DBS Private Bank has launched a bank-backed trust to manage bitcoin for clients, the first such product in Asia.
DBS Private Bank has launched the first bank-backed cryptocurrency trust in Asia, which will allow private banking clients to invest in and manage bitcoin, according to a Bloombergreport.
Per the report, the trust services are built on DBS Digital Exchange and it would be offering cryptocurrency services to private banking clients for asset management, including for ether, bitcoin cash and XRP in addition to bitcoin. DBS Exchange was launched in December to offer fully integrated cryptocurrency services.
The news is another noteworthy indicator that demand for bitcoin is growing significantly.
According to the bank, this new service will allow its customers to be able to hold bitcoin with confidence about its custody and management. In the words of the group head of DBS Private Bank, Joseph Poon, “Our trust structure allows clients to conveniently hold these assets, with a peace of mind that they will be safely managed and passed on to their intended beneficiaries,” according to Bloomberg.
Bloomberg reported that DBS’s digital exchange currently has 120 clients. The firm holds “S$80 million ($60 million) in assets under custody, with trading volumes up 10-fold to S$30 million to S$40 million.”
Bitcoin mining firms DMG Blockchain Solutions and Argo Blockchain have joined an accord promoting industry decarbonization.
Bitcoin mining companies Argo Blockchain and DMG Blockchain Solutions have partnered with the Crypto Climate Accord (CCA) to promote industry decarbonization.
Per a press release, in conjunction with CAA, both firms are developing a new working group to articulate the accord’s objectives, while looking to increase the transparency of the renewable energy sourcing of cryptocurrency mining operations using new technologies.
The CCA proposes several objectives to bring down the carbon emissions within the bitcoin mining industry, including reaching net-zero emissions from electricity consumption by 2030 and collaborating with supporters to develop technology, tools and strategies to accelerate the adoption and verification of 100% renewables-powered blockchains by 2025.
“The Crypto Climate Accord helps lay the groundwork for real, tangible action to address Bitcoin mining’s impact on the environment,” Peter Wall, CEO of Argo Blockchain, said in the statement.
Jesse Morris, the chief commercial officer at Energy Web, a low-carbon electricity system accelerator, said that this “green hash rate solution is critical,” and that it could help individual mining facilities highlight their use of renewables and set an example for other industries.
The CCA consortium consists of over 40 companies, including 20 organizations focused on the cryptocurrency space.
The debate around bitcoin mining’s energy consumption has long caused misunderstandings about the technology, but it has ramped up recently, as highlighted by Tesla CEO Elon Musk’s recent statements. In a recent tweet, he said that the electric vehicle manufacturer will be suspending all of its bitcoin purchases, citing climate change concerns.
However, while bitcoin mining is based on energy consumption, a large shift toward renewables is taking place through initiatives like this partnership and others. Furthermore, many argue that Bitcoin’s energy consumption is a highly-efficient transfer of energy to permissionless value.
Bill Ackerman is a billionaire investor that knows a thing or two about financial stability and wealth. In a recent interview, he commented that cryptocurrency is a fascinating thing and that it could potentially benefit from some of the poor economic circumstances America is dealing with.
Bill Ackerman Likes Bitcoin, Thinks Inflation May Last a While
For the past year, inflation has been a serious problem in the United States and abroad. The coronavirus pandemic has struck our global markets like nothing else has in the past, and thus the status of the U.S. dollar and virtually every other form of fiat has dropped in the past 12 months.
This has potentially allowed bitcoin to incur the meteoric rises it has been experiencing since last summer. Many people no longer see it as just a speculative asset; it is now a hedge tool that can keep one’s wealth stable during times of economic strife.
While the situation has been good for bitcoin and cryptocurrencies, standard monetary markets are experiencing heavy problems, and Ackerman does not think this is going to be a short-term issue. In his interview, he comments that things are going to last this way for some time, claiming:
I think [inflation is] not temporary. Look at every commodity price, right? Copper, lumber, energy even before the colonial pipeline issue. Look at housing prices. Look at bitcoin, right? Everything is inflating. That is driven by a once-in-a-moment history. People are emerging from a pandemic with the endless spirit that comes from being locked up.
One of the things Ackerman thinks may be contributing to the present situation is that the Fed is doling out historically low interest rates. He says that he can understand why the Fed took such a route, but this cannot last forever if the economy is to ever fully recover. He says:
I think they are going to have to raise rates for sure, and I think they adjusted their policy just at the wrong time. Preemptive policy toward inflation, I think, is a better approach, particularly in a world where we have massive, massive economic stimulus. I think with rates where they are, there is a very good risk of the economy overheating.
An Extraordinary “Phenomenon”
Ackerman also took a few moments to discuss bitcoin and other forms of cryptocurrency, which he thinks are “brilliant” and “fascinating.” He says:
I think crypto is a fascinating phenomenon. I think it is a brilliant technology and I kick myself for not understanding it. It is one of the best speculations ever, but it is not a place where I would feel comfortable personally putting any meaningful amount of assets in. Therefore, I would not invest our firm’s assets.
Rick Rieder, a chief investment officer for major asset manager BlackRock, recently touted many positive attributes of bitcoin.
Rick Rieder, BlackRock’s chief investment officer of global fixed income and head of the global allocation team, recently made notably positive comments regarding Bitcoin during an appearance on CNBC’s “Squawk Box.”
“Bitcoin is an interesting asset,” said Rieder. “I think it’s durable. I think it will be part of the investment arena for years to come.”
Rieder was asked his opinion on Bitcoin in light of Elon Musk’s recent announcement that Tesla will be halting acceptance of the largest cryptocurrency as payment for its electric vehicles due to environmental concerns.
