602.5 Lesson - powerLaws

Screen: powerLaws

Headline: Power Laws

Reward: 4

Text: Power laws are a way to understand how two things are related. When one thing changes, the other thing changes in a way that is related to the first change. Power laws can show up in different areas, like language, biology, and space. Small changes in one thing can often lead to bigger changes in the other thing.

In economics, power laws are often shown in graphs. One example of a power law is the Pareto principle, which says that about 80% of the results come from 20% of the things that cause them. In a market, this might mean that 20% of the producers make up 80% of the market.

Power laws can also be seen in other parts of bitcoin, like how much power mining pools have or how many hardware wallets different companies sell. They can also be seen in how bitcoin is distributed among different addresses.

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QUIZ

Question: What is the Pareto principle, also known as the 80/20 rule?

Answer: A power law in economics

Feedback: Good job! The Pareto principle, also known as the 80/20 rule, is a power law that explains how a small amount of something (like 20% of producers) can have a big impact (like 80% of the market share).

Correct: true

Answer: A type of pasta dish

Feedback: Sorry, but it looks like you need to brush up on your economics and not your culinary skills. The Pareto principle is not a type of pasta, although it might be a tasty way to remember it

Correct: false

Answer: A way to fold laundry

Feedback: I'm afraid you're going to have to put away the laundry and pay a little more attention to economics. The Pareto principle is not a way to fold clothes, but it is a useful way to understand how small changes in one thing can lead to bigger changes in another.

Correct: false