WhyRareMatter

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Many forms of money ever found in the history have the rarity characteristic. This is not just coincidence. Suppose the random variable of the amount of the money by one day hard work is XX. By rarity, the mean and the deviation of XX must be tiny. What is the number of the days that one can collect 1.0 money ?

Denote these identical independent random variables for day i by X iX_i whose mean and deviation is μ\mu and σ\sigma. The amount of money one collects in TT days is X 1+X 2…+X TX_1+ X_2\ldots + X_T . Because collecting more than 1.0 unit in days less or equal than T is equivalent to X 1+X 2+…+X T≥1.0X_1+ X_2 + \ldots +X_T \ge1.0 , and the mean is tiny so that the TT is supposed to be large, its probability is

1−N(1.0T−μσ/T)1-N\left(\frac{\frac{1.0}{T}-\mu}{\sigma / \sqrt{T}} \right)

by central limit theorem where N is the standard normal distribution and the TT is scattered in a narrow range around 1.0μ\frac{1.0}{\mu} . To see this, rescale TT to another variable RR such that 1.0μ\frac{1.0}{\mu} is mapped to 1.0, therefore the distribution of RR is

N(R−1R×μσ)N\left(\frac{R-1}{\sqrt{R}} \times \frac{\sqrt{\mu}}{\sigma}\right)

Because μσ\frac{\sqrt{\mu}}{\sigma} is huge (the definition of 1.0 physical unit allows this number to be arbitrarily large), therefore RR who is slightly larger than 1 or smaller than 1 becomes unlikely. Hence the rarity will support a public understanding of the energy amount to get 1.0 unit of that money and establish the proof-of-work property of a sound money.