“[There are] some … hurdles to overcome, and I think [Musk] was mentioning one of them,” shared Rieder. He later added some challenges he currently sees regarding Bitcoin, such as volatility, regulatory dynamics and fiat currency concerns.
Greenidge Generation has announced it will offset all greenhouse gas emissions from its bitcoin mining operations by June 2021.
According to a press release sent to Bitcoin Magazine, Greenidge Generation Holdings’ bitcoin mining operations facility in Upstate New York will be entirely carbon neutral by June 1, 2021.
“Greenidge will purchase voluntary carbon offsets from a portfolio of U.S. greenhouse gas reduction projects,” according to the release. “Each project has been reviewed and certified by one of three well-recognized Offset Project Registries … ensuring that any projects funded by Greenidge reduce emissions or increase sequestration of greenhouse gas in a manner that is real, permanent, and verifiable.”
Greenidge Generation Holding Inc. is a holding company that includes Greenidge Generation LLC, its vertically-integrated bitcoin mining and power generation facility in Upstate New York. Its 106-megawatt natural gas plant allows Greenidge to mine bitcoin and contribute to the security of the Bitcoin network with reduced costs while meeting the power needs of homes and businesses in the Finger Lakes region.
“Our bitcoin mining capability is already best-in-class and seamlessly integrated with our electricity generation that powers thousands of homes and businesses,” Jeffrey Kirt, CEO of Greenidge Generation Holdings Inc, per the release. “By taking the bold and unique step of making our cryptocurrency mining fully carbon neutral immediately — as opposed to at some distant date in the future — Greenidge is once again leading in environmental efforts.”
Kirt added that, with this commitment, Greenidge is demonstrating that it is possible to secure the Bitcoin network while maintaining a fully carbon-neutral footprint. The company is also calling on others to join in cutting greenhouse gas emissions “now.”
There has been plenty of movement in the Bitcoin energy field lately. At the beginning of this week, Ninepoint announced it would invest its management fees in forest conservation to offset the carbon footprint of its bitcoin exchange-traded fund (ETF). And yesterday, Argo Blockchain announced that it had purchased two hydro-powered data centers to propel its green bitcoin mining vision.
Highlighting some common misconceptions about Bitcoin as an energy “waster,” on Wednesday, Elon Musk tweeted that his company, Tesla, will halt the acceptance of bitcoin as payment for its electric cars due to environmental concerns.
Government authorities in Argentina are requiring cryptocurrency exchanges in the country to provide monthly data on users and transactions.
Despite various anti-free market policies discouraging bitcoin use in Argentina, adoption has continued to accelerate in the capital control-stricken country. In the government’s most recent move, the Federal Administration of Public Revenue (AFIP), essentially the Argentinian version of the Internal Revenue Service (IRS), has ordered all cryptocurrency exchanges operating within the country to file comprehensive transaction data on their customers every month, according to a report from local outlet Bae Negocios.
The agency is requiring all exchanges to identify all of their clients, as well as all modifications that occur for all accounts. Paired with this massive information grab, exchanges must report total income as well as final account balances to the AFIP by the fifteenth of every month.
For decades, the people of Argentina have been hit by strict capital controls and dramatic inflation spirals, hampering their ability to preserve capital. Citizens have opted to denominate their wealth in the U.S dollar, the global reserve currency, yet have essentially been stripped of that ability through recent strict government policies.
Bitcoin provides a safe haven for the citizens of Argentina to store their wealth in a deflationary asset that is censorship-resistant, cannot be confiscated and operates outside the far-reaching arms of all government entities. The AFIP’s attempt to access all user information on regulated bitcoin exchanges will ultimately prove futile, as it will only incentivize users to use peer-to-peer Eexchanges, hold their own private keys and become increasingly vigilant when conducting transactions.
The Argentinian government has suppressed its citizens’ ability to store wealth in all fiat currencies, but no policy will be able to stop the unstoppable monetary force that is Bitcoin.
Bitcoin will empower individuals and check all authoritarian government agencies.
As of late, bitcoin has been suffering somewhat. The world’s number one digital currency by market cap has fallen into the high $53,000 range, which is about $2,000 less than where it has been all week. While bitcoin falls, other currencies – such as Ethereum – are reaching record highs, yet analyst and big-time investor Stanley Druckenmiller is confident that no permanent harm will come to the currency, and that it will remain at the top of the crypto ladder at least for the time being.
Steven Druckenmiller: BTC’s Price Cannot Be Beaten
Bitcoin has always been the father of crypto. It first emerged in 2009 (that is when it was first mined) and several competing altcoins have come about following its initial introduction, though to be fair, none have come close to bitcoin’s present market cap. While other coins may have become popular for other reasons – for example, Ethereum is widely lauded for its smart contract capabilities – bitcoin remains at the top in terms of price, and according to Druckenmiller, this is not going to change at any point in the immediate future.
In addition, he is confident that the present suffering bitcoin has endured is only temporary, and that the currency is about to get much bigger. This is due, in his opinion, to new federal policies that are taking place. While these policies remain nameless at the time of writing, he comments that they are likely to cause many more problems for the U.S. dollar and lead to further inflation.
Speaking about bitcoin, Druckenmiller says:
It is going to be very hard to unseat bitcoin as a store of value asset because it has a 14-year-old brand. It has been around long enough, and obviously there is a finite supply.
But while bitcoin is still number one in the world of crypto, Druckenmiller seemed to hint that at some point – perhaps in a coming century – another cryptocurrency could wind up taking the top spot. He says there are multiple cryptocurrencies being introduced every day, and it is certainly possible for one of these assets to potentially take over as the leader of the digital world. He mentioned:
The quality of the competition that is going to come against the incumbents in this space is going to be brutal. That is why I think it is just too early to call who is going to be the winner when it comes to the payment system, commerce, that kind of stuff.
