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This is Bitcoin Study Sessions.
Hey, welcome back.
Today we're continuing on in the Satoshi Papers,
Reflections on Political Economy After Bitcoin.
Lucas and I have already discussed the introduction and the first chapter.
Now we're moving on to the second chapter,
and these are all standalone essays.
this essay is
Toward an Anthropological Theory
of Money by Natalie Smolenski
she is also the editor
of this anthology and
she was a co-writer of the introduction
this
Lucas and I were talking
this anthology
I mean it's aspiration is to
be academic in
nature in the sense of
to aspire to academic standards
to talk to academics
to really have that level of scholarship.
And the essay so far, the introduction, the first essay, and this essay,
it definitely attains to that, which is excellent.
The content here is extremely interesting, very thought-provoking,
and difficult, but difficult in the best sense.
There's so many ideas in this essay.
I'm going to do what we usually do.
I'm going to try to get kind of the broad ideas out on the table
so Lucas and I can kind of hash out those ideas.
Whenever I do this, I have to omit some interesting stuff,
so don't think that the kind of circle is entirely closed in this essay
just because of what you hear.
I'm going to get out the stuff that I think is the most interesting,
but there's a lot of stuff in here.
This essay is also very, like, imbricated, overlapping, interlocking,
lots of concepts, lots of definitions,
and we're going to have to, of course, just kind of give a gloss on top of that,
skip through it like a stone over what could be some very deep discussions in a lot of ways.
I'll start with this quote that's like three quarters the way into the essay, because this
is one of the big takeaway points that I want to really talk to Lucas about, and I want to get out
here. The quote is, money in all its forms is the ever-evolving social answer to the question
of what people want in settlement of debts.
So we're going to come back to,
we're going to circle back around
to why this quote is so impactful.
There's a lot dwelling in the definition of settlement
and what people want in settlement.
And that's going to be, I think, the kernel of the essay.
But let's back up.
How does the essay begin?
So this Natalie Smolenski is an anthropologist by training.
She's also an entrepreneur,
but by formation she has an academic anthropology background,
specifically the field of cultural anthropology,
which within anthropology is where I have a definition here,
but I seem to have deleted it.
In any case, for a cultural anthropologist,
they're kind of studying what in a well-rounded sense,
like the institutions, the customs, and other things of people.
And so culture in a broad sense, the anthropology that's going to study that type of thing.
And this, towards an anthropological theory of money,
is obviously regarding what money is in that sense for a cultural anthropologist.
Anthropologists have had, Smolensky notes, a kind of hostility towards economics as a study.
One anthropologist, she notes, even refers to economics as the anti-anthropology.
Why?
So economics has tended to be neutral regarding the ends or goals that people choose
and to instead focus on the means that people choose to achieve those ends.
So that is the basic idea of economics is that humans will tend to select the least costly means of achieving whatever end or goal they set for themselves.
It could be a virtuous end, it could be what we would consider a bad end.
So a person seeking to rescue penguins, if that was their end or goal, they would do it in the least costly way possible so as to rescue the most penguins and have the most resources left over for their other ends.
or a person seeking to buy heroin would do it in the least costly way
so as to be able to maximize the amount of heroin or other things in their life that they want to get.
So whatever your end, however irrational or vicious,
people economize rationally in selecting the least costly means for it.
That's what economics proposes.
Anthropologists have tended to discount the economic motivation
in favor of motivations that kind of blend in values, you might say, or ends into the motivation.
They have tended anthropologists to want to debunk economic ideas that they see as justifying capitalism and exploitation,
assumptions such that individuals are self-interested or individuals act to maximize utility, things like this.
this is also part of a broader methodological dispute between individualism and collectivism
so economists tend to view human behavior as determined as determined by individual agency
methodological individualism with individuals as the fundamental social actor anthropologists on
the other hand have tended to view human behavior as determined by socialization social structures
class, race, gender, kinship, age, things like language and myth. These things determine how
people act, not kind of their own individual agency. Smolensky points out that this debate
kind of oversimplifies that humans, on one hand, of course, are not atomized individuals, but on
the other hand, are not sheer conformist to cultural norms and institutions. So Smolensky,
as an anthropologist who is not afraid of economics has a lot to bring to this field here.
And so this essay is very interesting. She does believe that individuals are cost minimizing,
not utility maximizing. That draws from the economist Ronald Coase. People do have an
economic motivation. They respond to scarcity by choosing the least costly means to suit whatever
end they might have. So whether rescuing penguins or buying drugs or whatever, they seek to do it,
humans do, in a way that minimizes costs. So far, then, that's kind of the general state between
economics and anthropology. That's how the essay kind of kicks off, as well as Smolenski's kind of
commentary towards maybe a reconciliation. In this essay, again, given the title, Smolenski is going
to state her own anthropological theory of money or kind of theorizing towards a theory,
one might say.
Before stating her own theory of money from an anthropological point of view, Smolensky
does kind of a literature review, but specifically an in-depth review of one anthropologist,
the late anarchist anthropologist David Graeber, primarily from his book Debt the First 5,000
Years.
So Graeber does fit this mold of an anthropologist who was very hostile to economics.
And Smolenski, he's a popularizer too, David Graeber was.
He's a very good writer.
I began reading Death the first 5,000 years.
It's a thick book.
I enjoyed it.
I had to set it aside because I got busy.
Very rich in discussing the anthropological record.
And Smolenski does an excellent job here.
She goes into depth getting his views out on the table so people can see that she's not misrepresenting what an anthropologist, what other anthropologists have said about money.
In doing this, the kicking off point for this discussion of David Graeber is a canonical Twitter exchange between the computer scientist Nick Szabo, famous in the Bitcoin realm, obviously.
maybe not obviously, but famous for Bitcoiners.
David Graeber and others participate too.
So it's just very interesting to read this.
