NCMT 500-314 -- Bitcoin and Philosophy (2 of 8)

Hello everyone, thanks for joining Nick Lanz Bitcoin and Philosophy session 2. I'm going to stop talking and pass it on to Nick to begin the seminar. Go ahead Nick, you're on. great and hi everybody I hope people have seen the first bits and pieces that have been them posted in the whatever it's called the this school bloggy thing we've got classroom the classroom yeah it's it's already looking good I got a

just a little while before I a really helpful a peace sent to me by I'm sorry hang on I'm just slightly losing my grip a minute here by Eric I'm which if people have not chance look at I recommend for sure raises a really interesting a topics to follow-up on I'm and this is sort of some wild if the area stuff beginning to accumulate which maybe we should push up the road a little bit I'm also mo sent a few pieces I thought the Bitcoin mining thing was very

helpful and the little text that is the small announcement that Satoshi Nakamoto made about the Bitcoin system that he just produces a really excellent fascinating little text I'm I'm I think I should probably give people a little bit more warning before a launching into a thing but that it's encourages close reading I think that maybe we should look at that next week along with the other stuff that we're doing so what I was hoping we could get on with here is running through the main substance of the

the course which is of course Satoshi Nakamoto's basic Bitcoin paper and I think one thing that's worth saying about that is when you hear a term like say a completely non-random example the critique of pure reason you immediately think of a book I mean I would be stunned if any of you would say to me when you hear that expression the first thing that comes to your mind is the critique of pure reason the thing the critique of pure reason the actual process or the undertaking or

anything other than when you hear that expression you think oh that's camps book that's the first critique it's quite intriguing that Bitcoin doesn't work like that I would be equally stunned in the opposite direction if anybody when they hear the word Bitcoin think 0 that satanosh Satoshi Nakamoto 2008 paper that's the name of text There's obviously all kinds of reasons for that. I think all of them are interesting and all of them are things that I hope we're going to be able to dig into. But it's on a very, very superficial level fascinating because of course Bitcoin is the

name of a paper. In this original little mail, he refers to this paper being produced. This paper is called Bitcoin, obviously with a fascinating and deep subtitle that we could easily spend four weeks looking at, but we'll keep coming back to him. And the fact that we don't immediately think we're talking about a text when we're talking up Bitcoin is already telling us something very interesting. It's telling us that if, as I'm trying to persuade you, and perhaps even on some other storylines as well, if

Bitcoin is the name for critique in its most advanced form, that critique is no longer instantiated in a text primarily it has migrated somewhere else you know the place in which critique takes place is no longer within this space that we're familiar with being within a book within a paper within sex something that we can reference in that way so there's something that I think is both necessary and artificial about treating this whole problem textually. I think it's necessary to do it because so much is happening in the whole Bitcoin world

that it's the only way within the sort of time period available to us to maintain some kind of focus and discipline and order in a way that we're approaching that. And I absolutely no doubt at all that this text merits that kind of attention. So I think it's something that we can't avoid doing, but at the same time it's also something that is strange in a way that would not be familiar in previous philosophical undertakings. It would seem completely natural that we were talking about a book. If we were talking about what is the critique for your reason, of course we'd be talking about a book. But actually, structurally, the actual cognitive issue is exactly the same.

We have two different phases in the history of critique. Both of them are associated with a text. In one, it's the most natural thing in the world to talk about a book. In another, it's an artificial and peculiar gesture that we're forced to constantly question. But that all said, as a kind of introductory remark, here we are with the text. Can I just say at this point, the tendency probably will be that I will continue talking unless someone jabs me. So I would like to be jabbed. So please jump in as soon as you want to.

My hopes at this stage is that we can just advance some distance into this paper with everybody being confident about what's going on and they can see both what's happening on a first-order level they can see the kind of issues and topics and questions that are running off it and they can also see why we are completely within a recognizable philosophical problematic in dealing with this paper in the way they're doing that. So I think this text is extremely and a bit surreptitiously dense in the sense it's actually

I think most people's experience of it is it's much smoother and easier read than you would expect. I mean this is very advanced it's coming from a very advanced field of knowledge it's coming with from a lot of highly technical expertise it would be the most natural thing in the world for it to be extremely off-putting and difficult and really inaccessible to people who were not and technically expert in these areas I don't think that's the impression that you get and I'd be surprised if that's the way people a response to it in my opinion there's only one section that is truly intimidating on a technical level and we won't get there for a while that's the section

on number 11 it's the longest the most paranoid section about and security threats to the Bitcoin system and it gets into some technical probabilistic calculations about about threats but we won't get there for a while and let's see how we can deal with that I think it's I think we can get the gist even of that without being too obstructed by it but up to that point I think it's a very very smooth reading and it's a text that is worth trying deliberately actually to slow down with and not to just get carried along by it because it all seems to make so much

sense it seems to be so a facile in the way that it's just communicating something very clearly and in a sensible fashion and it's very easy therefore to slip right past a lot of very interesting a content that doesn't isn't prickly isn't rebarbative it doesn't it doesn't force you to to get a tangled up in it So the title, as we've already seen, first of all, it's called Bitcoin. Bitcoin, one of the meanings of Bitcoin is this text. And the subtitle is a definition. And I think everything about this definition is worth pausing on, but I won't pause on it for a long time.