More Disastrous Policies Coming?
Druckenmiller also says that the Fed is likely to make even more disastrous decisions that could ultimately spell doom for USD and other forms of fiat. He claims:
I cannot find any period in history where monetary and fiscal policy were this out of step with the economic circumstances. Not one.
Colonial is the largest pipeline system for refined oil products in the U.S. The system runs from Texas to New Jersey and spans 5,500 miles, transporting around 45% of fuel consumed on the East Coast. However, the ransomware attack forced the company to shut down the entire pipeline, halting its distribution services to many U.S. states and triggering gas price rises across the country.
Ransomware is a type of computer malware that hijacks the victim’s data, locks them up and demands a ransom payment to restore them. The hackers behind the attacks typically lock the victims’ files using robust encryption methods, in some cases making data retrieval by anyone other than the hackers themselves unfeasible.
If the victim decides to pay the ransom and it is to be in bitcoin, which the Federal Bureau of Investigation (FBI) discourages, they have to purchase the amount of bitcoin required, send it to the attackers, await payment confirmation and hope for the release of their data.
Bitcoin is occasionally used for ransom payments due to its permissionless digital nature. As no government can control, stop or regulate bitcoin transactions, hackers opt to use the cryptocurrency instead of the highly-regulated traditional banking system. In addition, it is impossible to revert the bitcoin ransom payment transaction after it’s sent, and the attackers can verify its arrival trustlessly.
But using bitcoin for nefarious activities doesn’t come without its drawbacks. Many people still misunderstand some aspects of Bitcoin and assume it is anonymous and untraceable — it is not. Bitcoin’s public blockchain is susceptible to forensic analysis, and the attackers’ addresses used to receive the ransom payment can be watched and analyzed by nearly anyone.
I’ve been an avid reader and student of philosophy, psychology and other related topics since my early teens.
My uncle first influenced and introduced me to thinkers like Aristotle, Alexander the Great, Plato and Socrates, and as I grew older, I discovered many others.
Some helped me understand the world and human beings better (Robbins, Taleb, Bruce Lee, Watts, Clare Graves, Frankl, Sowell, Rand, Hoppe, Rothbard, etc.), while others helped reinforce the formers’ ideas by either consistently contradicting themselves, introducing ridiculous ideas of their own or just regurgitating things others have said but completely out of context, thus exhibiting no understanding at all. Some examples include the likes of Marx, Sam Harris, Derrida, Harari, Piketty, Kelton and Keynes.
Either way, they all helped me sharpen and hone my own viewpoints, so for that, I’m thankful even for the dumb texts I’ve read.
In the last five years, I’ve come to really enjoy and align with the philosophies of a particular individual, whom by now you’ve surely guessed is Jordan Peterson.
While I believe the most profound modern philosopher is likely Murray Rothbard, I believe Peterson is the most articulate and, for me, (personally) one of the most authentic and courageous people alive today.
So today… as an homage to Jordan’s work, and as an attempt to introduce him and his audience to Bitcoin, I’ve decided to write a series of articles that examine Bitcoin through a Jordan B. Peterson lens.
I’m going to use his most popular book, “12 Rules For Life” as the framework. While I’ll follow the structure of the book because each of the chapters is quite dense, I will look to glean a number of lessons along the way with my interpretation of the essence of each.
I hope you find value in this series of essays, and if you’re a Bitcoiner who has friends that you’ve not yet been able to orange pill, but are aligned with Jordan’s ideas and philosophy, I hope this becomes a useful resource.
Lesson One: Bitcoin, Hierarchy And Territory
Jordan’s first rule in the book is “stand up straight, with your shoulders back.”
He explores how the individual’s position in the social hierarchy impacts their hormonal (serotonin) and dopaminergic systems, and vice versa, hence making it a feedback loop.
More importantly, though, the essence of the lesson is how by owning oneself and taking responsibility (standing up straight), you can influence these systems to either cease a downward spiral or commence an upward journey in life.
“The part of our brain that keeps track of our position in the dominance hierarchy is therefore exceptionally ancient and fundamental.
It is a master control system, modulating our perceptions, values, emotions, thoughts and actions. It powerfully affects every aspect of our Being, conscious and unconscious alike.”
– Peterson, “12 Rules For Life”
This chapter is extraordinarily dense, with so much to unpack and relate to Bitcoin. It was hard for me to choose a single angle, so I’ve explored multiple sections and how they each relate; socially, evolutionarily, economically and psychologically.
Territory And Private Property
Note: I will use the words “territory” and “private property” interchangeably.
We live in a world with finite territory, and much like any other species, including the now-famous lobsters, our ability to subsist relies on how well we select, protect and handle our territory (aka; private property in a more anthropomorphic sense).
Territory matters. A few truths we must come to terms with are:
Your territory is that which you’re able to successfully defend
Territory is scarce (particularly the best locales and goods)
Humanity has, over the millennia, developed methods of protecting territory because it is fundamental to our survival as a species. We are collaborative by nature, and the means through which we collaborate is the exchange of private property. This private property (or territory) starts with you and extends to anything you mix your time and energy with on a voluntary basis without having taken it by force from another, although the latter does (and has) happened throughout history, hence the critical need for defence.