I'm not going to do the below-by-below recitation of this Twitter thread.
Swalinski does, and it's beautiful.
It's its own literary form, I think,
to discuss how a Twitter discussion evolves.
And she does a very good job.
You go through all the highlights there.
instead I'll just give
kind of the highlights
from a high level of
Smolenski's summary of Graeber's view
and then we'll move on to what Smolenski says
is her anthropological theory of money
so overall Graeber's position
endorses state
and credit theories of money
whereas
those theories end up
justifying the state monopoly
over money Graeber's going to
end up calling for the state's abolition
So let's pull that apart.
So this is, you could say, consists of three claims.
First, an ontological claim that money is credit or debt and not a commodity.
So the state and credit theorists of money say money is just credit or a debt.
It's an IOU.
They go so far as to say things like, even if you use a gold coin, the gold represents
It's an IOU credit and not the underlying value of the gold.
The person accepts the gold coin not because they want to adorn themselves
or use it to make advanced electronics or because they think other people want to do that,
but rather because they just assume that others will accept the gold.
Kind of a social or political convention in that sense.
So that's the first claim, the claim that money is credit or debt.
But the second part of Graeber's theory is that the historical claim that abstract systems of accounting preceded commodity money, which is just another way of stating that the unit of account function of money, the use of money to denominate the prices of things, takes precedence in Graeber's view historically over the store of value function.
And that's kind of, if you read the essay, what's at the kernel of the Zabo and Graeber Twitter exchange.
Third is the claim that true money is always a creation of the state, going back to the state and credit theorists that Graeber draws from.
The idea here is that the state always defines which means of payments it's going to accept to discharge debts against itself.
And the state is the biggest creditor, so it defines what money is.
money again then is a political
agreement. Up to this
point with these three claims
especially the first and the third one
that money is credit and money is a creation of the state
Graeber
agrees with state and credit
theorists on money, people like
Mitchell Ennis
Knapp and Keynes
but this leads the
anarchist in Graeber to
further descriptive and prescriptive
conclusions. Descriptively quote
and I'm going to quote Smolenski describing Graeber
He says, quote,
of mutuality and respect. Smolensky does a very good critique of the different parts of this view.
I won't go into that without going too deep. I think just generally she could say that I think
most decisively for me she just notes how utopic this is to think that if you abolish money in the
state you're going to get the arising of human economies without economic motivation. So now we
move on then to Smolensky's
anthropological theory of money
or we might say her theorizing
towards such a theory.
The key point
or the definition we might, well,
money is a social institution
and technology to enable
us to reliably settle debts
with the least amount of sacrifice.
That's the kernel. Money is an institution.
It solves a coordination
problem by making
cooperation cheap and
defection expensive.
If you want to go really deep into that idea, the last essay that Lucas and I discussed, What Satoshi Did by Bailey and Warmke, really goes into the game-theoretic background of money as an institution solving a coordination problem, specifically how Bitcoin can bootstrap from zero into a widely used currency.
but here's the important part
and this goes back to the quote
that I kicked off this
episode with
money is an institution
that allows us to settle
debts, that's a key
the quote I used at the beginning
money in all its forms is the ever evolving
social answer to the question of what people want
in settlement of debts
the purpose of money is settling a debt
which is not the same
thing as being paid
So this is what I find to be a very interesting point that I think Smolenski is kind of unique in focusing on.
Payment and settlement are different things.
A debt can be paid, someone can give money or give something to try to pay for a debt,
but the debt might not be settled in the mind of the creditor.
The creditor might not be satisfied that settlement of the debt was reached through the manner of payment that the debtor gave.
This is because settlement of a debt does require the satisfaction of the creditor.
The debt is cleared ultimately from a psychological ledger.
Satisfaction of debt, releasing that debt, settling it, is a moral sentiment.
It is psychological, not legal.
So this is a psychological process when debts are paid and settled,
when settlement actually occurs through the satisfaction of the creditor.
The debt might not be settled even if payment is made if the creditor, again, is not psychologically satisfied with the payment.
When talking about this, another very interesting thing, Smolenski is clear that she means also non-monetary debts.
A person who is injured by another person becomes a creditor in some way demanding satisfaction or compensation for that injury.
A person who's hit by a car might get a jury verdict to compensate them, and that then might resolve a debt between the creditor, the person who was injured, and the debtor, the person who was driving the car, if the creditor does in fact accept that the jury verdict was sufficient.
Another example one might give, it's a famous example, I forget the guy's name, but essentially it was a father, his child was groomed and molested by a child molester.
That child molester was arrested, he was being frog-marched through an airport in handcuffs by the police, and the father came and shot him dead in the airport.
The father did not think that there was any way that the psychological ledger would be rebalanced, that himself as a creditor being damaged through the molestation of his son, the only way to get satisfaction to the extent you ever can for something like that was to take the life of the person who did it.
anthropologically then socially
this is a key example I think
a lot depends on creditors being satisfied
because when people are not satisfied
that a debt was settled
when the psychological ledger remains
unbalanced this leads to cycles
of violence to blood feuds
vendettas revolutions and even war
people
you know if there's not
if they're not satisfied with payment
can settle a debt an eye for an eye
war in that sense
is a settlement protocol between groups.
So if a creditor does not believe payment is sufficient to satisfy,
they can resort to violence, which can cause violence in return.
To quote Smolenski, destructive cycle.
It is a destructive cycle of violent ledger entries.
I like that because we think of ledger usually in the dry sense
as like an accounting book, you know, the different owing this, owing that,
and then, you know, moving the entries around, modifying entries in a ledger.
using numerical notations, but violent ledger entries.