It starts with an indefinite article which means that he's being at least theatrically modest about the whole thing. It's a peer-to-peer electronic cash system. He's not saying that Bitcoin monopolizes this particular definition. And this kind of issue will actually come back in a lot of the concrete discussions about Bitcoin where people really get into serious questions about to what extent is or should Bitcoin be a natural monopoly. I think we'll get a chance to look at some writings particularly by a very interesting Bitcoin commentator called Daniel Kravitz who

is a very very strong advocate for pushing forward the sort of monopolistic potential Bitcoin and basically he says that anything that obstructs that tendency is actually preventing it really realizing its full potential. But we'll move on from the little word A. And then the little word A. And then, so the next word then is peer-to-peer. And this is an expression that I think is so huge in its historical resonances, again, that it's really worth, we will definitely keep coming back to it. It's basically, I think, the whole political

horizontal horizon of modernity is captured in that expression, peer to peer. We'll see concretely what it means for Bitcoin when we push a little bit further in. But it's associated with a whole series of associated terms. And in particular, with a certain set of notions that are very easily and regularly politicized to do with formal equality and flatness. And it's a term that is very interesting in terms of the fact it's very, very provocative

and stimulating for polemics. I mean in both directions all the most agitated highly energized a socio-political confrontations at the modern period are connected with this notion I will just skip ahead just a tiny bit just a to flesh out I can't because he says a down in the introduction he has a little phrase where he's he's talking about his own replacement for the trusted third party model and the ideal but Bitcoin is aimed for which he he says succinctly and clearly as allowing any to willing parties

to transact directly with each other without the need for trusted third party and that is the peer-to-peer model I'm and it's a model that captures all antagonisms of the modern period and and what it's trying to do you know it can be seen it's basically any sense of what is the teleology of liberalism from its origins in the sort of chewing up traditional society through to later debates about its about criticism coming from the left about what liberalism and it's about all tied up with this notion about the notion that two individuals or

agents disengaged many social context should be freed to directly interact with each other negotiating that interaction between themselves without any extrinsic or transcendent authority being involved in that negotiation in a in absolute nutshell in a old sense of the term that is the liberal notion of social interaction that is being captured here and so we can already see your just as soon as we'd say peer-to-peer here where we can see how fraught the politics of Bitcoin are going to be we can see that

Yes, of course. So let's compare this to the file sharing protocols, right? And how quickly they were all being shut down because of the origin of what is being shared, which is supposedly like copyrighted material, right? Right. There's a shift here too between sort of like sharing already existing rather than sharing what's being produced within the system itself rather than you know because in like any kind

of like torrent system right it's like you're usually sharing something from outside whereas here Bitcoin is tolerated or not shut down or at least not yet because what's being shared is nobody has claims to it. I think that this is going to be huge. I know I'm saying that about a lot of things but for sure it's incredibly unsettled I think this whole question. obviously you you have to remember my with this that the first big piece of social context with Bitcoin like this is the Silk Road you know where immediately it's being tied up with piracy with various types of

commerce in in contraband goods in in all kinds of she transactions that are I'm I'm obstructed by she existing social authorities I mean it's already again I think in this peer-to-peer thing read the Bitcoin is a fine it has a natural inclination towards allowing any to agents a distributed anywhere within the social field to engage in any activity that is mutually acceptable irrespective of any external social values or judgments

or laws or any of these things. So of course you're right that when it's purely being used as a system for monetary transfer that's hidden but implicit in monetary transfer is the fact that something is being trafficked or traded. You know, I think it's necessarily going to always be opened onto the social field. If you expect me to give you some bitcoins, then there's going to be something I'm wanting you to do in exchange for that. And so we're already going to be exiting from a completely hermetically closed system into a wider commercial field that is going to introduce all these larger social and political

questions about what are acceptable transactions taking place between particular agents. Are you still there, Mo, with that? I don't know, is Mo still with us? Yeah, I'm here. I'm here. Oh, yeah. So, saying that is to say, on the one hand, it necessarily is already tangled up in these kinds of questions. And secondly, there is a really interesting open and, I think, quite deep and tangled question

about what from the side of the state the politics of Bitcoin look like. And again, I think there's been a few already very suggestive interesting things written about that. I don't think this is the time to dig into it too much, but one thing that I do think is really worth saying at an early point is that there's an asymmetry between the state's public pronouncements and the state's actual interests and if we have anything other than the most naive notion of a liberal at this time in a modern sense of that term a modern transparent

representational state as soon as we begin to be suspicious about the the realism of that then we expect that there is going to be some kind of deep or dark state and there's two basic elements to that one of them is the what we could call generally intelligence services or security services or anything that if in any way relies upon covert operation and clearly we all know those thing I mean it's it's publicly announced that those social zones exist it's not a secret that they did and secondly this I'm agents who

while having some official status within the within this the political administration are also nevertheless private agents and have private interests and do private deals and that are also going to be a cult it and and shadowy in relation to their public profile public statements and public presentation and so for those two aspects of the deep or dark state Bitcoin is by no means an unambiguously negative phenomenon you know I think if we can just coldly without being getting too excited about it think about these regular

associations between cover parts state and narcotics industries and the narcotics trade because it allows them to have black black funds to operate with people who are very influential in the kind of field they need to to engage in a whole series of the cover activity outside of the limitations posed by public scrutiny if we find those kind of activities understandable and surely we should expect that they were gonna see Bitcoin at least with half of their mind are going to think are this is a resource of use to us you know we we could do a lot of things with this and it so it seems to me while publicly

the state has to say look this thing is basically a problem and its kind of it's a threat to the public sphere there is this large piece of political machinery that isn't deliberately outside the public sphere and the fact that we now have this resource that I'll that facilitates activity outside the public sphere for that component of the political machine is not any in any way an obvious problem I just wanted to say I was just looking up on Wikipedia where it's illegal so far, I

actually hadn't done that yet and seeing it's apparently illegal in a few countries and I wasn't expecting that. Like Iceland of all places it's illegal according to Wikipedia. right yes that is strange yes sorry just to make sure I'm hearing you right that it's illegal in Iceland. Illegal yes not legal. I also heard legal and I thought okay then it's just all the other places but it's illegal. Right okay that's interesting I mean I need to look this up I mean there's a list of these places do you have any other do you have any sense of the other places? Yeah it says just a little introduction it is currently not legal in Bangladesh Bolivia Ecuador Iceland

