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Today, we're going to continue our conversation of the Satoshi paper,
Reflections on Political Economy After Bitcoin.
This is an anthology edited by Natalie Smolenski of the Bitcoin Policy Institute.
we talked about the introduction
Lucas and I last conversation
which kind of gave a broad narrative framework
for all of these disparate
essays that are going to center
something kind of
the narrative thread that was given to us
the introduction is that
is Bitcoin a sort of refounding
of America based on the values
that have been lost since
the original founding we've had
increasing financial surveillance
restriction of civil liberties
inalienable rights have been alienated and given to the state. So we are now into the first essay
proper, which is What Satoshi Did by Anderan Bailey and Craig Warmke. These are two philosophers,
two authors of Resistance Money. There's a third author, I forget who that is.
But these are actual academic philosophers. And it shows in this essay, which is incredibly well
written, incredibly coherent, incredibly well argued, very tight in the best sense.
Like philosophy can be something that you have to muddle through sometimes.
But this is philosophy in the best sense where it's just crisp and clear writing.
So what Satoshi did by Andrew Bailey and Craig Warmke, there's a lot of ideas in here, but
I think we can summarize it and condense it down to three ideas.
So those are that Bitcoin has a social layer, that Satoshi operating on this social layer is able to solve the bootstrapping problem of starting a new network through marketing, greed, and departure.
And that the way Bitcoin bootstraps in this way reveals it to be a particular type of institution, more like a natural language than a state or a church, a feral institution, as the authors say.
So those are like the three, I think, overarching ideas.
I'll unpack them a bit and then Lucas and I will discuss this essay.
So first, that Bitcoin has a social layer.
We can say that layer one of Bitcoin is like the machines, the protocol itself, the Bitcoin
asset, all of that.
Layer zero, then the authors say we might consider to be a social layer.
The people that coordinate the machines in layer one, node operators, users, all the
social stuff that goes on, the adoption in El Salvador, the Central African Republic,
things like that. The social layer is not obviously a computer layer. It resists easy
duplication. You can just copy layer one and hard fork and just start your own iteration of the
Bitcoin protocol. You can't as easily, or you can't do that with layer zero, which is the social
layer, the people that shape and constrain the actual development of all the layers on top of it,
the actual Bitcoin protocol and the machines as they kind of develop and unfold.
So Bitcoin has a social layer.
Satoshi then operating on the social layer solves the bootstrapping problem.
You know, you have a new network.
A network of one person is not a network.
Networks without many nodes on the network don't have any power.
Network effects is the idea.
The network increases in power the more people join the network.
So how do you start a new network when you have a rival network, the US dollar, all of the legacy financial system that is already very, very powerful and which everybody is already participating in?
So Satoshi solves the bootstrapping problem in three ways, we could say.
Marketing, greed, and departure.
So marketing. We don't often maybe think of Satoshi, he, she, they, whoever, as a marketer. But what Satoshi did when starting launching the Bitcoin project, the authors break this down, they kind of made branding decisions.
decisions Satoshi first considered, should I call it net coin or Bitcoin? They went with Bitcoin.
There was consideration about a logo first being a gold coin, the BC in the middle,
and then later the dollar sign B that we're all familiar with. There was deciding to launch it
through the cryptography mailing list to appeal to cypherpunks and technologists. There was the
use of a white paper, which is not really a technical specification, a formal specification
of the BTC protocol as much as kind of an introduction or teaser of what Bitcoin is or
could be. So that's marketing. Satoshi started as a marketer of Bitcoin. Satoshi also used greed,
which, you know, just another name for kind of a very deep and vital human incentive that we have,
something very ingrained in human nature. Bitcoin, Satoshi prominently notes in forum responses and
the Bitcoin white paper, limited supply, a difficulty adjustment that's going to make
it more difficult to attain Bitcoin as more people try to get it through the mining process,
and an emission schedule that is going to, in stepwise fashion, have every four years.
So early adopters get more Bitcoin, and there's only a certain number of Bitcoin.
Hal Finney notes early on that in a forum, or I think in response to the cryptography
mailing list that he thinks Bitcoin could get to $10 million a coin if you consider all household
wealth in the world. And then in response, Satoshi says, quote, it might make sense just to get some
in case it catches on. So there's this notion that greed helps to bootstrap Bitcoin from zero
into something. And I think it's worth saying that it's not cynical in the sense, talking about greed
in this sense. Bitcoin, as I kind of alluded at the beginning, depends for its value as a network,
as having more people join it. And at first, there's not people on it, you have to bootstrap
into value, you need to get people to defect from an established network into a network that has
kind of, quote, unquote, less value. To quote the authors, in such cases, some perceived benefit
must attract new users by outweighing the disadvantages of unplugging capital from a
stronger monetary network. The authors speculate that Bitcoin is designed to generate price
volatility through this emission schedule, which increases publicity, and that also Satoshi very
cannily used a four-year halving cycle, drawing from things like the Olympics and presidential
elections, there's like this four-year cycle that's kind of ingrained in a certain type of
media reporting. And so four-year cycles for elections and Olympics, why not for money as well?