Examples of mechanisms for defence include anything from:
Walls and fences (land as territory)
Knives and guns (yourself as private property)
Vaults and banks (your wealth as property)
Churches, governments and constitutions (your thoughts, beliefs, rights as territory)
The math and cryptography embodied in Bitcoin which defends private property via the information asymmetry and law of large numbers
What’s important to note here is that without a mechanism for the protection of private property, society collapses. We are all individuals, who are inherently diverse and value everything subjectively. We cannot all own a portion of each other, nor own a part of everything. It’s a physical and social impossibility.
Territory is not a “social construct.” It’s a biological imperative.
It’s the mechanism that’s evolved through which nature achieves balance and equilibrium. It’s an emergent, bottom-up phenomenon, not a top-down decree like pseudo scientists would have you believe.
Peterson’s overview on territory is brilliant, but I would recommend the incredible work by Robert Ardrey (“The Territorial Imperative”), or you can wait for a piece I’ll be writing in the future entitled: “Private Property As A Biological Imperative,” in which I’ll dig deeper into the above.
So… if territory and private property are central to existence, then how do we value, order and select it, knowing that we are all subjective beings and that all property is scarce?
Pecking orders are natural phenomena, and found across all living systems. Hierarchies have to develop because life cannot exist without some form of selection, and this cannot exist without prioritization.
This is not to say that there is “one” right way. Life is not so simplistic. We exist in a complex world where hierarchies and methods for prioritization emerge across multiple dimensions (remember the subjective nature of humans and what they value).
In other words, hierarchies will always form, so the question is not whether they should exist or not (that’s like arguing about the existence of gravity), but “in what form are hierarchies most conducive to life”?
As with most things, it’s a spectrum.
On one side, we have hierarchies by fiat. These are unnatural and abhorrent. They exist by decree and because there is little to no skin in the game for some, they form at the expense and the exclusion of many.
On the other hand, we have those which are natural and emergent. These are best classified as hierarchies of competence. They are ergodic and dynamic by nature because participants have skin in the game.
Then, of course, we have everything in between. Reality is such that things are messy, and the extremes are rare.
If modernity has shown us anything, it’s that institutions that may have initially arisen due to competence and a desire for order, but cemented themselves by fiat and thus have become monopolies, will not only begin to decay, but as described by the cobra effect, they will pose a greater danger to existence than the original chaos they set out to manage.
The most prone to such degeneration (enhanced and accelerated by the moral hazard of having no skin in the game) are state monopolies on money, violence, morality and ethics (i.e., law). Why?
Because they are the levers of society. They’re the glue which binds us. And because of this, they seem to incentivize two key reactions:
The need to “control” or at the very least “manage” the spontaneous emergence of order for quality control purposes. The intent here may be (initially at least) positive, but like any complex system, misguided because centrally managing a process that occurs at the edge is hard enough for a community, let alone a city. It is not functional at scale, and in our bid to do so, we do more damage.
Related to the Nietzschean will to power; those who want it at the expense of everything else and those who may find they’re unable to adequately climb a hierarchy of competence become consumed by envy and want to acquire power, self-worth, validation and meaning through the acquisition of position by fiat. This is a big reason why politics and the public sector is so poisonous. The kinds of people it attracts are either naively optimistic (in the better scenario) or are, more often than not, envious wolves in sheep’s clothing looking to win popularity contests on their quest to amass power by fiat.
This edifice becomes more dangerous and fragile the larger it grows, and like the proverbial “beast” that must continually be fed, it continues to consume all in its path until it starves and collapses.
All hierarchies are dynamic, and even natural hierarchies tend to adjust, evolve, deconstruct and re-emerge, but fiat hierarchies, in particular, are prone to catastrophic collapse because, through monopolization and the incessant need to control and manage, they deviate further from natural order and become increasingly fragile.
I wrote about fiat versus natural authority at greater length here:
Inequality is one of the most “pushed” subjects today and one which is deeply misunderstood.
Many who know my work will know my position on inequality. I believe there is nothing more natural than inequality, and in fact, it is the basis of all diversity, nuance and life itself.
Nature is perfect in its imperfection and the result is a naturally unequal distribution of everything from skills, to values, to likes, dislikes, shapes, sizes, interests, resources, effort and everything else one can perceive.
The only thing that should be equal in the world is equality in probability. This means the game we’re all playing remains dynamic, because we all have skin in the game.
This is by and large how hierarchies naturally emerge, grow, correct and persist, unless of course there is a mechanism via which those at the top can remove their skin from the game, and thus remove the natural equality in probability inherent to stable, emergent systems (after which they decay and collapse).
People are not really angry about inequality, but unfairness. When the opportunity to move up exists and the risk to fall remains, the game is fair and the results are dynamic. If not, the game is rigged.
The Pareto principle is a perfectly natural power law distribution most commonly known as the 80/20 rule and best documented by Italian economist Vilfredo Pareto.
The Pareto principle states that for many outcomes roughly 80% of consequences come from 20% of the causes.
You know this not only in your own life (i.e., a smaller number of the things you do produce most of the results), but can see it all around the world and can even deduce it using some simple logic.
You know full well that a few of the songs by a band are their best. That a few players in any sport are disproportionately more impactful than the rest. That a few actors produce most of the hits. That a few hard and smart employees at work produce most of the output.
At a macro level, this manifests itself as uneven Pareto-type wealth distribution.
Think of the following example:
Two people start out working. One does the average nine to five, while the other decides to work two jobs, and save every penny of the second.
As they progress, the saver builds up a small capital base which he decides to use as his investment capital. The other person just continues working the nine to five and hangs out with friends afterwards.
Fast forward a few years, and the saver managed to grow his total wealth through some intelligent investments. He now has a greater capital base from which to invest and further compound that wealth, i.e., earning 5% a few years ago on a $1,000 investment may have yielded $50, but now that same 5% yields $500 per month because he’s got $10,000 invested (for example).