Indonesia Russia Thailand Vietnam and Kyrgyzstan right Russia mmm yes it says I can't vouch for the for how up-to-date this is but this is Wikipedia no it's a very interesting list of countries I mean if you were trying to find some common thread between them it wouldn't be at all easy yes that's something definitely to to look at carefully I to be honest I I mean I would be just speculating very wildly about the different motives motives there so I don't think it would be very helpful to do that but it's interesting yeah and it does say this does for example for Iceland it says this does not stop

businesses in Iceland from mining bitcoins so that could imply that there's no law from having a Bitcoin mine right take which is I mean that just well I followed the Chinese situation a relatively closely and it also is ambiguous like this and because I I think it's now illegal to engage in direct currency transactions with Bitcoin it was the case that the the the Bitcoin trade in China was just absolutely mushrooming hugely and there was then a crackdown I'm about a year ago I think now but as you know they still have

the this massive Bitcoin mining operation which is the same yeah I watched the link that you sent one of the short YouTube video link. Yes, yes. In the case of China, did that correlate, because you mentioned a year ago they cracked down, and I know it was, if I'm not totally mistaken or off, it was about a year ago when Bitcoins were over $1,000 US dollars to one Bitcoin, and now it's down to $250. Is there any correlation between the Chinese crackdown? Well, the Chinese crackdown wasn't responsible for, I think, the collapse in the price. I think that people expected there would be a big problem there, but I don't think it

was. I think there was a serious time lag, at least, between the time that the Chinese rules changed and the price collapsed in that way. Well, I just wanted to add, traders in the futures market of Bitcoin would really leverage when every time Bitcoin would be banned in China, they'd play off that rumor and crash the price on purpose. Right. And then re-long it and just keep playing off the news. Yes. I mean, my personal guess about this is that I think China will not accept a Bitcoin it will definitely if it goes in this direction it will produce its own Bitcoin clone I mean that's the way it does everything

and so it would completely break form if it was to accept this thing that had come from the other side of the world and move on to it I think when we see a Sino coin or Dra coin or something they've been persuaded by a model and they're doing a an indigenous version of it that could be identical could be perfect clown but it will just in some sense even it just symbolically be bears and you know that to me is what would be expected I would be honestly stunned if they would you know just to stick with the symbolism is a country that is very concerned with symbolism And I just don't think that symbolism would be acceptable to them to have the RMB being

dispatched by some currency system from overseas. It wouldn't work. My question would be how do these different systems of Bitcoin talk to each other if there is already more than one which there are and if let's say China or other places start their own club because it won't be Bitcoin if they are not somehow transacting with each other. So somehow through this trend because as you know like I mean I follow old school monetary

a little bit. As you know, Nick, there's a bank in England called Bank of International Settlements, right? And BIS is actually, I argue, one of the most important financial institutions in the world because they basically set all the exchange rates of all the currencies and everyone just abide by whatever BIS sets, right? So there must be a BIS for Bitcoin at some point to somehow validate and to validate and also set rates of how these bitcoins relate to each other. And in that sense then you're going to end up having with one bitcoin regardless of China or any country. I mean in a normal circumstance where there's no war or boycott or sanctions there will be

that will be like basically one bitcoin because BIS, BIS's job will be to regulate, or the bitcoin BIS will regulate how all this work together. Yeah, again, I think there's a whole bunch of things that come off this. I mean, one question is to do with the mainstreaming of Bitcoin in terms of like existing institutional structures and people following the way that a lot of the polemics around it particularly are playing out knows that that's a huge issue.

You know, there's basically, if you see Bitcoin politics as a set of concentric circles and on the outer level there are sort of critiques based on very sort of deeply philosophical on traditional issues to do with I would say they can be summarized as saying with the ideological and historical meaning of liberalism, you know, critiques from the left about ideas of algorithmic government to do with the de-democratization of economic processes, these kind of things on the left side. I guess there's a nationalistic version of that on the right, although I'm although I haven't not sure I've really seen anything striking written from that point of view but as you push into the inner core there's one debate that is overwhelmingly kind of

organizing the way these things go and it's between Bitcoin ultras associated if you're looking at the stuff at the Nakamoto Institute it takes to love those guys and I mean they are very very stimulating interesting and and radical and what in their approach to this is got already mentioned Daniel Kravish is one Mike Goldstein is another guy Pierre Rochard as a bunch of these characters you look very very uncomfortable much about it and on the other side there are people who are wanting to a basically make Bitcoin safe venture capital and the most significant character by far in this is Mark Andreessen

and he's very vocal about it, very willing to poke libertarians in the eye, even trying to frighten them off it and really wanting to say look this is, you know, has a kind of radical sort of anarcho-capitalist edge to it in the initial phase but what this really is a phase of internet technology that the whole world economy is going to move on to and the smoothest path to that is to stop it being so scary and to really assimilate it to established social institutions and to say about the blockchain in particular that as a public ledger this is something that's extremely compatible even he would

goes well as they have an affinity with modes of regulation and surveillance that are already in play in these social institutions. So that kind of mainstreaming argument I would say would be very sympathetic to what Mohs just said there, that you would expect to have national and international regulatory authorities and overseers in some way of the way this is working. But on the other edge, I think there'd be a lot of suspicion about it, in the sense that if you can get together, this is back to this peer-to-peer business, if you can get together with somebody over the Internet and agree on a transaction between

a Bitcoin and anything else, it can be any other coin, it can be any physical commodity, it can be anything that you can actually settle a contract about over the Internet, then the Internet is going to facilitate that without any regard for the interests or concerns of regulatory authorities, whether they're on the national or international level. I mean, if there is a Chinese Sino coin, and I personally decide that one Sino coin is worth one bitcoin and I approach over the net someone who's sitting on a pile of Sino coins and we strike a private deal that I will transfer some bitcoins then and now transfer some Sino coins to me

then how is something some a financial authority going to impose its own sense of the proper regulation of that trade on that on that deal I just don't see how it's technically possible and so I think it's only if all agents involved are actually welcoming the role of such an authority that that that is going to be something that's plausible now I mean as long as miners yeah as long as miners are willing to accept transactions into the blocks that they're creating regardless of their origin and have an incentive to keep doing so.

So you'd have to see the market cap or the total value of the Bitcoin being produced and traded in the exchange. I mean, Sinocoins would seem to be a possible area where this could happen, where China has the wherewithal to set up their own regulated exchanges, where most of the capital sunk into it would be happening there, and so they'd have some ability to control what was most lucrative for miners to accept into their blocks. But in Bitcoin itself, it doesn't seem as if, quote-unquote, regulation would be anything other than access to the capital. Access to the capital of regulated spaces as opposed to there being any, you know, that doesn't impose constraints on anyone else's uses of Bitcoin. Right. Sure.

