Elon Musk thinks we're probably living in a simulation

It’s not easy to make a consistent ad-hoc simulation. Imagine flying in the simulator, you meet a person and ask them who their great-grandfather was and what they did (or if you can read their diary). Then you fly to another point and ask another person the same question. Universes are so complex that it is extremely hard to ensure that both histories are consistent; their are almost certainly to be contradictions between the two stories, especially if you start digging deeper. A simpler model is trying to simulate a chess game. Chess games work under a set of rules, and only certain positions on the board are legal chess games. If you set up an arbitrary mid-game position, the only way to ensure that it is legal is to backwards compute the histories of all pieces and moves and make sure that one of them is legal, and combinatorial explosion makes this almost impossible. To ensure a legal non-contradictory arrangement, you have to simulate the game from the start.

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