This really reinforces that the ledger is internally a psychological concept of reciprocity that humans innately have And I hope Lucas and I are going to kind of go into depth talking about that but to get the rest of the summary out a lot depends then on psychological satisfaction to an extent that society intervenes to prevent these cycles of violence
That's why we have the rule of law to attempt to constrain violence by defining when a creditor should be satisfied, when they should accept payment and be satisfied with it and allow settlement of the debt and the clearing of the psychological ledger.
but society's response then in itself needs to be psychologically accepted to satisfy that leads to
a bigger point political legitimacy is a result of creditors in the aggregate being satisfied being
overall satisfied that debts are being cleared so now we get to money money as a technology to
reliably settle debts to satisfy people money is a technology to reliably settle debts to satisfy
people. It arises then as a chimera or a contradiction. Money is the cheapest valuable
that will settle a debt. This unites two ideas. So the cheapest valuable, they seem contradictory,
but cheapest, remember we're talking humans are economizing individuals. They want the cheapest
means to resolve something. So the cheapest valuable, to be the cheapest is for something
to be sufficiently available to the creditor to have enough liquidity so they can actually pay it,
but it also has to be the cheapest valuable so that the creditor will actually accept that
they're receiving something of value. Somewhat contradictory sounding, the cheapest valuable
must both have scarcity, value to the creditor, and availability be cheap enough for the debtor
to acquire and transfer. Money then is a particular technology to achieve the characteristics of being
this cheapest valuable that reliably settles debts.
As a technology, it's a durable solution to a problem,
this problem of reliably settling debts in the least costly way.
It has characteristics that enable it to function technologically in this fashion.
Value and scarcity, availability, durability, portability, fungibility, verifiability.
Things like this that make something suitable for money.
The tech enables the functions of money, the use of money to reliably settle debt.
Um, in discussing this, Smolenski talks about the three functions of money, which if you
read any of the literature on Bitcoin, you see these discussed a lot, store of value,
unit of account, and medium of exchange.
So money as a technology to reliably settle debts as a store of value, money needs to
be able to retain or grow value over time because for creditor to be satisfied, they
of course must believe that the thing that they are receiving now is something that they
will be able to exchange in the future for something they want. It has to be a store of
value in that sense at least. Unit of account, the ability to notate price is going to allow
greater precision in transacting. It's going to make it the cheapest valuable. It's going to make
it easier to use. As a medium of exchange, again, so medium of exchange defined in terms of
saleability, the good that the most actors on the market actually want. So basically widespread
Spread willingness to accept something leads to it being a medium of exchange and even allows something, if it's serving as money, to communicate value across social boundaries, which is useful for resolving debts because they often arise between groups of people and otherwise can lead to war if you can't resolve them through a technology that reliably settles debts.
Money is technology, and here's an important part that's going to bring us back to Graeber.
Money is tech, and tech does not require the state.
So, Selinsky notes that the archaeological record justifies that monies based on commodities,
things with use value, were adopted before there were governments issuing money,
and there were also, even in modern societies, there has been money issued without government, such as by free banks.
Yes, states can issue money, but they can't truly force people to consider it money.
Because again, for Smolenski, money is defined as something that reliably settles debts.
Whether a person is satisfied that a debt is settled is psychological.
The state can't force people to have the psychological sensation of satisfaction that a debt has actually been settled.
Indeed, when states issue bad money, creditors are often not satisfied. Then we see the decline of political legitimacy and rule of law if people are forced to be, quote-unquote, satisfied to accept payment of a bad currency that's not actually resolving debts between people.
again that's what I take to be at least for me the key idea from key idea from this essay
quote money in all its forms is the ever-evolving social answer to the question of what people want
in the settlement of debts so Lucas I want to kick this over to you with that key idea in mind
does that seem right that the purpose of money is the reliable settlement of debts in this
psychological sense as clearing like the psychological letter ledger as a moral idea
um and is there then that's the first part of the question second part
is there a way that this ties specifically to the characteristics of bitcoin
yeah um all right first off i gotta i gotta applaud that's one of my favorite intro summaries
ever we're talking penguins and smack and um just really really enjoying getting into how we're
digging into this. So the question, the question that you pose is, you know, what do I think of
her definition and how does it relate to Bitcoin? So I love the definition because it's that useful
type of useful type of thinking where it may not give a it may not give an answer in the
way that I can now hold this in my hand, I can point to it on the shelf, I can definitively say
that this thing is money and this thing is not money. But it gives the answer in the meaning that
a cup is that which you drink water out of. It's not necessarily four and a half inches tall and
three inches in diameter. It's that which you drink water out of. So you could drink water
out of a hat, you could drink water out of a shoe, you could drink water out of a bucket,
but in that moment, it's serving as a cup.
It defines it by its function.
Correct, yeah.
Yeah, exactly.
So I think that's a very useful way of looking at this.
As you were talking, I know I'm going to take just kind of a slight meander, but I want
to comment on some of the things that you said.
But first off, and I do agree that this is one of the more important things she talks about, which is the distinction between payment and settlement.
And when you're given examples of that, the first thing that I think of is a divorce settlement.
So it's really not a divorce settlement.
It's a divorce payment on the legal side.
And then quite often you see that the divorce is not settled by at least one of the members of those involved.
People get divorced and they carry that with them for decades, for the rest of their life sometimes.
In the legal sense, they have been remunerated, they have been satisfied, but not in the moral sense.
So I think it's really wise to look at this from the angle of separating the payment from the settlement, from separating the legal satisfaction from, say, the moral satisfaction.
Brilliantly done.
Smolenski does a bang-up job of actually coming at and talking about Graeber's theories in depth.
I noted when I read this that most of the time when somebody says, hey, I'm going to talk about my thing, but before I talk about my thing, I'm going to propose the other side.
I'm going to steal, man.
I'm going to propose the other side and talk about that.
They usually do that in a paragraph or a page.
Smolenski spends 40 pages on this.
Putting out Graber's series, I have a good understanding, I think, of where Graber's coming from, and I actually agree with a lot of the things he says.