Their proportionate wealth will start to look very much like an 80/20 distribution.
Now here’s the beautiful part.
The saver, turned investor, gets addicted to his strategy and gets super greedy in the process, so he decides to take some silly risks to yield 50% on investment. He puts up a large chunk of his capital for it and then loses it because he was wrong about his investment.
He’s now back to square one and needs to practically start all over again.
This is the dynamic nature of life and how excessive risk can (and does) lead to natural rebalancing in any system.
Now… let’s look at the situation in an alternate universe. Saver never gets greedy but gets extremely risk averse. Instead of investing any more of his capital, he just decides to put it all where it’s safe and he no longer cares about growth.
In this scenario, the original spender who has seen his friend get ahead decides that he wants to catch up. Well, he begins to work harder, save and put those savings toward investments or activities that can yield a higher return. He’s got less to lose, he’s younger and, as such, is willing to take more risk.
Over time, he begins to catch up because the original saver is content where he is.
Once again, the system rebalances. All distribution is dynamic and can either compound or erode. It does not standstill. There is no such thing as a static system. That’s exactly why equality can never exist. It’s a static, imaginary, utopian (dystopian) dead state.
Inequality, Price’s law and the Pareto distribution are all perfectly normal.
Unfairness is the real problem. When the game is rigged, people get pissed off.
Unfortunately, via the monopolization of violence, ethics, morality and most importantly, the production of the most important human technology (money), the state has managed to rig the game.
On a short enough timescale (which is long by individual standards), they are no longer subject to the downside. Neither are any of the organizations, institutions and representatives that can get close to any of the key monopolies of the state.
The result is unnatural distributions, and instead of the system re-balancing via natural correction, we get these 99/1 or even 99.9/01 type distributions of wealth.
Because: “heads they win, tails you lose.”
It’s like playing a game of monopoly with one person keeping their hand in the box of money, so they can’t lose. Or better yet, playing a game of poker where the initial leader of the game knows the dealer, makes a deal, and as such, any time he loses on the river, he gets bailed out from the chips that are in every other player’s stack.
If that’s how the game is played, the rest of the players will soon leave. And that’s exactly what’s happening now, with Bitcoin.
Poker is actually a great analogy because it incorporates not only skill but luck. Prudent early play can get you ahead. You have to take risks sometimes, you have to bluff, sometimes you’ll have to fold. If you play well, you can amass enough chips to begin to play harder and more rough, but, the chance to lose it all always exists, and thus, keeps the game fair.
Modernity is a rigged poker game and Bitcoin fixes it by tearing money out of the hands of any one player and thus reintroducing skin in the game for all.
Fitness And Selection
Changing tack a little here is the evolutionary idea of fitness and selection.
As Jordan writes:
“The idea of selects contains implicitly nested within it the idea of fitness.
It is fitness that is selected.
The fit in fitness is the matching of organismal attributes to environmental demand.”
Fitness is that which is ever more accurately approximated across time, and it’s important to note that it’s neither a linear process nor one that is always trending toward more fitness.
It’s like a dance. There is a direction across time, but much like two dancers, it moves, sways and swings as it hones and adapts toward ever more fitness.
Bitcoin’s proof-of-work network is much the same. The difficulty adjustment, incentive mechanism and the work required to participate make Bitcoin an organism that one can argue are alive.
Brilliant minds like Gigi’s have done this topic far more justice than I can here, so I suggest a review of the following:
Furthermore, there is the natural selection process we as individuals make in our pursuit of economic survival. I’ve called it “Economic Darwinism” and it’s related to Gresham’s law (i.e., good money pushes out bad money).
We select the money that best performs the three key functions of money:
Store of value (as close to fixed in supply as possible to map to time and energy)
Medium of exchange (must be uncensorable. Bearer asset is best)
Unit of account (measure all other goods with it and have a way to measure against all else)
Making the wrong selection relegates us to poverty and diminishes our capacity to cooperate, collaborate and interact with the rest of society.
As such, we are incentivized to converge and select the fittest mechanism via which the product of our labor can be stored, exchanged and measured.
This fittest medium is unequivocally Bitcoin, and the self-reinforcing, convergent nature of the “network effect of money” will only continue to accelerate this realization as it spreads globally.
This then brings me to the idea of:
Status is the metaphysical relationship between us and the rest of the world.
It’s our relationship to not only the dynamic distribution of all the resources, wealth, skills, shapes, sizes, etc., in the world, but our position in the multitude of hierarchies across every dimension and category one comes into contact with.
This is where the rubber meets the road and why our systems are hormonally, neurologically and biologically wired the way they are.
“The part of our brain that regulates where we sit in the dominance hierarchy is as old as life.”
Serotonin is one of the master control hormones and seems to have emerged to help us understand, manage and influence our relative position in hierarchies and across the spectrum of different distributions.
It helps us get a sense of what is top and what is bottom.
Its effect on the system seems also to be reflexive, or self-reinforcing:
The lower you are on the hierarchy, the lower you’re prone to fall.
The higher you are, the further up you’re likely to come.
This is because decision making changes depending on where you are (or are perceived by yourself or others to be). It can have significant ramifications and is why it’s so important that the game is not rigged in such a way that creates barriers to mobility for an individual’s status.
Heightens your time preference
You then spend your resources for the crises of the present
You are in constant preparedness for the next emergency
These are de-evolutionary in nature.
Lowers your time preference
You plan for the long term
You can further delay gratification
You can invest resources for the future, while having some for the next emergency
You can work to secure your position
These are evolutionary in nature.
Each have a symbiotic relationship with your production of serotonin and are thus self reinforcing.