And this gets us to this whole notion of cash. I mean in saying and here it goes out on a very interesting and controversial live in calling this an electronic cash system then from the very title it's saying that those kind of controls are not going to work you know because as you say insofar as capital is cash then it's already departed from that system of oversight and control and I think this would be if we were gonna try and find a word to hinge some of these debates on it would be precisely here like that Mark Andreessen's of the world are gonna say look get real

you know large chunks of capital are not and never will be cash and you know there too there's too much social investment in what is happening to those things so no big company dependent upon goodwill of its national already is concerned with its its public relations is going to treat its capital stock ask cash to be just deployed at will on these pete here system so that whole piratical attraction a bit coin as you people simply have this totally I'm off the grid stocks cash that they're they're engaged in private deals with is obviously

something that that the main line as a saying the mainstream is a single that's just not a realistic way this is going to play out and but yeah that's battlefield for sure so can ask are you defining and cash then I'm as an entity you can transit you can use as a former transaction in private so so outside a regulation would you have your simplest my time they should cash it's a it's a strong definition and I think to be honest it's a bit too strong number the Bitcoin system to easily tolerate so it has a remain a slightly tense issue but I think it's beats most economical and strict definition

cast is it's fully anonymous money mmm and it's the it's the equivalent a higher level of financial instrument of a bearer bond where with it you know if you go through the the set of paper financial instruments and it starts as we were saying last week that you put some gold in a bank vault and you've got a piece of paper that says I you can redeem this said get your gold back from the warehouse so that's the most simple step in this. But if you then take the next step and it says on that bit of paper and whatever kind of protections have taken place, I mean we're into the double spending problem here immediately but I'll have to bracket that off. If it says on that piece of paper anybody whatsoever who turns up with this piece of paper, even if they're

wearing a ski mask is entitled to take the gold out of the warehouse, then that is then become cash because it's no longer, there's no longer any form of institutional social approval that needs to be super added to make that a transactional entity. You can just simply, you know, anybody who's got it, you can strike a deal. And if you end up with that bear a bond then you got it and can redeem it in any way you want. So that is what cash looks like when it's formalized at a higher level. And obviously that ideal is feeding

right into the Bitcoin protocol and has a deep history in previous e-money and e-cash systems so it's it's it's something that's being inherited by Satoshi Nakamoto you know that the it's not really questioned here why people would want cash I mean it's just taken I think as obvious coming out of the tradition he's dealing with that that if you want a form of resources that have passed beyond any regulatory horizon and are freely disposable I'm and hence we get the Silk Road and all of those sort of on I'm so I'm I'm gonna venture

now even though there's a few on explored words even in the title I think I'll I'll venture down in abstract a little bit and there are some things that abstract doesn't do or just hints at but that said its as you find a lot of the text around this is an extraordinarily I'm comprehensive summary really a whole Bitcoin system it's just a few sentences and and it tells us an awful lot about what's going on I'm and it introduces the the key elements break quickly so

sorry one second here and that the very first sentence abstract is already setting up as a critique in the sense we were talking about last week the second aspect because it's already pointing to the fact that it's aimed to eliminate trusted third parties from commercial interactions that's the goal set up right from the start of the whole thing.

And he's saying that there's a little historical diagnosis that then follows up in the next sentence there about where those trusted third parties come from. Now it's not pitched as a historical theory, it's pitched as a kind of very tacit or implicit functional theory. But it really, I think, inevitably does suggest a certain kind of model of history behind it, because he says the reason that we have these trusted third parties is because of the double spending problem. So insofar as the double spending problem remains unsolved, then this particular ideal,

I really don't think it's too strong to see it as this kind of fundamental modernist teleological scheme towards peer-to-peer interactivity. That schema cannot be realized until the double spending problem is solved. So even though there's nothing remotely grandiose about Satoshi Nakamoto's style or mode of presentation, the actual claim, however modestly and straightforwardly presented, is extremely grandiose. It's almost natural when you dig down into it to say he, from, again, I think safe to say from a certain original primordial liberal perspective, is

claiming here to solve the fundamental problem of modernity. He is allowing this teleological realization that has been obstructed throughout the whole of modern history and has resulted in all the political and social infrastructure that we have seen through a resolution to this problem of double spending. So I think just two sentences in and we have this really just magnificent dramatic schema in place about what is going on in the paper.

The central core of the abstract is then about computers and time. The whole system that is going to be used, which is hinted at more than fully explained in this thing to solve the double spending problem, is again to just pull up stuff from last week is about the construction of a synthetic temporality. And this pushes us then, because this is tied up with computers and with a notion that also I think requires down the

road a lot of concerted attention, this notion of proof of work in the way it's used in this he's really saying that I'm all power as it is being sort of brought bear upon the system is being at delegated to computers I'm enough that the Nakamoto consensus the final decision about the nature reality is decided by computer power and computer power determined very precisely by that technical details of this proof-of-work system and we'll get to a proof-of-work section but just very briefly to skip

ahead on that the crucial point of a proof-of-work is that what is being done is an ordeal it's it's a task that doesn't allow for any kind of intelligent rationalization or simplification or large-scale solution at all it can only be resolved by work by continuous commitment of all volume of computer power to trial and error activity piece by piece to solve the these puzzles and so its it's set up deliberately that nothing

of cognitive significance could come out of this task and we only see this in the way that it's pushing a certain type of mining technology you know it's a it's a kind of interesting almost kinda anti-AI in the sense far from trying to push computer technology in a way that leads to more and more sophisticated algorithms and simplifying solutions that will actually allow and computers to do something that we would recognize as thinking in some dignified way it's going completely in the opposite direction it went from sort of normal CPU's to graphic chips in

game consoles that are just doing high-speed repetitive crunching activity with minimal sort of cognitive element to that all of that's actually being it's departing from that and then it goes into these special dedicated chips that even more and directed towards a certain kind of strange proletarianization of the computer towards these extremely standardized a non-rational forms of a work that is just to do with the share volume of calculation that it that it is able to do and the reason for this