In the end, though, I think about it more like, and I hate to say this, but I think about it more in like, I don't know that there's a whole lot of usefulness.
I'm sure there is, but I don't necessarily see the usefulness of the competing theories because in the end, both sides end up settling on the same type of money.
So they both get to the same thing, but they do it from different theories.
And to me, I think it's kind of like asking someone, why did you pick this house?
Why did you pick this spouse?
what is the one thing that led you to marry this person, that led you to live in this place?
And there just is never one thing.
It's not I fell in love with her eyes and the other person is saying, oh, it's the human.
Yeah, yeah, go ahead.
So, I mean, I think Graeber, so he draws from the state and credit theorists of money.
They are trying to say that fiat money is what money is, that the state defines money.
and that the state is the best social technology there is
because it has created credit,
which is like the definitional form of money
because the state defines money
and that's what they've defined as money,
kind of circularly or something like that.
Graeber then says,
I agree with what you say,
that yeah, the state defines money
and therefore we have to abolish the state
because money is shit.
And I mean, like the Bitcoiner agrees in that sense,
but it says, wait, wait, wait,
we don't actually have to abolish the state because it turns out,
and Spelinski's theory is this way,
money is technology.
Technology is agnostic from,
it's separate from the state.
It arises bottom up by group selection based on the characteristics of the
thing as solving a problem,
this problem for liably settling debts.
And so it's like,
Graeber's so close.
He's like,
he sees,
like he just accepts hook,
line and sinker.
Unfortunately,
what the state and credit theorist says about what money is.
and it just discounts that money could be this bottom-up phenomena in the best anarchist sense, really,
like separate from the state because he's so anti-capitalist, I think is kind of the undertone.
Yeah, I think I would disagree that the state creates credit.
I think credit existed before the state.
Yeah, right.
We've talked about this numerous times.
Lynn Alden's book, I think, primarily talks about money as a – it began as like a social ledger.
And Graver talks about this too, like favors.
He looks at it less in terms of like payments and more in terms of like gifts and favors.
And I don't – yeah, that is not a domain that is exclusive to the state.
That existed prior to the state.
It will exist long after.
I think Michael Saylor is right now proving that credit-backed, you know, credit instruments, you don't need the state for it.
You can just – although I do completely view what Michael Saylor is doing as a speculative attack on the dollar.
So I say you probably couldn't conduct a speculative attack on the dollar without the dollar.
So that's such a good point.
You bring that up.
The state and credit theorists, they are not it's not necessary to be a state and credit theorist to accept that credit has a function.
And in fact, in high trust societies, credit works great.
You can just like, hey, do me a solid.
I'll do you a solid.
If it's all kinship, if you're it's when you begin to transact internationally or between groups or in lower trust situations that commodities come into play because you want final settlement on the scene.
by giving something with use value.
I think the state and credit theorists,
they don't just say credit is the preferred form of money.
They say the state credit, fiat money,
is the preferred form of money.
So within a subset of credit,
that is money which the state defines as extinguishing.
The state's debt is credit in that sense.
The state, like fiat money for the state credit theorists
is what they define as money, something like that.
there's a saying in sales that people do business with people that they know, like, and trust in that order.
So I get to know you, I like you, and now I gain some sort of insight as to your character,
and I trust you, and therefore I'm willing to do business with you.
And what Bitcoin does is turn that entirely on its head.
I don't need to know you, I don't need to like you, I don't need to trust you,
Yet I can still do business with you as though you were my brother, as though you were my friend, as though you were a close acquaintance because I can trust the ledger and I can trust the money.
So how does how does, you know, the second part of your question was how does Bitcoin fall into this and and where does it where does it kind of land in between those two theories?
And Bitcoin is proving that money is what people say it is because it is displacing money.
It's also in the sense of the example of, you know, there's not just one thing that you love about your spouse, about your house.
There's also not just one thing that you love about Bitcoin.
It wouldn't be as useful, people wouldn't use it if they couldn't subdivide it and reconstitute it.
It wouldn't be nearly as useful if they couldn't carry it across borders in their mind or in their pocket.
It wouldn't be as useful if they couldn't instantly send it to someone, anyone across the world.
For all those reasons, it is the whole package.
It is, you know, it's the perfect eyes and the beautiful body and the sense of humor and she's smart and she's, you know, all that stuff.
You know, so how does Bitcoin fit into that?
I think it kind of satisfies both theories except that I don't think it's an institution.
I would balk at that term.
And I don't want to split hairs, but I don't think of Bitcoin as an institution.
I just think of it as technology.
I don't think of a cup as an institution on drinking water.
I just think of it as a technology that I use to drink water that enables that.
That's a good distinction.
I think that it would be like money is the institution and Bitcoin is an iteration of that.
Bitcoin is like a particular technological solution to the problem of reliably satisfying debts.
And so money is the institution that's going to do that.
And then within money, there's going to be different technologies that arise that help us do that.
Gold and fiat and credit, all these things have been like institutions of like the institution of money has utilized these.
And you might say like the institution is something more abstract, whereas the actual things that are used by humans to instantiate that institution, you know, can be different material expressions, I guess.
I do think that, so Graeber proposes that it's kind of like utility-based and that it has all these ephemeral qualities and stuff.
And Smolenski talks about it from a cost minimization standpoint.
And I'm wearing penguin socks today, so I'm super excited that you brought that up.
I think it again it it Bitcoin does both of those things yes it's the cheapest way for me to transact
but it's also the thing that fulfills all the utility that I want in a money so
again it Bitcoin is all things to all people it it is the thing that everyone in the world needs
and everyone in the world wants because it satisfies.
They don't know that they want it, some yet, but it satisfies.
It doesn't matter what your aims are, what your goals are.
Even if you are the thing that is most opposed to what Bitcoin stands for because it outcompetes the product that you offer
So say you're a country that has the global reserve currency like the United States.