Individuals have the capacity to voluntarily and wilfully “stand up straight with their shoulders back” in order to influence these processes, and therefore what matters in a system, or a society, is enabling mobility. In other words the freedom for the individual to take such actions.
To stand up straight with your shoulders back is to accept the terrible responsibility of life, with eyes wide open. It means deciding to voluntarily transform the chaos of potential into the realities of habitable order. It means adopting the burden of self-conscious vulnerability, and accepting the end of the unconscious paradise of childhood, where finitude and mortality are only dimly comprehended. It means willingly undertaking the sacrifices necessary to generate a productive and meaningful reality.
Bitcoin Fixes This
With Bitcoin, humans can truly stand up straight with their shoulders back because:
Private property is not only recognized, but integral to the system
It is unable to be co-opted by any individual, organization or institution and is thus able to naturally correct should hierarchies become deformed by fiat or by decree
In using math as its form of protection/guarantee/security, it lowers the cost of defense, increases the cost of attack and therefore tilts the inherent incentives of human interaction toward more voluntary cooperation instead of coercive dominion
The above enable organic, ergodic and most importantly naturally dynamic hierarchies of competence to form, which are more robust, antifragile and more immune to corruption by fiat
It allows for natural Pareto distributions to re-emerge, and to normalize because of innovation and the competitive nature of markets in which monopolies cannot subsist (because a focal monopoly on money is non-existent)
Unnatural distributions begin to break down because skin in the game is reintroduced and economic bailouts wherein one group pays for the mistakes of another cease to exist
Fitness and selection (i.e., innovation) is once again honed in and more generally focused toward real problems and real needs because the deployment of capital once again has a realistic opportunity cost
Status becomes mobile once again and tied to competence, skill, talent, effort, passion and input, instead of fiat. The relatively static nature of status that we see today begins to dissolve because downside risk is reintroduced and upside potential is once again accessible by those who want it — no matter who or where they are
Jordan’s opening chapter is a treasure trove of information that one could write an entire book about. In fact, I could probably write a book just on its relationship to Bitcoin. Hint, hint.
For now, I’d like to wrap this up by thanking Jordan for his insightful work and noting my hope that he has a chance to view Bitcoin through its lens.
The framing of order and chaos, yin and yang, duality or whatever name that simple yet profound principle has donned throughout the ages is something that resonates with me. I view Bitcoin as something which truly embodies it, not only in its operation (it is right between entropy and order) but in its impact on the world.
The more we allow natural order to emerge from chaos without trying to grasp and stifle it out of an insecure need to make it static, the more we’ll see the dynamic selection process that is nature do its thing, forming Lindy-compatible structures and hierarchies.
Can we stop these hierarchies from succumbing to concentration of power or fiat decay?
Not entirely, because we must allow things to grow and die.
But, we can create an environment where the corrective nature of the system allows it to rebalance and adapt before it crumbles.
Catastrophic collapse is far less possible in a decentralized, localized system where monopolies are inhibited via competition, and this matters whether the system is social, cultural, biological, legal or economic.
It’s not who’s driving the train, but how the tracks are laid that really matters.
Bitcoin is the new train track.
With it, we can continue to manifest the promise of not just the West but the wisdom of nature and existence.
See you in the next chapter…
This is part one of a 12-part series in which we will explore Bitcoin through the lens of Peterson’s “12 Rules For Life” work.
Each section will be released with Bitcoin Magazine as a free long form article.
This is a guest post by Aleks Svetski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
The limitations of the physical world and the limitless experience of information is combined in Bitcoin.
Limitations Of The Physical World
If you were to ask a stranger, “What are the properties of a physical object?” They would likely say it can be touched, it has volume and mass, and is made up of atoms. If you were to ask about its limitations, they might say it must travel a physical path to move from point A to point B (no teleportation); it cannot be given to a person without being relinquished by the giver (discrete ownership); or it degrades over time (increasing entropy).
If you asked the same person how to describe “information,” they might say essentially the opposite; it’s intangible, it can be given to someone while the giver retains it, and it can survive in perpetuity without changing. In summary, the physical is finite and limited, while the metaphysical is infinite. Many of us (myself included until recently) believe that no single entity can be both finite and infinite. Enter Bitcoin.
Several of the following topics are touched upon by Alex Waltz in “Bitcoin: Or How We Became Gods.” He concluded, “Bitcoin is the link between the two worlds: chaos and order, real and digital, uncertain and certain, unconfirmed and confirmed.” I hope to build upon this idea and explore its implications.
I will generally refer to the network and the token as bitcoin. Bitcoin (the token) has advantages of both the physical and the metaphysical: it is intangible, teleportable, infinitely divisible and is created from nothing while it’s paradoxically impossible to destroy and finite in final quantity. Though you and I both know it’s not truly physical, it seems so by application (e.g. futures markets are ironically calling derivatives settled in Bitcoin “physically settled”). The significance of this relationship cannot be understated. We now have an example of how an infinite resource can be bound in a semi-physical form to leverage the benefits of both worlds. This author has lost his grasp of the metaphorical versus literal implications of this technological breakthrough.
At first glance, this may seem to be a clever trick of computer science which, with its advances, continually improves and outdoes itself in its order-of-magnitude improvements on our world. One could be forgiven to think that this imitation of scarcity could just as easily be undone with more information or changes to its code. Yet there are multiple metaphysical layers of defense that prevent this from occurring: robust network effects, a firewall of mining hashpower, a hornet’s nest of social consensus, and so on (these are well documented elsewhere). If the laws of thermodynamics set the bounds of the physical world, these characteristics could be thought of as the incentive-bounds of Bitcoin dynamics.