So that's, again, we have marketing and greed are helping to bootstrap the network from zero,
but not, the authors note, not Satoshi's greed. And in fact, they're going to go on to describe
the third way of bootstrapping, which is Satoshi's departure from the project.
Satoshi could have sold his coins. They did not. Could have pre-mined coins, as so many other projects do, did not. Could have mined aggressively and tried to shoehorn the market. Satoshi did not.
And then Satoshi then through greed, through kind of harnessing the greed of users through the nature, the limited nature of Bitcoin, through marketing Bitcoin in the correct way, and then through Satoshi's own departure, Satoshi divests in an orderly way from the Bitcoin project, transitions out and then disappears.
And at the time of Satoshi's disappearance, the network has matured in a certain sense. There are developers, defenders, evangelists, and it's begun to garner kind of media headlines because of that price volatility.
So Satoshi, there's a social layer zero that the Bitcoin protocol has. Satoshi operating as kind of the leader, the social architect of layer zero, markets, harnesses greed, and then departs, leaving and enabling a shift from a leader position to a leaderless protocol as social layer zero.
The authors use game theory in a very interesting way to really, in detailed fashion, explain how this bootstrapping works from a network of no value competing against the most valuable network, the financial system, how Bitcoin can gain traction.
So within a game theoretic simulation, even if there is kind of a better alternative network, such as a financial network, even if we could say that Bitcoin is like better money, there's still psychological precedent is sticky.
Equilibrium is sticky for people.
And it's hard to get people out of an established network into a rival alternative network that's better in some sense.
A new money has to be a lot better.
And for some people, the authors can see Bitcoin is not better.
Some people benefit a lot from the financial system the way it currently is.
But the key point, Bitcoin is better for some people.
And they give a theoretic person, Boris, a Russian dissident who is completely excluded from the banking system by the country he's in.
And so for Boris, Bitcoin would have an advantage.
That's not enough.
What it also needs in order to bootstrap, of course, is you have to have Bitcoin.
You have to have an inventor and you have to have people who are going to use it with Boris.
And so that's what Satoshi does, uses signal to overcome precedent.
So again, the psychological precedent keeps people in an established network.
But if you can signal that you're going to use a different network, then people who don't benefit from the legacy network will defect to the new network. And so that's what Satoshi did. He or they signaled that they were going to use the network.
They signaled in a provably costly way by mining that they were invested in this network. And of course, their own marketing network began to signal the advantages. And so with high signal, you can break out of the kind of game theoretic framework, break the psychological precedent that keeps people stuck in an equilibrium in a suboptimal monetary system for them.
And so now Boris and Satoshi can participate in a new network that is at least bootstrapped from zero to one.
So Satoshi visibly signaling his defection, provably costly support, and then departure from that project has enabled the Bitcoin network to bootstrap and begin in earnest.
In this way, the authors ask, so what is Bitcoin then, given the way that Bitcoin develops through this peculiar form of bootstrapping where it begins as an invented thing and then bootstraps into something where the leader is now gone and the social layer zero is distributed?
To go from leader to leaderless, what type of institution is this?
the authors respond it's a feral institution and this is a coinage of theirs and it's very
interesting a feral institution in their estimation their definition is an institution that
at one point was engineered but now released into the wild is now released into the wild and has a
life of its own so these are they get into they really do analytic philosophy in its best sense
here they look at the definitions of what an institution is and the constituent parts of an
institution to describe Bitcoin fully as an institution. So institutions are groups of people
structured by conventions. And conventions are just rules that motivate cooperation.
For example, they can be arbitrary rules. The fact that in some countries we drive on the right side
of the road is just an arbitrary convention. We could do it on the left, but we all have to agree
either on right or left. So conventions motivate cooperation, and then institutions then use these
conventions to solve coordination problems. Again, they can be arbitrary conventions,
but people have to coordinate around them and agree on them. Some examples of institutions,
we have like churches, Westphalian states, corporations, families. But again, what type
of institution is Bitcoin? And as I noted at the outset, the authors think that it most closely
resembles a natural language. As a feral institution, it most closely resembles a natural
language. Languages are collections of conventions. And again, conventions are just rules that we
follow and that motivate cooperation. Languages can be arbitrary. The word tree does not necessarily
have to mean tree, but we do have to coordinate or agree that the word tree refers to the thing
that we all think that it does.