is to ensure that there is no a computational shortcut available no one can come up with some brilliant innovation a in AI or something like that will that will suddenly allow them to dominate mining mining has to be a former a a computer trial computer or deal cannot be simplified or economy start and is always that we're going to reflect a commitment of sheer volume computing power and the largest volume of computing power settles the consensus so there's a very weird implicit kind of sci-fi ask computer politics involved in this whole notion

of power as it comes in and it's utterly critical it decides the nature of reality I'm and and it's being determined in a way that the intelligence that determines reality cannot be anything other than this grinding, crunching application of massive computing volume to the problem. The time element of course is because it is all done by time stamping, that all that needs to be decided in the system, what the consensus is based upon, is the succession of transactions and he says I think just a little bit further down

the most helpful thing going just pushing forward into instruction he says that what Bitcoin is what what we propose he says a solution to the double spending problem using a peer-to-peer distributed timestamps server to generate computational proof of the chronological order of transactions I know I'm rushing forward a little bit but I just want to get to this one thing where he says in the transaction section, the earliest transaction is the one that counts. We need a system for participants to agree on a single history of the order in which they were received. So all of this is about creating an artificial order of time and then settling on it through

this consensus system based on the pure volume of computational commitment to the running of the system. So can I ask a question about time here? Yes, of course. It's not even a question. It's just like, I guess it is a question, but it's a very general question. And that is, you know, every system, every political economic system, every system, right? Every piece of technology in a way comes with its own time binding or the way it has to deal with time. So in a way, you were talking about how Bitcoin operations are like a step in the wrong direction

from artificial intelligence in terms of like small, smarter algorithms or machine taking on a sort of like a human-like brain activity. Rather, it's about proletarization of the CPU and crunching and repetitive work, right? Yes, I mean I'm not, can I just say, I'm not meaning that in either of two senses that it could easily seem. First of all, it's not a moral claim about it. And secondly, it's not at all to suggest that it's actually diverting from the actual deep teleology of artificial intelligence, which I think we're going to get to. I think it's more that it is a critique of certain naive and maybe anthropomorphic models of what...

Machinic. What machinic is. No, for sure. But I wanted to somehow line that up with this, also how the temporality or the time binding of Bitcoin is kind of like chronological and chain-like, which is also a step back in terms of like, ooh, everything is network and everything is simultaneous. There's also an attempt in Bitcoin that the Bitcoin time binding somehow, I keep forgetting to put the camera on my own because I keep doing that with everybody else so people can see. Yeah so basically you know that thing you talked about in terms of like repetitive is also like reflected in the type of time binding that Bitcoin like operationalizes right or

am I wrong? I think these two could be somehow related. to be honest I could use a little bit more on on on this actually I mean because I think this I can see several different lines that you're going on here and I'm not sure which is the one you've got greatest attached to I mean one is obviously this question that you seem to move through quite fast about and it seems to be in a certain antagonism to to the notion of the concurrent network I'm but that seemed to be a passing thing and then and I think the deeper point you are making is one I'm not entirely a entirely getting yet

yes I'll so basically to to to respond to what what you what you just said Nick what basically I'll I'm trying to get at I guess is, is there a way to see these two, I mean in the same way you sort of talked about it which is sort of like this utilization of repetitive work is not in contrast to complex algorithms or machines taking on a kind of like a thinking thinking role but it's in conjunction with it so I agree with that

I'm not saying like no no no it we should we should create this polarity but I'm saying like there must be something there could be something similar going on in terms of because because based on what I read in in the paper the time the way Bitcoin deals with time is also so like a little bit seems backwards or like seems old school and very like linear and very like chronological and that's how that's how credibility is established in Bitcoin right? Yes, okay I mean this is obviously the thing I need to to dig at in your question though like what do you think, I mean it's obviously already fascinating when you're talking

about a notion of time as old-school or we could find a whole lot of interesting Senate it's for that like retrogressive notion of time these sort of notions because obviously the whole notion of the past is something that we know is really important faces is through the construction of past the system is is securing itself but but I I think there's a philosophical point you're making here about a certain a transition in the way that people think about time that is not being taken up into the Bitcoin system or am I getting you right? Yes, but also think of think of how Bitcoin and mining is sort of like a way of, sort of like symbolically

is a return to a system that was there prior to fiat money which was gold base or precious metal base, basis for money, even though that old system had its own problem of double spending or triple spending. But this, to me these three, there could be something in sort of like this, it's sort of like a back to the future kind of thing. With all three, like you mean the limitation of like how much Bitcoin could actually be made and how like that the idea is that return to some form of a solid metal even though it's basically metaphorical we know bitcoins are not solid and metal but like the name mining Bitcoin all the like graphics used for Bitcoin are gold color right and they look like gold coins right

right I mean search people go to Google images you see this this gold thing gold metaphor visual medical. Something that plus this repetitive work which is kind of mining, which is factory work, plus this idea of time binding in Bitcoin which is kind of linear could be somehow, I don't know, is it a camouflage to make people think this is like a, it's like a bit of like, you know what I mean, libertarianism. Is it like a move to the past or is it a move move to the future camouflaged as a past or the other way around. I mean, it seems that double spending is equivalent to a causal violation because it's a closed time-like move. You move back into the past in which a Bitcoin hasn't been spent yet without modifying the,

you know, you've created a double in the way that, you know, in time travel movies like Primer, looping through the past creates a double of the coin or of the traveler. Right. Sure. in temporal terms, establishing a stable timeline that exhibits linearity in a chronology and so forth, you have to avoid global causality violations, which is what it would be. Yes. Yes. I think that's really good. I think there's a lot in this whole line that I really hope we're not going to lose here. Like, for sure, this notion of a sort of simulated retrogression in these different dimensions is interesting. I mean, maybe they need to be teased apart a little bit.