Even if you are that country that is currently benefiting from that,
because of the things that we've learned about the Triffin dilemma primarily,
where if you have the world's global reserve currency,
there are second and third ore effects that are unavoidable,
which means that you stop being a producer of your own supplies,
you stop being sovereign, you stop being self-sufficient,
you stop being resilient,
and you become primarily an exporter of debt
and an exporter of your dollars,
and that's what you provide the world.
So even if you are in that position,
with that knowledge that we have now seen demonstrated over the United States most recently,
Britain before that, I can't remember, Rome, all of these.
Even if you are in that position, you can see now that it's not the position you want to be in long term
if you have a long time horizon.
And again, this comes back to a common talking point in Bitcoin, which is what is your time horizon?
Are you maximizing for the next six months or are you maximizing for the next six centuries?
Yeah, that's a good accounting of the characteristics of Bitcoin and why it's increasingly being accepted by people to settle debts that they have to clear their psychological ledger.
I want to see if I can, um, nuance-ify that too with a quote from, um, Smolenski has a quote from
Adam Smith, the theory of moral sentiments that I think does a really good job of like,
so if, if, um, the satisfaction of debt is a moral sentiment, if it's like a psychological
sensation we have, it's like a feeling, right? Like you can feel depressed, you can feel happy,
you can feel like your debts are satisfied. You can feel like your debts are not satisfied. It's
feeling tone. And so what is that feeling? We can describe feelings, right? So here's Adam Smith
kind of, I think, helping us understand what that psychological sensation of the satisfaction of
debt is like, so we can then look to see if Bitcoin, why Bitcoin might make us feel that way.
So Adam Smith says in the theory of moral sentiments, we are delighted to find a person
who values us as we value ourselves and distinguishes us from the rest of mankind
with an attention not unlike that with which we distinguish ourselves.
To maintain in him these agreeable and flattering sentiments
is one of the chief ends proposed by the returns we are disposed to make to him.
What chiefly enrages us against the man who injures or insults us
is the little account which he seems to make of us,
the unreasonable preferences which he gives to himself above us,
and that absurd self-love by which he seems to imagine
that other people may be sacrificed at any time to his conveniency or his humor. So like I, what I
take from that is like the psychological ledger is like this thing of social reciprocity where we
want to feel that other people are taking us into account, um, in almost a literal sense,
talking about an accounting here as their moral equals that people are, or maybe not even an equal
Well, this could happen in a society, a case society, but given whatever society you're in, the social context,
that people are taking me into account in the way that's correctly weighted to that social context,
that they're considering me as something that they have to take into account in the way they don't have to take into account a tree or a rock or a goat or something like that.
And so the psychological ledger gets filled up with these insults, with the ways that people don't treat us in the way that we feel we should be treated.
and then it can be cleared reliably by giving somebody
money as a technology is a way to reliably clear that
by giving them the cheapest valuable
the thing that's valuable to them that they're going to accept
but also like the most economical for me to give to them
and I get you know Bitcoin we can say that
it can be the cheapest valuable in that sense it's scarce
and then also as you mentioned has all these other qualities that makes it easy to negotiate
to other people and so once people you know if you're going to make want to make somebody feel
that they are taken into account give them something that is absolutely finite right a piece
of um the gabriel's horn to use jason lowry's metaphor that is bitcoin this finite but expanding
in a sense type of thing.
You're giving somebody a piece of cyber real estate.
We can use all sorts of metaphors, right?
You're giving somebody a real thing
because it is finite,
and the finiteness of it shows that person
they are literally being taken into account
in an incorruptible ledger,
in the form of an incorruptible ledger.
Yeah, and again, to quote Jason Lowry,
you know, Bitcoin is the paradox
that is a paradox.
It's the paradox of all paradoxes.
It's finite, but it's also infinite.
It's finite in that there's only 21 million.
It's infinite in that theoretically it can hold the entire wealth of the universe.
It could hold a penny or it could hold every bit of wealth that's ever been created
and stretch to fit that like Gabriel's horn.
But, you know, this is where this is where it breaks the definition that's given in the in the writing where she talks about how money must be scarce, but not so scarce.
Like it has to be scarce in that there's not a whole lot of it, but it can't be so scarce that there's not enough of it.
Yeah. And Bitcoin is the thing that is scarce.
scarce, um, but it is also, um, infinitely expandable. And so, um, you, and, and the
way to think about that, I think is that it's also like, it's infinitely, um, it's infinitely
subdividable. Um, you can, you can chop it up into little pieces, you can put it back
together, you can chop it up into little pieces and do it again. So whether it's infinitely
subdividable whether that's not yet yeah whether that would take a softer hard fork is something
i've heard differing perspectives on yeah or different layers could subdivide in some sense
different layers yeah yes i think it's different layers you know i i have this conversation a lot
around here because there there are if this is your first time listening to this podcast i apologize
um there are lots of shit coiners um that come through this place uh particularly right now we
We have the Solano super team.
This place being the network school, too, if you're the first time here.
Yeah, yeah, yeah.
This place being the network school.
And so I have this discussion a lot, and we talk about optimizing for security versus optimizing for features.
And Jason Lowery, Michael Saylor talk about this a lot.
Michael Saylor, I love the way that he talks about it, which is like if you think about it from the concept of aeronautical engineering,
you have to understand that any failure is a catastrophic failure.
That in order to engineer something, it has to work every time under every condition without question.
And the way that I like to think about it is I think about like Bitcoin as being a boat that was made to be entirely unsinkable.
It's not fast. It has no chandeliers. It has no buffet. It has no swimming pools or dancing rooms.
Yes, we shall call it the Titanic because it is unsinkable.
Yes, but it will not sink.
And we are reasonably confident that it will not sink.