Languages also another aspect of languages as an institution they more valuable the more users that they have because you have more potential conversational partners with which to exchange
Bitcoin resembles a language in that sense.
It also solves a coordination problem by establishing a convention, the Bitcoin protocol, a set of rules that people are motivated to follow.
The coordination problem is similar.
languages are used
a set of conventions to exchange information
Bitcoin is a set of conventions to exchange value
and to route around those who would censor that
exchange of value, would try to
and also like a language, Bitcoin gets more valuable
the more people that use it
something that the authors call a network good
so to quote the authors, to kind of give a full picture of this
To recap, Bitcoin's network is an institution with a defining convention, and its users follow that convention to partake in its associated network good, its native asset.
Bitcoin motivates future users with the benefits of coordinating with those who already play by its rules.
And Lucas, could you pull up, there's a chart, Lucas and I have copied a photo from this essay, which really nicely lays out the author's comparison between language, just here English, and Bitcoin.
So again, they think that Bitcoin as an institution is similar to a natural language.
And here we see the comparison that languages solve the problem of a coincidence of meaning.
We both have to, when we use the word tree, we have to coincide on what that refers to in order for us to benefit to exchanges of information.
And Lucas, I see you're, yeah, we zoomed down on the picture there.
But in any case, I'll describe it here.
There it is. Yeah. So languages solve the problem of the coincidence of meanings. Bitcoin solves a coordination problem, which is the coincidence of wants. When people go to do a trade, they have to coincide in wanting what the other party offers. But Bitcoin is a medium of exchange. So it allows for people to solve that problem because you give them Bitcoin and they can exchange their Bitcoin with other people for the thing that they want.
And then it goes down the list here, comparing, again, the ways that natural languages are similar to Bitcoin.
Natural languages have conventions, which are, again, sets of rules.
Bitcoin is a protocol that has specific rules about exchanging and receiving value.
And so on and so forth down the list here.
The last item on the list is where they differ, though.
So English, a natural language like English is unplanned.
It's not created.
But of course, Bitcoin was created.
It's engineered.
We saw at the beginning how Bitcoin begins with a leader and then Satoshi departs and
it becomes leaderless.
But there is a difference here.
Languages are unplanned.
Bitcoin is engineered, but then becomes leaderless and increasingly distributed over time.
That then is why the authors call it, as I mentioned, a feral institution, which is their
coinage.
something that begins as a domesticated entity but has since that time through subsequent
generations become more and more feral you can imagine a cat which is domesticated the cat
escapes the household over time the cat you know reproduces out in the wild and there's these feral
cats the captain is a domesticated animal it was domesticated it was molded by co-evolution
by its origin. It's still stamped and marked by that origin, but with each subsequent generation,
it becomes something more and more distinct, more feral. Here's a quote that kind of strings
together some of these ideas. The authors say, quote, Bitcoin's network is a feral institution.
English, by contrast, is wild and always has been, so far as we know. It never had an inventor.
Bitcoin did, but then its inventor left and left Bitcoin out of the barn. By altering Bitcoin's
social layer, layer zero in this way, Satoshi unleashed the potential for leaderlessness
that was already present in its protocol layer, layer one. So the authors then conclude,
they bring this essay home in a sense and tie it back to the Satoshi papers, the title of the
anthology, this analogy to the Federalist Papers, to America's initial founding. Last week, we saw
again how that title was an intentional focus on a new founding of our country in light of the
changes that Bitcoin will unleash. Satoshi, the authors say, was like our founding fathers,
Washington and Jefferson. They were also social architects operating on that social layer zero,
creating not just the Constitution, but showing through the example of their own departure.
Of course, Washington, George Washington doesn't take, Jefferson refuses a third term based on George Washington having set that precedent.
They unleashed this idea of building a nation without lifelong rulers.
They set the social precedent.
They also abided by the Constitution.
So there's kind of implicit this analogy that the United States is also a feral institution, having had a leaderful founding, but then unleashed with the idea that we could be, in a sense, sovereign citizens.
I'll read the concluding paragraph because it really does do a nice job summarizing everything, and it's really good.
In summary, Satoshi discovered how money could operate without central authorities, encoded that discovery into software, freely gave it to the world from behind a mask, provably committed his own resource to demonstrate its benefits, bootstrapped a community devoted to its success, relinquished control, and left.
Anyone may now use the feral institution he left behind.
That is what Satoshi did.
He set Bitcoin free.
So again, the three ideas, as I stated at the beginning, one, Bitcoin has a social layer.
Two, Satoshi operating on that social layer solves the bootstrapping problem through marketing, greed, and its own departure.