I no longer believe that Bitcoin is simply a network, digital gold or the future of our financial system. I believe Bitcoin is proof that we have taken the limits of the physical world for granted, which opens the doors to question, reverse or obliterate these limitations as long as we can apply a limitless concept (such as information) in an opposing fashion on a related plane.
The Second Law of Thermodynamics
Entropy is the measure of stability or disorder of a system. We accept that in any contained system, entropy increases over time and cannot decrease. In some cases, such as chemical reactions, this can be directly measured. Entropy is an important driving force of the physical world; everything trends toward chaos (eventually the heat death of the universe). But like the saying goes, “Bitcoin’s value doesn’t go up a straight line.” Similarly, the universe has systems of order along the path towards disorder.
Life itself is an affront to the compulsion of increasing entropy. Living beings strive to maintain a level of order throughout their existence. This inevitably ends in failure for the individual lifeform, yet this failure has yet to be seen for life as a whole. Life could be described as the capacity for growth, reproduction, functional activity and continual change preceding death. It’s also defined as a system capable of performing functions such as eating, metabolizing, excreting, breathing, moving, growing, reproducing and responding to external stimuli. In the context of this monologue, I define life as a system working as one to leverage the potential energy of its environment to stabilize its own entropy. Individual lifeforms die, but life goes on. If entropy is a river, life is a fish swimming upstream against the nearly insurmountable force of the water.
Unstoppable Force, Immovable Object
We learn in physics class that a larger force trumps a smaller one; it will either move it, incorporate it or destroy it. Yet there are types of measurements, or planes of existence, that don’t allow for direct comparisons, at least not intuitively. For example, what would win out, the sheer volume of my shrill singing voice or the strength of a wine glass? Intuitively, the primary characteristics of each have nothing to do with each other, this is demonstrable with the units by which they are measured. Audible volume is measured in decibels and my cheap wine glasses are made of strong bonds between silicon dioxide molecules.
High school math taught me that measurements of different units weren’t directly comparable and thus had no effect on each other. However, there is a term that can be applied to both: resonance. With research, practice and lots of vocal lessons, I can learn the resonance with which the chemical bonds in my wine glass vibrate and sing at that exact pitch. From there, it’s a simple case of “which force is stronger?”
It wasn’t what I took for granted as the primary characteristics of my voice (the decibels of volume) and the glass (the chemical composition) that mattered, these concepts are unrelated to each other. What mattered was being able to apply my voice in a way that could forcefully act within the same domain as the glass.
Most of us understand the world around us by perceiving, measuring and subconsciously categorizing things into a basis of comparison. For example, yesterday, I took a cold refreshing beer out of the fridge and enjoyed it. I believe that today, the remaining beer will be equally cold and refreshing. I might take for granted the fact that the next beer could serve the same purpose, or it could be a gift for a new neighbor that might foster a strong community or a long and memorable friendship. Same tool, new application. These two concepts, refreshment and friendship, are two concepts that can’t be compared apples to apples.
I didn’t reinvent the idea of vocal resonance, I had to discover it. I didn’t change the beer, I merely learned how to use it differently. What other concepts do we take for granted that may be holding us back as individuals or as living beings?
When I was a kid and wanted my dad’s attention, sometimes I’d stand between him and the TV. When he told me to move, I would step backward, technically obeying his request (see image below) while still blocking his view. I would keep this position only briefly, lest I cease to be charming and start to annoy. My path was a movement we could both understand, but it could be best described as orthogonal to his line of sight.
I like the term “orthogonal” to describe two seemingly unrelated concepts. On a classic two-dimensional graph, the x-axis and y-axis are orthogonal, as they can be described in independent ways but, rather importantly, they are not completely independent. In fact, they coexist at a very important point, [0,0]. The importance of zero is brilliantly described by Robert Breedlove in “The Number Zero and Bitcoin.”
Most of us assume that this point is meaningless, but Breedlove adds onto the work of Brahmagupta to say that not only is zero a sort of final frontier of numbers, but it is a gateway to negative and imaginary numbers. He says that zero “punched a hole and created a vacuum in the framework of mathematics” and that Bitcoin “is the catalyst of a worldwide paradigmatic phase change.” I’ll combine these concepts and say that Bitcoin is the gateway between the infinity of information and the finiteness of matter.
How difficult would it be to block the thrust of an enemy’s sword with the point of your own? Not as hard as finding a single point between dimensions where seemingly unrelated systems can interact and influence each other. Bitcoin sticks ‘em with the pointy end.
Stated another way, Bitcoin is the [0,0] coordinate between (yet within) the orthogonal dimensions of the physical and the metaphysical. The fact that this relationship was forged is an quantally unique occurrence. It can be hard to analogize what I’m proposing here, so let’s start with foundational concepts. An electron is effectively a zero-dimensional object as it has nearly immeasurable mass and volume. Its path through a wire is analogous to a zero-dimensional object bound by and traveling through a one-dimensional plane. If it were to come upon a slow, stopped or reverse-moving electron in the same wire, they would have no choice but to pass through each other or collide.
In our world, that is to say an electrical force applied on one end of the wire will travel to the other end, affecting the wire wholly; there is no section of wire not affected by the electron. However, if you placed the same electron at the edge of a thin metal plate (two-dimensional wire), the number of paths to a different edge are numerous. The dimensional degree of freedom is one level higher than in the one-dimensional wire. The chances of two electrons placed on different edges ever meeting are improbable. The possible pathways are orthogonal and increase exponentially with each higher dimension of freedom. In this example, a zero-dimensional object on a two-dimensional plane allows for two dimensions of freedom.
