: it’s mathematics.

Mathematician and popular author David Orrell argues that the future of economics does not lie in cryptocurrencies like Bitcoin. Rather, it is an application of quantum mechanics.

This innovative approach, known as quantum economics, overcomes the limitations of classical economic theories and provides an accurate and nuanced understanding of financial systems.

Quantum economics, not bitcoin.

Classical economic theories have long been the basis of financial analysis and forecasting, relying on equilibrium models to predict market behavior. These models, while basic, often miss the mark by ignoring the complexity and inherent uncertainty of real-world economic systems. Bitcoin and similar cryptocurrencies, despite their innovative approach to decentralization and security, still operate within these classical frameworks, thus inheriting their limitations.

Quantum economics, however, accepts these complexities and models economic phenomena by analogy with the wave-particle coupling of quantum particles.

Orrell emphasizes that quantum economics uses quantum models as a mathematical tool to more effectively analyze and predict economic behavior. He says that, just as quantum probability is useful for understanding physical processes, it can also illuminate economics.

“I find that people in the social sciences use quantum models for things like decision-making—in other words, how to use a quantum model to account for decision-making. Like in conventional economics, instead of always making completely rational decisions, you have all these other things that interfere with thought processes. We are finding that things are happening in the background.

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Thus, quantum models can account for irrational behavior that affects economic decisions. This approach provides a more comprehensive framework for understanding the flow of money and information in the financial system. Thus, it defies the traditional rational assumptions of classical economics.

He also highlighted the similarities between the binary nature of traditional computing and the capabilities of qubits in quantum computing. According to Orrell, this change in perspective can lead to changes in economic modeling and decision-making by embracing uncertainty and complexity.

“Qubits can be matched with different colors, providing different shades and complexities. It's not just zero or one. Qubits are stuck; They interact with each other by introducing uncertainty in measurement. This is the fundamental difference. And as I said, the point is to show that models based on this principle can be profitable and effective,” Orel said.

While Bitcoin revolutionizes the concept of decentralized finance, it remains confined to classical economic theories. These often fail to capture the full spectrum of human behavior and market fluctuations. Orrell believes that the addition of quantum principles will bring new economic models and strategies to the benefit of the global financial system.