And in fact, if you were to think about Bitcoin as a ship, it would appear to be riding higher and higher and gaining in buoyancy throughout the years.
in that it becomes more and more unsinkable the more value and wealth is put into it the more
nodes are run the more miners are run and i think what satoshi did was he built the unsinkable ship
and then he said cool now you guys you can put cup holders in it you can put stairs in it you
want to throw an elevator in it go for it these are the layer two layer three layer four things
that you're optimizing for features, you're optimizing for speed, you're optimizing for comfort.
And the way that I think about the shitcoin community, primarily Ethereum and Solana,
because they get the most notoriety, is that you built a ship that has a hole in it,
and then you decided to put jet engines on it.
And if you have a small leak, you will sink slowly.
If you have a small leak and you go very fast, you will drive it into the ocean much faster.
It creates a honeypot.
So there are security flaws that are inherent, primarily that they have central authority that, yeah, maybe you can't just put Vitalik in a room and corner him and thump him in the nose a couple times and say, hey, I want all the Ethereum.
but there is a number of people you could do that to, and it's not a lot.
And so as these shitcoins gain in wealth, they also become a honeypot.
They become a greater risk.
They go faster, and they sink faster.
They appear to be riding high in the waves, and then they'll crash down.
And this goes, I think, for any sort of shitcoin, the United States dollar, the Nigerian Naira, whatever you want to think about.
They are all of the same ilk and of the same breed.
And so optimizing for security versus speed is the thing that I think separates what we have with Bitcoin here.
I probably got off onto a look.
No, no.
I mean it's good to talk about.
The Solana people were rude to me twice.
So I'm just like holding a grudge.
You're clearing the psychological ledger right now.
I am clearing the psychological ledger.
It's the airing of grievances.
That's what to do, man.
So there's one thing that I kind of left out of the definition as I streamlined the presentation, the summary.
So – and I want to talk about this, the idea of a market.
So this was an important idea in Smolenski's essay that's also very interesting and also very anthropologically rich.
So in her definition of money, as I talked about it, the cheapest valuable that reliably satisfies creditors, she also adds in a given market.
So the social context provided by the particular market in which the debt is being cleared is very relevant to talking about what type of thing is actually going to clear that debt.
I mean, if the marketplace is how Lucas feels about people who are – how people are treating him as a Bitcoiner, then he can, in the marketplace, clear that debt by talking shit on them behind their back.
Other markets –
Still not clear.
No, you got some more shit talking to do.
I got ways to go.
So markets, though, could be broadly then, for Smolenski, considered like spheres of exchange to kind of get away from the term of market.
with many different limitations and conditions as to who can participate in which way.
So some examples, the international markets, you have different nations,
different players within nations and, you know, trading amongst themselves.
But there's also like the marriage market, people seeking a spouse.
And, you know, there's literal in some cultures like bride prices and things like that.
There's capital markets.
There's even like the county fair where a particular type of market,
particular type of transacting parties, particular types of transactions can occur.
some can't you can't buy a house at the county market the county fair um but you can buy tickets
and go on you know a ride or something there's two general though types of markets in um
smolensky's estimation prestige and mundane prestige are those like marriages political
alliances inheritance legal judgments that usually use collateral that has like a certain solemnity
to it um you know a marriage is not just something that you pay for with dollars or whatever if
there's a bride price given, maybe there's a ceremonial rendering of a valuable object
or something. Mundane markets are things that it doesn't matter, you just want to pay for
them with whichever way, you want to buy your food, etc.
The problem, so this is the kind of question I want to put back to you, and a part that
I think is really interesting about, I mean, Graeber is not wrong in being concerned about
exploitation through capitalism, broadly speaking, or through markets.
I don't think.
So the question then, like, a cheapest valuable, money is the cheapest valuable that reliably settles debts.
I think one of the issues is that it tends to conflate or collapse all of these markets.
Prestige markets are collapsed into mundane markets if the currency is the same, satisfying them in all the ways.
marriage markets, bride price becomes something almost akin to like sex trafficking or even
prostitution. You're just paying for it with the same dirty dollar you pay for your food with
instead of, you know, some like morally freighted, like gift of ceremonial significance or whatever.
Goats.
Goats for sure, man. And so like Graeber's hostility to markets, I don't think is unfounded. It's not
Graeber is like a leftist anarchist.
There is, and Smolensky notes this in her essay.
And Smolensky, if you listen to some of her interviews, like she began her anthropological
studies thinking about, I believe, something like religious value and how that's truly
a type of like incommensurable value with other types of things.
It's a true prestige type of value, one might say.
And so this, I'm going to quote Graeber here because I think this is a quote that gets some
of these ideas out on the table in a nice way.
Or no, this is not a quote from
Graeber, it's a quote of course from Molenski's summary of
Graeber. It is the violence
of commensurability, what he
calls calculation
that is offensive to Graeber,
of unlike things coming into
contact, whether in war or
economic exchange, and establishing
shared languages of intelligibility
that necessarily exclude
the full hermeneutic
richness of the worlds
in which those previously incommensurable things originated.
Again, that's the conflation of all these markets into this,
like, just go out on the street and just buy yourself a can of Coca-Cola and a wife.
It's all the same.
So what do you think about this, Lucas,
this, I guess, critique of the free market system
as tending to reduce all things,
the unit of account making all things accountable in the dollar
or maybe even in Bitcoin, even those things which shouldn't be,
or should things not be, I guess, that presumes.
So I'm kind of stuck on what you were talking about
with prestige versus mundane markets,
because I was thinking of a metaphor with that,
which was like, so I'm a fan of baseball,
and in baseball there's the market for players,
and in the market for players, they get paid in money.
I would say that that is a mundane market where they exchange production for money.
But within the game itself, it's more of a prestige thing where they exchange what is needed for prestige, for applause, for the encouragement, for the satisfaction of the people that are watching it.