And then three, the way Bitcoin bootstraps reveals it to be a particular type of institution, like a natural language, which is a feral institution.
and, as the authors conclude, something like the, by analogy, what Washington and Jefferson did at
our country's own founding. So that's a summary. This is an essay with a lot of, like, all these
ideas are interlocking, but there's lots of interesting novel ideas. Lucas, what did you,
just starting with the first point, because I thought this was really interesting,
the idea that Bitcoin has a social layer, did that strike you as a novel kind of thought
And what do you make of that?
That to me was the biggest takeaway in terms of the novelty of it.
I spoke with some other people about this here, encouraging them to read this book, because just in the first essay, I've gotten a new appreciation for Bitcoin that I didn't have before from that idea of a social layer.
So Bitcoin is, and I guess this is just the natural outcropping of what happens when you have a decentralized anything.
So there's going to be, I think, if we think in terms of all the decentralization that's happening now, there does become some sort of a social layer underneath that, whether it's decentralized societies that are interconnected because they look to each other for cues and tips, successes and failures.
Or it's in this realm of decentralized tools, decentralized products that are just Noster, by the way, for example.
So Noster, they all appear to be a social layer first and then have utility second.
And it's fascinating that Bitcoin provided us utility first.
And it seems to me that it took people with the insight of Andrew Bailey and Craig Wormkey to really discern that there was a social layer underneath, that the strength, the power underneath the engineering is still the people.
it's the people who run nodes and who run miners
and are
using the convention in order to
create a rule set
that enables freedom that when you were talking one of the things that
just bounced into my mind was Jocko Willink's book
I think it's called
extreme ownership or i think it's called extreme i think that's it yeah but his his tagline punch
line for for all of all these things is discipline is freedom um and so discipline um could be
interpreted as following the rules of the convention um and by the more rules of the convention that
you follow, the more freedom you have to operate by using that convention.
Yeah.
The English language is a brilliant example and a brilliant comparison.
The better you know the English language, the more free you are.
Jordan Peterson talks about this all the time.
You know, if you want to truly become dangerous, learn how to speak, learn how to write, learn
how to talk.
Yeah.
And you actually have to be constrained by English.
You can't just like act in total freedom and just like make up your own words.
You actually have to have the discipline to use the words that are already there that we've coordinated upon as having meaning.
Freedom means being constrained by what the protocol and convention rule set has given us.
Yeah, because then you'll – when you use the right word, people understand.
Yeah.
And they are then really bought in.
And if you use a word that the other person has a, if you use something that, talk about how there's, the human eye is so sensitive that it can notice like something that's a half a degree off of plum, right?
So if something is supposed to be at a 90 degree angle and it's at 89.5, that's like blatantly obvious to the human.
and I think
people who choose to use
a word that is not fully
descriptive of what they're trying to get across
then they end up not fully
getting their idea across
and when you do hammer into
the correct
hammer into, that's probably the wrong word to use
when you do
intentionally
choose and
successfully land upon
the best description, um, using the conventions of the English language to convey your idea,
then you're, you're able to, uh, amass a coalition of understanding and support for your ideas.
Yeah. Yeah. I, I, to me, that's the coolest takeaway is like, I never heard Bitcoin talked
about as a social layer? Yeah, we focus definitely on the technology as this kind of the novel
technologies or the not novel, the established technologies that go into and combine to create
a novel thing, the hashing functions, the public key cryptography, this notion of accumulative
proof of work. We think of these types of things, which are very important, but we forget that
it's the importance of Satoshi's departure.
Like, because if Satoshi would be or is like the 11th richest person in the world right now,
this is the person who did the most unprecedented thing.
We can almost, this can also almost give rise to like cultish or pseudo religious aspects
to the idea of Bitcoin.
Somebody who gives up, you know, the most wealth possible, right?
They could have benefited in so many ways, but they forego their own greed, harness the incentive of greed embedded in everybody else's human nature to bootstrap a system that then benefits us all.
Just the importance of Satoshi's departure cannot be underrated, and that's an entirely social phenomena that's separate from the technology.
And yet, what is the Bitcoin network without Satoshi having backed away as the leader, without Satoshi having transitioned the project away from himself, disappeared, and then not moved any coins? Without that, I think Bitcoin is different, right? And maybe it still survives, but I don't think it survives with the strength that it currently has, right?
Yeah. I know this is maybe a swing onto an off-ramp, but I was trying to think about other successful startup ideas alongside of something that was just hugely successful.
So there been a number of runs at creating a new professional football league Donald Trump has done it with USFL back in like 1984
Yeah.
They tried to restart that.