Now consider two electrons placed at different locations on a metal sphere at different times throughout history since the big bang. This sphere is a four-dimensional version of our wire, allowing for four dimensions of freedom. These two electrons have an infinitesimally low chance of ever meeting. To summarize, the dimensional difference between two systems has an exponential effect on the inability for them to have influence upon each other.
Another interesting example of domain boundaries is found in chemical phase change. We all know of H2O as solid ice, liquid water, and gaseous vapor. These are all domains of H2O’s existence that are bounded on the pressure vs temperature graph by physical changes. We regularly observe the transformation of water via boiling, melting, condensation, and freezing. Most of us only observe these changes as manipulated by temperature changes. In a sufficiently cold environment (to the left of the triple point in the image below), decreasing the pressure causes solid ice to phase change into gas, omitting the liquid state completely. This is called sublimation and is the process by which freeze-dried food is produced, an important tool in increasing its shelf life.
I can’t describe how difficult it is to discover the inflection between the domain of imagination and the domain of the physical world, as I can’t perceive all of the dimensions of freedom between them.
“It’s like launching a pencil over the empire state building, having it reverse, come back down and land on a shoebox on the ground in a windstorm.” — Tim Urban on SpaceX landing a rocket upright for the first time.
I’d happily bet that the electrons in the four-dimensional example above will never meet. Yet two entities having common existence on multiple dimensions have a much higher probability of meeting. Consider two lines on a graph, these are two one-dimensional objects bound by the same two-dimensional plane.
The graph below depicts how two lines representing supply and demand can intersect, setting an optimal price (all of trade is dependent upon supply and demand being bound by the same domains so they can meet, satisfying the double coincidence of wants).
Let’s come back to Earth. If supply is the primary driver of value (demonstrated by the supply vs. demand graph), one might say that anything physical is totally scarce. They’d be wrong, of course, but only for taking supply and demand as too literal of a concept. The hidden complexity to supply is the amount of work to bring goods and services to market. Gold coins are much more useful than gold ore. Frédéric Bastiat describes the relationship between work, property and value in “The Law.” In short, the physical is finite but not necessarily scarce. This is another perspective on the laws of thermodynamics, in that unlimited resources are pointless if they cannot be properly utilized (just ask Venezuela’s oil producers). Scarcity and value are always measurable in energy and work, including Bitcoin’s proof of work. It is ironic then, that Bitcoin is the only purely scarce thing in the universe, and it’s not even purely physical.
Bitcoin is a practical application that straddles the intersection of the real and the imaginary. In Bitcoin’s eternal struggle, Gigi demonstrates the incentive-bounds of Bitcoin and summarizes it by saying, “Bitcoin grows on the edge of order and chaos.” He is describing how Bitcoin takes the “chaos” of randomness and leverages it into the “order” of blocks. Bitcoin is the [0,0] that allows us to convert chaos into order.
Information can be shared without diminishing. Information is fire, Satoshi is Zippo, and Bitcoin is the lighter. Being able to harness something intangible and bound it in a physical form breaks us free of our physical limits. All it requires is admitting what many of us are in denial about: the physical state isn’t our final form. The first epoch of man has been spent striving for understanding and earning rewards of the spiritual realm. A short span of man’s existence has been dedicated to developing one implementation of life after death: the computer.
We’ve been getting closer to building the digital ship of Theseus by reducing ourselves to bits. This may lead to a completely digital existence, or the ability to regenerate ourselves in meatspace elsewhere in the universe. Maybe we can have our cake and eat it too. There will be some uncomfortable truths to face along the way. Such as
Is a digital self truly the same as the original or merely a projection of what we can currently perceive?
Will our vanity drive us to chase perfection by altering either our DNA or our source code?
Is this the correct path of life?
A single living being cannot overcome the force of entropy. Everything that has ever lived, has died and decayed. Yet life itself continues to grow and improve. I mentioned above that I believe life is a “system working as one to leverage the potential energy of its environment to stabilize its own entropy.” Generally speaking, individual life forms are in competition with each other for resources. But on the grand scale, life itself is making progress in the fight against chaos. There are many examples of living beings working in tandem. A pride of lions works together to hunt, to grow and to survive. Man, as a being of higher intelligence, is able to work together in much more complex ways. Our intelligence continues to survive and grow with each generation.
The difference between an inanimate object and living being is intelligence. If knowledge is a force of infinite magnitude, then it will win out versus anything bound by the limits of the physical world, but it requires the right application. A virus has intelligence that has singular application: reproduction. Lions have a higher but still limited level of intelligence whose application is limited to the survival of a pride until a new alpha takes over. Humans have taken the application of knowledge a step further in that we can communicate our knowledge directly, allowing our collective intelligence to grow with each generation. The more effectively we apply our intelligence, the closer we can get to finding the gateway that unlocks the power of infinity, the next [0,0].
Applying infinite metaphysical concepts to the physical world allows us to achieve the improbable. Not because our knowledge is complete, but because our imagination is boundless. Bitcoin is an order-of-magnitude improvement for mankind. How many improvements would it take to counter or slow the forces of chaos? Possibly many but maybe not infinite. What do we currently accept as truth which may be fallible if we grow to a higher level of intelligence: The eventual end of our species? The heat death of the universe? The expected death of an individual life form? I hope I live long enough to see another shattered assumption.
[0,0] is the ultimate goal of mining life’s intelligence, not only as the common path of the physical and metaphysical, but also the goal of life as it applies to its change in entropy. If entropy is a stream and life is a fish swimming against the current, life’s ultimate goal is to build a watermill and leverage the force of the stream or dam it up entirely. Bitcoin has shown us not to take for granted the impossible of today which might be an afterthought of tomorrow.
This is a guest post by Corey Edwards. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.