And the prestige of those people in the audience is what ultimately determines the mundane market.
If you satisfy the people in the stands, then you will satisfy the mundane market.
You know, I think that there's – yeah, it's really interesting.
So think about a pitcher who is paid in the mundane market.
His salary is paid based on his ability to get batters out, to not allow batters to reach first base.
Yet in the game,
there occurs an instance the inning before where an opposing player does something that is viewed to violate the violate the rules of the game um you know one one of them would be like trying to knock the ball
out of a out of a defenseman's glove this is viewed as like a no-no you don't you don't do
that. And so the next time that batter comes to the plate, the pitcher whose value in the mundane
market is determined by his ability to get people out is now within the game valued in the prestige
market by whether or not he's going to intentionally hit the batter in order to punish him for the
thing that he did the inning before. And if he does so, then he will gain prestige among his
teammates among the fan. And so these markets are separate. They are differentiable. Now, let's
take a step further and let's interconnect everything. And on the scoreboard, we have
the pitchers, not only statistics, but also his Bitcoin address. And we have the batter's
statistics and his Bitcoin address. And now, much like Ivan Nakadonsky promotes, which
would be the ability for people to exchange value for value, you do the thing I want,
I pay you directly.
And we're satisfied.
We're able to do things that other people want,
and we know that they want them because they reward us immediately.
So in that instance, instead of prestige,
the pitcher hits the batter, and now 10 million sats are sent his way.
So I think Bitcoin, to answer your question after meandering through my trip down memory lane of swinging bats and throwing balls,
to answer your question, how does Bitcoin fit into this?
I think Bitcoin has the ability to, as elucidated by Ivan Nakadonsky,
and look up his writings in Bitcoin magazine.
for those of you who haven't been exposed to him or watch our interview with him on the Instant Settlement series.
But Bitcoin has the ability to, I believe, condense that prestige and mundane market.
Not entirely.
You know, your wife is still going to want flowers rather than Bitcoin on certain days.
But that's exactly the problem, though.
those microtransactions that make everything now a part of the marketplace that you can get the
pitcher to bean the batter because you can pay them directly to do it everything is now a market
transaction the question i mean like the prestige and mundane question is what is sacred what is
sacred anymore what cannot be paid for and so bitcoin might i mean we need to be cognizant of
this the ability to do microtransactions in that sense might make might not be good and this is
actually hinted at by Timothy Mays in the Crypto Anarchist Manifesto. So one of the
originary documents of the kind of the culture that led to Satoshi and the creation, like
the white paper, he says that, you know, there are going to be with the rise of cryptography
markets for assassination. You're going to be able to pay people secretly in an anonymous
or pseudonymous way to do things that are not good. And so these are problems to deal
with maybe they're like they're better problems than the problems we have as a result of a
surveilled currency for sure um which is endless war and the control of populaces but there are
going to be problems that people i think need to have um a spiritual concern a spiritual and a
broadest sense of their of like what is sacred to them what is not within the realm of market
transactions, whether in Bitcoin or another currency, they're not going to reliably settle.
Their psychological ledger is going to be resistant to monetary compensation for certain
types of debts and other things.
Maybe that's Marcel Maas talks about the gift economy.
I haven't even read this stuff, but this is Molenski's site.
This is evidently a key text in the anthropological literature.
Maybe there are, you know, this more broad and ample idea of the gift is something that
It's going to benefit Bitcoiners too as we consider like how much the reach of microtransactions should go.
Or again, I tend to make it just individual.
You know, you can always retreat from the market and make your life better by not letting people pay you to do things you don't want to do.
There can be sacred things.
I'm okay with that.
So I want to think that through a little bit.
Yes, there actually will be the enablement of a secret assassination, but also that will enable secret protection.
If everyone, you know, okay, first off, if a whole lot of people want somebody dead, there might also be a whole lot of people that want that person alive.
and it could also benefit them just as it would benefit someone to clear their psychological ledger to have someone assassinated.
It could also benefit people to have someone protected.
Go back to the baseball example.
yes we could actually create a problem where we incentivize a pitcher hitting a batter and thus
gaining prestige but also at the same time decreasing his team's chances of winning
and so what are you at that point are you you're the fan that is fueling this are you a fan of the
team's success if you're a fan of the team's success then ultimately you will want to do the
thing that gives your team the best chance of winning. And so I think one of the things that
when we look at new technologies, they are always, it appears, adopted by the illicit markets first.
And they're adopted by the illicit markets first because the gatekeepers of the old technology
have a middleman benefit to the old technology that they don't want to let go of.
This is why Bitcoin was adopted first by people marketing drugs and stuff like that.
This is why VHS was adopted by the porn industry first.
This is why cars were adopted by moonshine runners first.
These are things that are outside the established hierarchy wherein that hierarchy is an extractive benefit of being involved.
And to make an end around of that with a new technology, it is always going to be adopted by people who are outside of the system first.
but it eventually comes within the system.
Now the sweet grandma who goes, you know, she has a car so that she can go to church and pray
and go to the cemetery and lay flowers on the grave.
And the sweet grandma has a VHS player not to watch Ron Jeremy,
but to watch videos of her grandchildren.
and the sweet grandma has bitcoin not to fund war and to fund extraction of value from an economy,
but to make sure that she has value to pass on to her granddaughter.
And so it's not who gets there first, but that is the signal.
The signal is that I do believe that this is how I view technology now, is that one of the things that I look at for an affirming technology is, is it being adopted by people outside of the system who are viewed traditionally as criminals or illicit or viewed negatively in the eye of public society?