Currently there's I think it's the Live Golf or something like that, which is the Saudi Arabian Middle Eastern attempt to rival the PGA.
there's been numerous fighting type of things that rise up and they all have the exact same
methodology which is they attempt to incentivize people to come there by incentivizing the big
names in that realm by paying them they just pay them more and that's their incentive you know
Herschel Walker was one of the famous ones that signed with USFL.
I can't remember.
I think it's like Rory McIlroy is the famous golfer that signed with the other two.
But none of them have been truly successful.
The golf one is arguably fairly successful, but it's only successful because they just literally have unlimited money.
and they have insane purses and they have insane pay for the players that is so much better than
than one but there's another example because i was trying to think i was like i don't know that
there is another example ever of someone who was able to launch something that could kill the
existing convention yeah and do so in a way that didn't it wasn't like yield farming shit coinery
type of thing where you're just going to throw money at it. And have you heard of the Savannah
bananas? Do you know what that is? I have no idea what that is now. The Savannah bananas are a
amateur, um, well, not amateur, they're professional now because they're getting paid, but
let's say a, a group of, a group of baseball players who are certainly not at professional
baseball level in some capacity.
They wouldn't be able to probably make a professional baseball team,
but maybe in one realm they are elite.
Maybe they're an elite fielder, but they just can't hit.
Maybe they're an elite runner on the base pass, but they just can't hit.
Usually it's hitting, by the way.
But anyways, the Savannah Bananas, they're kind of like the Harlem Globetrotters.
They have this other team that goes with them, and they go into cities, and they play baseball, and they sell out every single game that they play because they made baseball more fun than what it was.
They have guys doing backflips in the outfield as they catch the ball.
They have a pitcher who pitches while on stilts and hits while on stilts.
You know, the dances and stuff, all this stuff.
But what's fascinating is that they were able to be successful in that mold,
and I think they will be successful for a very, very, very long time
because they changed the convention.
They didn't take the regular approach of, oh, we're just going to go pay the better players to come over here because it turns out that's not the reason why people watch the game.
They watch the game to be entertained.
They watch the game to feel as though they're part of it.
And the approach of the Savannah Bananas has been to literally change the rules, change the convention of baseball so that it is more – it incentivizes people to gather around it because they have more of a stakeholder process in it.
They have more to gain by being entertained.
They have more to gain by feeling part of something.
and I think that's growing.
You're starting to see these ideas of like,
oh, somebody wants to start a football league,
but the way that this football league is going to work
is that the fans on every play are going to vote
for what the next play is.
So if 70% of the people want them to throw a Hail Mary,
then they're going to throw a Hail Mary.
Yeah.
I think that's fascinating because it does add
a social layer to something that was previously just a convention um that that people were
kind of like observing and and being not subjects of but just uh yeah yeah they didn't have that
ownership of it yeah no i think the authors have they do have a section on game theory and they
have three different game theoretic simulations about how to bootstrap new networks essentially
how do you get people from a system where they all already benefit and find value from,
we could say like traditional baseball into a new system or network like Savannah Banana,
a new thing where, you know, you have to get people out of the psychological precedent of
baseball is a certain thing into, okay, baseball can be another thing where it can be more fun.
And you have to like, the equilibria is sticky. It's tough to get people out of their default
psychological framework. It's very tough. I had never heard of Savannah Bananas. I think most
people probably haven't. So the incumbent defender of a network always has huge advantage from that
psychological perspective of precedent. And so that's what makes like Bitcoin super impressive
is it has been able to bootstrap in the way that it has bootstrapped is, you know, to these very
specific things like marketing, maybe Savannah Banana uses certain types of marketing through
greed through a sort of human incentive exploiting or taking, you know, taking into account an aspect
of human nature. Savannah Banana does that, I guess, with like the humans want to have fun or
whatever. So the I mean, what the authors do, again, with the game theory is interesting in sort
of a general application for how you start new networks, how you overcome incumbents, and again,
how Bitcoin is a case study and how that may be happening right now with the biggest incumbent
possible, which is the financial system.
One thing I want to jump in and point out here is that the consistent thing about these
is that they take courage from the founder.
And the courage from the founder is that they are relying on the participation of other people
to make it successful.
The Savannah Bananas game, it's not successful if there is no crowd.
They were able to play baseball games during COVID, and to be honest, not many people cared.
Because it's still the exact same product on the field.
And they could pump in crowd noise, and they could do all that.
But if you take that away from, if you take the crowd away from the Savannah Bananas,
they're coming out of the crowd oftentimes.
They're going into the crowd.
They're participating with the people. And so it takes a giving up of authority, a giving up of control, a faith in the people to make this a success.