I totally agree. I think this... Let me just go over what I think you guys have just said and try and hold on to it a little bit. And, like, so to go back from Jake's thing back to Moe's, is for sure I think this reference to a time violation is absolutely fantastically helpful I'm you know it it is really establishing laws of time so that when you talk about I'm what's going on in time travel movies and what preserving the timeline or yes it to just repeat this look the cabinet violating time violation all of this

is actually now being I'm instantiated in software in the protocol I think that's totally totally right and and I think that gold reference is huge and we can it we're gonna be there a lot and I also agree that it definitely deserves this this understanding and and this kind of language to do with a certain type of retrogression so is a fascinating retrogression that the the intensity with which Bitcoin focuses on simulating the fuck the economic function precious metals is absolutely remarkable you know it's in no way a casual metaphor it's it's a very very deep

simulation all of the abstract economic function of precious metals and and there's almost no way you can over emphasize the imports that's the way to the way Bitcoin is working I think it's when I I'm now and going into a set where I'm less totally sure about I mean obviously I introduced this whole thing about proletarianization computing power but obviously we are talking about computing power I mean so I think it's really worth sort of struggling with this little bit and

and and trying to disentangle it because because the very notion that work is best defy as a certain kind of non-economizable computational activity is remarkable. It's remarkable that this paper treats that as if it's actually quite straightforward and uncontroversial. It's remarkable in that it is so at variance to what we would expect coming out of our traditions. And obviously I expect but I don't think I've ever yet come across an extremely ferocious critique from the left about this use of work saying what the hell do you mean

that work is essentially defined by a kind of brute force computational activity you know where is that what are you doing with that and what does that socially suggests. I actually read, like I went into a lot of blogs and I don't know if I posted them or not because of their horrible graphics and the language I was kind of shy about like posting them to the classroom. People thinking like oh what is this guy reading? This is not what we're supposed to do. But I was actually interested in to see how this is trickling down into like simple FAQ language and how people are trying to set, basically I was interested in to see how people are trying to set this up and how you can set up bitcoining operations right

I'm thinking it's it's kind of like homegrown marijuana in a way because you have to sort of like it's very similar to similar to that because you have to think about energy consumption and how this will like raise your energy I mean if it's illegal they're probably like police will look at your energy consumption and come to your door and say why are you using that much electricity in your house right but it's not illegal then it's not like am I you want a production because you know what I mean it's okay to use all that electricity in your house somewhere right so that's a good thing for people who mine is like electricity right and really the language with which people talk about this is like setting up a little shop with like workers in it

right so it's like they talk about like you have to like really look into the specs of the graphic cards or all these CPUs you're going to set up and how it's not based on IP, it's based on CPU and you really have to be very good in patching them up together and doing this and that so they work together. So it's totally like a little form of computation on labor. It's like a labor camp. Yes. without it is it is it it's just I would really want to insist upon the perplexity and perversity and ambiguity of that notion of computational I mean I totally I totally agree and I totally agree on the importance of it but I think it's

like it's not that we can just treat it as a metaphor for previous political moral questions about labor because it just isn't working like that because because the computational aspect undermines and inverts and twists the labor aspect you know it's it's it's something very all it and very which we get we don't have a lot of preparation for if we're not if coming out of the computer science site up I guess it's a very straightforward coming out of notions of politic politics and and political economy philosophy of society all of these kind more historical fields it's extremely

weird strange disorienting thing that is happening with that mention of work as it used to use in Bitcoin so yeah fascinating but sorry just before I shut up on this little thing can I just also make sure I don't drop the other side what you're saying to do with this just energetic element you know I'm sure people really no one expected that it as a technological infrastructural development Bitcoin mining what sex such strong dramatic imperatives on the direction of a certain type of hardware

up and and that those to and that direction as you say is I'm tied up with things like energy economy to do with the amount of just group competition activity you can get for a certain unit electricity unit these are very very this is part of this working that is absolutely fascinating as you say it's crucial all any Bitcoin miner of any seriousness is looking at their electricity bill you know they are in a position of technological very high intense technological competition about screwing a certain amount of competition activity out of their machinery for certain electricity bill and as soon as they can't do that

As soon as something comes along that is actually able to crunch these blocks more efficiently for less power input, they go out of business. Their basic equation in terms of whether they're doing something that makes economic sense has their electricity bill as one, as the fundamental cost factor in the equation. And this is something that we can now see, looking at this paper, we can see this, it makes sense, almost as if it was there in some straightforward sense, but I don't think it was. I don't think that at the point that you're conceiving this system, from the currency

side, you could conceivably imagine what setting up this new mining industry, this synthetic, artificial simulated mining industry would actually do as a driver all technological development so that so the goal so far because our electricity is is not also are or not all nuclear right so and even if it is nuclear you have to mind in new looks in order to burn it to create electricity and then with with petroleum it's definitely mining is a form of petroleum mining right that that can fuel the Bitcoin mining so it's so like you get this you get this other relation here between

go between Bitcoin mining and then energy mining from the Sun or from nuclear energy or from a fossil base energy and how is this I'm just thinking about I just think It's very much like the old industrial model with human labor being cut out of it. And it's basically you have what Marx called in Grunderese, what does he call it? Fixed capital? You have natural resources and fixed capital meeting without the human labor somehow, without so much human labor involved. Yes. and I mean its I think again you can get a long way just by pushing this

gold mining simulation hot you know it I think that he's very consistent about the economics this you know why does gold if you go through the history political economy on coal you go through certain stages night to me this the most crude level most primitive level you just say old gold is rare you know gold is precious because we like it and it's rare scarce it gives it value but then when you get the sort of dawnings of a more scientific level political economic analysis people say what does that really mean to say it's rare you know there's gold in the ground

which we haven't extracted and it's obviously not as common as some other things but but what is that comparison really about and they come to the conclusion often confused with difficult questions about what becomes the labor theory of value in the role of labor and production and that what the scarcity goal really means is that the effort required to extract a certain unit of gold is the thing that is going to determine the value of gold like you know you do like anything else you can have a supply and demand curve and as long as the price