Yeah, definitely. I just think we'll definitely keep the reservation in the back of the mind. Bitcoin has all of these great properties. And yes, as you know, it will be adopted for various purposes and possibly first for the reasons you give, but also just for your own personal, like your soul, whatever reach you give that word.
like there are things that are not within the system and that should never be and don't accept
bitcoin or any other currency for them find a place where your dignity draws the line and you
know don't be in the batter if somebody pays you to do it and i was thinking when you said like we
want our team to win not really you know there are worse things exactly than having your team win a
game or lose a game right and that is for your team to be disgraced and so people don't want
their team to fall into disgrace because their quarterback like beats his wife or something.
They know people have, they want the team to represent the city and they want a feeling
of pride in something.
But yeah, cool.
Yeah, it's, it's, but it's an, it's an in the moment thing, right?
Where it's like, yes, today I'm feeling it.
I want my pitcher to hit this batter, but tomorrow, the next day, the day after that,
the day after that, if I just continue doing that, then, you know, if, if my, if I'm funding
a predictive action that is, that is leading to the downfall of the team, then it's just
not going to exist.
Maybe at the end of the day.
Like Robert, well, I was going to say, like, remember Robert Breedlove saying, you know,
like, this is, this is what keeps us from fighting to the death over every ham sandwich.
Yeah.
You know, I, I think that, yes, it is.
You want to satisfy that honor.
Yeah.
but there is a point at which satisfying honor no longer becomes fun um like yeah
let's let's get a let's get a guy out we've hit 14 batters in a row you know right and maybe if
you just want to hit batters maybe you're just more of a dodgeball fan maybe that's you just
got the wrong sport so i'm a huge dodgeball fan dodge dips i've got it cool so the conclusion here
I'm going to read the final paragraph of Smolenski's essay because it brings up one of the key points we haven't touched on that I think we should, which is this idea of political legitimacy coming from kind of a societal clearing of, or like a reliable clearing of debts among the aggregate of creditors in society, that political legitimacy and the rule of law begin to be threatened if these ledgers are not cleared reliably.
So, quote, this is the last paragraph of Smolensky's essay, so be impacted.
Let it flow into you.
Quote, the moral ledgers in the minds of an aggregate of creditors within a market can accommodate widely elastic but not infinite debt balances.
Once a sufficient number of creditors decide to collect on their debts, their collective action has inexorable force.
These are moments of rupture and refounding and often the introduction of new forms of social organization and new forms of money.
So again, I take the idea of this to be that the moral ledgers consider all the creditors in society.
If money is not a good technology, if it's not reliably clearing debts, you're going to get rupture.
You're going to get a refounding, to use a term Smolenski does from the introduction.
You're going to get potentially a new form of money.
A new technology is going to arise spontaneously.
The creditors are going to use this new technology, regardless of what the state says,
because they're going to clear their ledger whether the state wants them to or not.
They're not going to, again, accept payment that the state is mandating that they accept
if it's not actually reliably satisfying them and settling their debts.
So, yeah, political legitimacy is at stake if we have bad money.
Yep, absolutely, as it should be.
Yeah.
Cool.
Well, any concluding thoughts?
That's the conclusion of the essay.
What's the conclusion of Lucas's perspective on the essay?
uh smolinski is a writer whose words i have to read and then reform in my mind using
simple farm boy words but i can condense them down into what makes sense to me she's a
Brilliant writer with a large vocabulary and incredibly precise.
The academic tilt of the way that she writes, and she is an academic,
the academic way is not going to be, I think, immediately accessible
for a lot of comic book readers and Twitter thread scrollers.
And so I'm super glad that we did this essay because I think we were able to take these ideas and make them small enough for a mind like mine such that I hope that they're accessible for everyone out there.
But I want to encourage everyone, as we do with each of these, these writings that we read, please join us in consuming them.
Please join us in taking in the wealth of information and honor these authors for their contribution because they are doing a massive service to the world by sharing these things.
And, yeah, again, a high five to you for picking out a fantastic essay to read, a fantastic anthology.
I literally just picked out essay – yeah, I was going to say I literally picked out essay two after picking out essay one.
And so surprise, essay three is the next selection.
Chronology is one of my finest.
But, no, I just want to – one thing.
Nothing is not consistent.
Smolenski has academic formation as an anthropologist,
but she is, just so we don't slight her,
she's actually a doer.
I think she is an entrepreneur and does other things.
So not that it's bad to be an academic,
but she also is doing things in the world that are useful.
So I think, but I found this essay useful.
So I just want, one other thing I want to conclude on,
I totally agree with you, Lucas, that continue the dialogue.
If you listen this far or however far you listened,
consider these ideas. What do you agree and disagree with?
The authors of this wanted a
Federalist Papers type situation where we are debating the possibility
like what does a refounding look like? Is it necessary?
Keep that debate going. Twitter
as we see in this essay, the Zabo to Graeber
internet Twitter is now like a canonical piece of
literature in the Bitcoin tradition. So, you know, participate in those discussions.
And also, I just want to note that I find like the idea, my concluding point will just
be because I wanted to say this. I don't think I said it before. The idea of money as a technology
that then means it's a bottom up type of thing that's adopted by people so that they can
solve the problem in a durable way. This should unite left and right anarchists. This should
bring a David Graeber on board with an ANCAP. And so I love when, like Bitcoin is not about left or
right. It's about the middle path that we all have to take together if we want to survive.
And this is, I think, a good way to, you know, walk them through these steps and take them beyond
where Graeber foundered, which was the idea that, yeah, the state and credit theorists are right.
Money is only an invention of the state. Therefore, we should get rid of the state and get rid of
money and just hope that human economies spontaneously arise you can say that's a little
bit utopic i follow you up until get rid of the money but and then just like have a vague plan of
hope we actually do have a thing that spontaneously is arising from below that we can all coordinate
on so that's where i would leave us that anarchists unite and whoever non-anarchists too but that's
where we find ourselves.
That's it, man. Buy Bitcoin.
Yeah. Not investment
advice, but also
life advice.
Right on.
Alright. We're out. Thank you very much.
Thanks, Lucas.