And that is, it seems at first counterintuitive because we say, well, Satoshi did this great thing by not cashing out his coins, by not pre-mining, et cetera, et cetera, and doing all of these things.
But in reality, I think he knew that if he had done that, then the protocol would have died and he would have ended up with nothing.
Yeah. And so not only would he have ended up with a sure he would have had cash, but what's that going to be worth?
You know, like, I mean, if you if you understand Bitcoin, then you understand that having a lot of cash is not a good idea ever.
Yeah. Yeah. Like it makes you subject to all kinds of all kinds of issues, even in the present and in the future.
but to just have the foresight to say look that in order for this thing to live now it has to live
forever yeah and i think that and there's something in that no there's something in that that's also
a deep lesson about maturity in human nature so the authors give they make the analogy between
satoshi as a founding father with our nation's founding fathers who also
kind of relegated or delegated, backed away from power, right? So they create something and then
they kind of get the project going and then they back away. That's also kind of just the archetypical
notion, not the founding father, but the father in general. And the authors have the analogy in here
of like the father who helps someone ride a bicycle at first, they're, you know, holding them and
letting them go. But there comes a point where the father has to back away to let the child flower
and grow on their own. And so it's just, again, a mark of maturity. And it's almost like this
archetypical thing where that's what the father does is they create and set a project in motion.
But if they stay there, always overbearing, always looking over the project, they're going
to oppress and smother it. And so the father has to let go. And that's what a founding father is.
the founding father is not somebody who creates something and then centralizes power and locks it
down. And then that's the thing that they have. I mean, that's a corporate model that makes profits
fine. But the idea of the founding father is something more benevolent, somebody who lets
the project go. Yeah. Yeah. I, uh, I've been feeling this lately because I've been running
this man camp thing and i've been teaching these guys that that my big takeaway was that i i did
not assume that the competence bar would be so low where i thought i would teach you how to use power
tools i didn't know i'd have to teach you what a screw was i didn't know i had to teach you
you know uh how to put a screw or how to put a bit into a drill yeah and last just to give just
to give context just to give context you're around a bunch of very tech oriented people
and you're kind of teaching a practical skills oriented course.
Yeah. Yeah. And last week we took it to a whole nother level, um, where I brought out a chainsaw
and I had guys using a chainsaw that had never used a power tool in their life prior to last
week when they used a hand drill. Like, yeah. And, um, you know, my, my personal past has been that
I've always been on the front.
I've always been at the front of the stage.
I've always been a singer in a band, a student body president at a university.
I've always been the guy in front of the camera.
And I have been having these moments of just utter pride, utter satisfaction, utter contentment, utter enjoyment.
in taking something that is very simple for me
and giving it to someone else
and watching them go from a negative one to a five
in terms of competence with some realm.
And that there is a fatherly aspect to that.
There's a big brother aspect to that
that just makes you so proud.
And I can only imagine if Satoshi is still with us.
like yeah and i hope i hope he is because if satoshi is still with us like god what a great
feeling to be able to walk around every day and know um all of the good that has come about as a
result yeah the you know the political political dissidents that have been able to move freely
people that have been able to leave countries with their money intact in order to start a better life
to not have to go from being a neurosurgeon in Ethiopia to being a cab driver in the U.S.
You know, so I think there is just something.
It seems counterintuitive.
It seems like there should be this short-term greed incentive of I've got my money, I should cash out.
But we know that there are things that money cannot buy and that those things are far more important than money.
that if you have those things, it's more likely that you'll get money.
If you have money, it's not necessarily a given.
Depression rates, anxiety rates, et cetera,
are very, very high among the wealthy.
And so it perhaps is a precursor to wealth,
and it's a sense of wealth in its own meaning.
Yeah.
It's not just that Satoshi forewent an immense amount of wealth
by leaving these coins locked up.
It's also that Satoshi forewent the glory of I am the inventor of Bitcoin, which is huge and which is also something that the oppressive father does, that all that my son or daughter has good about them is something that I taught them or did for them.
And so again, it's like this is very – we can pattern it on as benevolent.
Who knows the reasoning behind it?
Maybe we shouldn't go too far down that road.
But again it just the notion that on social layer zero Bitcoin started out in a very specific trajectory that we shouldn take for granted
And that does define the Bitcoin network as it is today.
And it would be very different if a Satoshi was still here weighing in on every controversy that arose on Twitter arguing with people.
A very different world.
um when we focus when we overly focus on the tech on the tech of bitcoin that's i think where some
people get into shit coinery the idea that bitcoin is just blockchain right and so that
we can build a better blockchain because if all bitcoin is is technology then technology progresses
now we're at a better state we can build a better bitcoin but when you know that there's a social
layer zero when you begin with satoshi it's different than beginning with a corporation
like a ripple or something that still sticks around.