of gold is actually exceeding what it's costing people to extract new gold then you will have a whole in Russia capital into profitable gold mining activities and the equilibrium state which is really fixing the price of gold is the point at which gold mining becomes unproductive it's like you know I with obviously energy costs as one part of that you know labor energy all the other ancillary and cost involved in the process I'm put into mining and at a certain point the return in terms of a new gold production

for that investment is at equilibrium with the goal the global gold price and so that's what's going on with the question of the value of gold and gold mining as an industrial activity and I think that its there's no naivety about that in this Bitcoin sister it's like if we're if we want Bitcoin to have value then net we are saying necessarily that we are incentivizing a form of industrial mining activity and it makes no sense to say that when not incentivizing activity up to the equilibrium point set by the Bitcoin price so

you know this no one can be surprised it has in so far it's worked at all as a currency it has generated this new industry and it's an industry that is deliberately completely meaningless outside of the production of Bitcoin you know there's there's some people like I think it's called zero coin is an altcoin that tried to get people to solve useful scientific puzzles in the process of mining coins and that there's a very good article which I'll take out I I'm sure it's on the Nakamoto Institute I think that also like a crack at sure

or Goldstein I'm not sure and saying that if you think this you're not understanding the idea if you think that Bitcoin mining should be doing anything other than producing value through the production of bitcoins you you you're not understanding why it's modeled on gold you're not understanding why gold works you're not understanding what the function of mining in the Bitcoin system its the whole point is to prove industrial commitment to the Bitcoin system through the ship volume of mining activity that therefore entitles you to ace certain proportional say in the Nakamoto consensus

which with then settles the nature of reality so you know you're in a circuit that involves this mine activity obviously is a crucial factor and the and the s very very strong analogy of activity to mining as we know it out of normal economic history is no accident, it's extremely serious and it's taking us back to the role of gold as money obviously in gold standard and pre-gold standard financial systems. Nick, as a side note, it will be interesting to see how as Bitcoin mining becomes more

popular and more prevalent, how it will impact energy policies because you know you can quickly shift production to a country where electricity is cheap and then governments who have leverage could play with this in order to bring to attract Bitcoin mining to their economy by lowering the energy prices or all sorts of other stuff in the real world that can somehow So like block or facilitate the production of Bitcoins? Yes, for sure. For sure. That would require a huge economy of scale to already exist

in multiple mining actors. Because you'd have to have already bought a lot of CPU hardware to have the clock cycles at the level where the marginal cost of electricity was going to play a significant competitive role in what it costs you to mine more coins. So in terms of getting an advantage over some other country with cheaper electricity, in both places you're already going to need big concentrations of CPU power on the mining network, processing blocks and generating coins, in order for that to make a difference or provide any advantage. So I wouldn't think that with smaller-scale users, offshoring in search of cheaper solar-generated energy costs

is going to be that big a deal until you have, I don't know, a huge, a many-fold increase in the amount of mining and of block processing going on. So there's a lot of, I don't know, a lot of barriers or stages that come between now and when electricity, you know, when the thermodynamic problem becomes directly relevant to the economics. I'm not sure exactly. I mean, my sense of it, for instance, with these Chinese Bitcoin operations, which are

obviously deliberately going for scale, so maybe they crossed the line that you're already But it definitely gave the impression that the fundamental cost control element in their business was their electricity bill. I mean, they were saying it was costing them US$80,000 a month to pay their electricity bills. So I mean... I guess I'm probably off base there then. I didn't realize. That's a huge expense. It is. Electricity is super important in this right now, as it stands.

I was just thinking, I would imagine more so now, of course, and continually more so it's an issue. But in that documentary you just mentioned, they said that there was a point at which they were mining 100 bitcoins, over 100 bitcoins a day in the particular mine in that interview. So that's, even at that, I don't know what the value was then, but being at about $200 now, that's $20,000 a day. So in comparison, the $80,000 isn't that big a deal, but I'm assuming now they're mining a lot less. It's four days of the month, right? So it's like four days of the month production goes to electricity. That's like a formidable cost in a business model, right?

Because four days out of 30 is actually like 12%, right? So 12% of your cost, 12% of what you produce goes towards like some form of a cost, right? That's something you want to keep in mind. Well, if it's your only variable cost, it's not necessarily that big a problem or that big an issue for a business. But I'm not sure what other variable costs they might have. I mean, there's fixed plant hardware for the CPUs themselves. Security, so the plant is safe? Security, technical check, yeah, just troubleshooting and so forth, having technicians on site and dealing with problems.

I was also reading how at least for the first period that you're just setting it up and becoming part of this, you need to really be known and part of like a network of people who know they can connect to you. You have to use the right software, right? And I'm just talking about like amateur people getting into it, right? So in order for your CPUs to be used and be available, you need to do a bit of networking and knowing people and sort of like messaging people and thermodynamic barriers to entry. Is that what you wrote? Yeah, I did. Yeah. Yeah.

Definitely something I'm determined we're going to come back to. I thought your little post that you sent was really interesting there. but yet because of course which elect the whole question reversibility which is wanted to pick time dimensions and it's just blasted this whole thing we've already come across a reversibility when we're down in instruction but if I can just stick just for a minute to this to this question where all the the the mining issue I mean it should be the case that if people are treating Bitcoin mining as a normal industrial activity and it seemed to me

what the impression I got from this Chinese video was that the people are just sitting down there they're not weird libertarians cyber punks saying you know we'll use this thing to overthrow the state or something like that I I'm not I'm not dissing those guys because I love them daily but they're not those people there am they're saying a look this is a business opportunity it has certain costs it has certain preconditions and managerial demands it makes and I'm real do it at scale as a business opportunity and you know it's gonna cost us this and will produce this and this is what our balance sheets gonna look like now if people are thinking

like if they're just all be charging economic activity as we expect is but normal economic mentality then it should be the case that Bitcoin mining approaches equilibrium you know where when you put all your costs together your new machines your lectures deep there or your plan that any specialist people that need an artist and then track it against the Bitcoin price and the number of bitcoins you're producing a certain period you have a normal profit right and so if there's a whole bunch of questions for me that then come off that like