You can't, you know, the better tech does not make up for a deficient social layer zero
at the outset, which again is the true genius, one of the true geniuses of what Bitcoin is.
Yeah.
There was a group of people here that were working on a blockchain and they're proof
of work.
You know, they're all Bitcoin.
They understand Bitcoin.
yet they were still trying to do this thing where they claimed that it was decentralized.
And I would talk to them about it and I say, well, what's decentralized about?
Oh, you know, we're going to have miners and stuff.
I said, well, do you have a pre-mine?
I'm like, of course, we have a pre-mine.
There's investors and they want to get their money back.
Yeah.
But that's kind of like if you believe in the thing, then you're not holding back.
you know you don't michelangelo didn't do two do two sistine chapel paintings and keep one for
himself right there there is a value and in fact it could be the value in that it is out there it is
for the world um one of the things that i wanted to ask you about because this is i can actually
I can get to, and it makes me think that Satoshi was a father in order to have that type of long-term outlook.
I'm not saying that you have to be, but I think it probably helps.
But settling on the four-year halving cycle, to me, is that I could actually see with my little brain and a lot of time getting to most of Bitcoin eventually.
I don't think I would ever make it to the four-year halving cycle.
That, to me, is so revolutionary, so inventive.
Yet, as you note, there's precedent for that. There's a pattern for that, that somewhat exists in the natural order, the World Cup, the Olympics, the presidential cycle.
We could also say like spring, summer, autumn, winter. I mean, cycles are like have four quadrants.
Yeah. What I don't know. I just want to kind of get your take on that on the on the four year halving cycle, the inventiveness of that, how unique it is, what it does to contribute, because it does create a forcing function.
And I would say that it only creates a forcing function for people to own Bitcoin once you're like 98 percent of the way into Bitcoin, because it takes a while to kind of understand that.
It is what entices the media to report on Bitcoin.
It gives a discrete event that the media can be enticed to report on.
We can say, oh, there's this Bitcoin thing.
Its schedule is going to have as far as its emissions.
And so you should, the article talks about Satoshi conferring with other people on a listserv or a forum about how to get Slashdot to report on the upcoming halving cycle, like how they should frame it and formulate that so that the importance to the protocol is noted to Slashdot.
So it provides a discrete event that the media can then report on and that with anticipation can kind of be prepared for. And so it's not just like a forcing function for people who are already in Bitcoin, who see the importance of the having cycle for the protocol.
It also is maybe the first time that a normie is going to hear about it is a news outlet that they read all of a sudden has a novelty article about, oh, Bitcoin, the emissions are going to halve.
And so there's going to be less of it in circulation.
So implicitly, maybe you want to get some.
And so I think that the author's note is part of the marketer aspect of Satoshi to have included this four-year halving cycle and to have had the foreknowledge that publicity was going to be important.
And again, I don't know how the four-year cycle is not something I would have alighted upon naturally, like the Olympics, the presidential elections.
I wouldn't have found that pattern necessarily.
But I do think, again, there is something archetypical about it. It's like spring, summer, autumn, winter, you know, the rebirth, renewal, maturity and death, and then the rebirth, renewal, and like the cycle that I think there's something built into the human psychology. Maybe that goes to unnecessarily deep.
The important part for this article, again, is just that it provides a recurring point where there will be publicity on Bitcoin in a way that favorably reports on its volatility and emphasizes its aspect as a limited resource in a world of inflationary assets.
yeah the uh the authors do a great job i think of discussing and kind of laying out the game
theoretic implications of yeah uh you know expanding it to more in a more complex uh
version of game theory than most people are used to seeing and they do it walks you through it
step by step yeah if you if you hear game theory yeah if you hear game theory thrown around you're
kind of curious what does it look like to walk through an iteration of game theory and then to
redo the game with a different set of rules and see how it plays out differently the authors do
it very lucidly here you can read through it without having any sort of specialty background
and understand game theory and see it applied very well yeah yeah no i think um yeah this one
i haven't read i haven't read any further um but just this me neither yeah so far just this essay
so far has been worth the entire thing.
The idea of a social layer is to me so unique, so novel, yet so intuitive and so obvious.
Yeah.
On that, I do want to note one thing.
So the idea of a social layer is not necessarily novel, although I think the importance that
they place on it is.
They note at the beginning that, in fact, detractors of Bitcoin in the literature have
commonly made a two-step argument.
Step one of the argument, a detractor of Bitcoin will say Bitcoin claims to be one thing on the outside of the box.
Bitcoin claims to replace people with machines.
There's no trusted third parties who create money.
The governance flow, take custody along the way, trustless, no third parties, etc.
But then step two, they say, but Bitcoin inside the box, Bitcoin is just people.
They claim one thing, but actually there's this social layer, people who decide what code to execute, when and how.
machines just veil the influence of the people in control trusted parties remain so it's actually
like the social layer thing is something that detractors have used in the past the authors
don't purport to like directly respond to that they say we respond to that in our resistance
money book but i think they do provide a good response to like actually describe the operation
of bitcoin social layer and like through satoshi's invention of bitcoin marketing of bitcoin harnessing
of greed and an eventual departure, we see the operation of social layer in a way that
goes from a system with a leader to a leaderless system, where we get this idea of a feral
institution, an institution that begins domesticated, is released into the wild and continues to
grow more and more wild with time.
And so the idea of a social layer, what this essay does, I think, is really brilliantly
use that idea to know that this is actually a huge strength that Bitcoin has. If you're looking at
why is this network able to bootstrap from zero into something that's worth more than Amazon?
How is that possible? Yeah. I loved everything about it. It brought me to an understanding.
But yeah, it's really, really important. I think you're right to point that out, that
the fact that there is a social layer was viewed in the beginning by people who saw it as a negative,
who saw it as a, not a negative, but saw it as a, oh, this is just a wolf in sheep's clothing.
Yeah, right.
It's just more of the same with a little, with a Bitcoin miner in between.
Yeah.
Yeah, people are everything at the end.
Yeah, I guess a final point I want to make is part of the value I found in this essay and that I found in the introduction that I hope I keep on finding here is the memetics or rhetoric of the argument.
In the introduction, we get the meme, the rhetorical device of the banker revolution, a new way to kind of encapsulate meaning, to re-describe, to give narrative to the past in a quick and easy, intuitive way so that people can understand it themselves but also convey it to other people how the founding has gone astray through the dominance of finance, through this banker revolution.
Now we get the idea of a feral institution, the idea, what does it mean for Bitcoin? What is Bitcoin? It doesn't seem to be like any other thing. And then you can describe, begins with a leader, becomes leaderless through provably costly signaling and departure of the person that invents it, making it completely different than any other thing, something akin to a natural language and with just as much sticking power for those that join the network.
And so I hope like subsequent articles and this is like the kind of the characteristic of a gifted writer. They don't just explain by kind of walking you through an argument. They give you concepts that compact all that meaning into a neat phrase so that you can walk away from the essay with this idea, feral institution, and then explain Bitcoin, unpack that later on in your own mind and to other people to help convey insight.
and help people understand kind of why Bitcoin is revolutionary.
Yeah. Yeah. Fantastic job.
What do you say? We put a bow on this one?
I think that was a decent job here.
I think that I'm super excited to go on to the next essay.
So we'll next time.
What is the next essay?
Yeah, yeah. Next time we're going to be discussing.
And I don't want to say that I wasn't excited for all the other essays in this,
but I was actually coming into this most excited for the next essay,
which is toward an anthropological theory of money by Natalie Smolenski.
I just always like different perspectives from, you know,
kind of academic schools.
We saw Jason Lowery, military theory, what Satoshi did,
kind of analytic philosophy.
Now we're going to get an anthropological theory.
We've seen financial theories, you know, economic theories.
We're going to, yeah, right, exactly.
So now we're going to get an anthropological theory of money.
And so super excited for next conversation we have.
I started following Natalie on Twitter as a result of you bringing this to me because you told me about her.
And so I find that what she tweets out, very refreshing, very deep, very thoughtful.
Absolutely.
She recently – yeah, definitely follow her.
She recently tweeted, you know, something that people don't often do is defend privacy in kind of a developed way.
If you will just say privacy is good, other people kind of are left thinking, I'll cede my privacy for gain.
I would rather get Facebook for free and give up my privacy than have to pay for it.
But in a recent tweet, Natalie notes that the human mind, our personality develops.
We need a cocoon of privacy in order to explore.
The human mind has to be able to explore iterations of itself, to feel itself out.
And we need a sphere, a cocoon of privacy to do that.
and just like defending privacy from first principles.
She's really good at kind of first principles,
as you would call it, to use a lingo,
thinking like that,
where you get a defense of something
that people usually just throw around the label.
So definitely follow her on Twitter, engage.
And hopefully, you know,
I hope if you've listened this far
that you read the book,
but also engage with these ideas.
Shout at us on Twitter,
shout at the authors, you know,
agree or disagree.
This is the Satoshi papers.
This is supposed to incite a dialogue.
And I hope we get that.
Yeah.
Fantastic. All right. I think we're out.
Cool. All right, Lucas. Thanks. I appreciate it, man.
Later, gang.