if it isn't working like that why is you know I don't understand it and as I say that particular video was very eye-opening to me about the way that at least some people are seeing it that way. If it is working that way, then things follow from it that are consequences of Bitcoin that I think are not usually on the radar. know where we're talking for instance about this thing about mining equipment where web but with the cost of the equipment the function of the equipment

the electricity consumption of equipment to be level expertise that is needed to employ that equipment um that um mining equipment is going to set the terms of this Bitcoin equilibrium. It's going to be that there's a whole bunch of ancillary businesses which are not generally the Marc Andreessen businesses sort of engaged in complicated social, commercial things to do with Bitcoin. They're businesses that are just making these machines to sell to Bitcoin miners that allow them to optimize their bitcoin production given these other costs and given the bitcoin

price and the particular conditions of where those workers are situated. And so this industry has its own deep logic to it that I think is very dry and is sort of lacking in sort of – it's the complete opposite of some of the things we were talking about earlier in terms of ideological excitability. It's not – it has none of that at all. It's just much to do with profit and loss accounting and a certain very specific technological demand that is now being introduced within that framework. If nobody has a question, I want to just ask question and respond to what Nick just said.

So should we look at this as sort of like a way of like how the old political economic order is trying to absorb or corrupt or subsume Bitcoin or is the other way around even though it might in the beginning appears that way? I think it'd be good to have a little bit on both of those sides that just you were just suggesting how that could work in both those to directions and I mean I if I can take what just one step back on this I'm

a lot of the way a ok ok for them I'll see people that I think really get what Bitcoin is about not only am computer science level I mean that's interesting and people can have a brilliant technical grow as but that and make a contribution to tweaking the protocol if they can get the consensus right and all of these sort of things that that that's a particular constituency but people who understand it as more as a as a a social phenomenon and an industrial revolution say that the whole center of gravity of the system really lies in its understanding all incentives and in the way it binds incentives into

the operation the system so the mentality of the Bitcoin minor not as something psychological but as something that is actually being a produced in a circuit along with development of this of this capability becomes absolutely essential and the and the mentality of the I'm Bitcoin and I'm sorry if I'm just using a few constrained Marxist analogies but I think they actually are informative like that marks goes to great effort to say look when you're talking about the bush was a don't get caught up in their particular irritating characteristics

or their corruption or certain kinds of annoying affectations of superiority or any of this trivial thing because then you're getting distracted. He says the crucial thing about the bourgeoisie is that they have a fundamental incentive structure that is intelligible in terms of the system and is essential to an understanding of the way that capitalism functions that that it has a certain economy to it in the in the sense of a kind of clean this you know it's it's if it makes a profit it's good if it doesn't make a profit it it's bad and anyone who allows themselves to digress from that basic

very compact set of economic incentives should be pushed out of the of an important economic role that the system itself should police itself for this ideal bourgeois mentality in terms of the management of capital. And I think this is really something highly relevant to Satoshi Nakamoto's notion of Bitcoin miner. You know the Bitcoin miner has no political agenda. The Bitcoin miner is not interested in making any kind of point through the application of Bitcoin. The Bitcoin miner is simply wanting to maximize their production of Bitcoins.

As we've seen, there are these questions on the cost side too, at minimal cost. And in doing that, in this purely sort of flat, economically incentivized direction, they will then police the system, they will supervise the system, they will carry out all of these functions of systemic overview that have previously been put in a completely different department of social understanding. These are governmental functions. functions that people had associated with some strong sense of responsibility or ethical notions to do with a commitment to honesty, a lack of corruption, sound government, public

interest, all of these highly sort of ethically charged notions of responsibility, the Bitcoin protocol wants to collapse them entirely into these very, very basic economic incentives. have them appear totally as accidents. A Bitcoin miner does not require any kind of testing for their commitment to the system or why they're doing it or their motivations or their sense of public interest or their commitment to the Bitcoin community. All of that stuff is completely irrelevant. All that is required is that they are rationally optimizing their Bitcoin production at minimum cost.

So I think that ties in with what the point that Mo is making about this, you know, about co-option. Because you can't really co-opt a Bitcoin miner because they are down to this degree zero basic economic incentives. I mean, you would have to actually drive them into a hysterical state of ideological excitement where they would be had to sacrifice all their economic interest for some other obscure purpose to do with shifting the direction of the Bitcoin protocol. And that we will of course get back to, but people have said that's a completely impractical understanding of what can happen.

Also, Nick, I think the kind of time binding that Bitcoin suggests, it's sort of like, I'm not sure, maybe this is a naive comment, but it somehow safeguards Bitcoin from being exploited for an extra surplus over and above. which we know with both industrial production of what Foucault called the disciplinary society and the cybernetic production which Duluth calls the control society or like the financialized world that we know sort of like post Federal Reserve and all that,

that it was always all about that. It was always about how to propose this system and then find ways to immediately corrupt it and get more surplus out of it. But Bitcoin seems to be a little bit resisting that type of political economic interest in it because it seems to not have a loophole that could immediately be exploited by the very same people who propose the system. Yes, I think so. I mean, look, it seems to me there's extremely strong, very, very traditional, profound left critique of Bitcoin for the fact that even in its purity, it realizes liberal historical teleology to the most extreme degree that we've ever seen.

So it's not that I think what you're saying immunizes against that level of critique, but I think at the same time, if one's criticism is guided to this kind of what we maybe see as a kind of hermeneutics of a suspicion about there being these secret, as you say, supplementary agendas that are riding it, I think that there's a lot in what you say a lot in what you say I mean obviously have slightly undermined my capacity for full agreement because what I've already said about a relation Bitcoin to the deep and dark state you know I think that it's it's almost

certainly the case that there are complicated agendas investing it because it does allow it facilitates social commerce outside the public sphere I mean that's what Bitcoin does so anybody who has an interest in that whether one sees that as as beneficent or malign is is has reason for interest in this yeah like why why why Ron why do drug runs from from Colombia to United States to then use the money in the in the dark CIA budget when you can just buy servers and just make extra money for the security apparatus

outside up are congress's approval right so it's like so it's like so it's like yeah so there's also select people and powerful people can get into this business wanna wanna make money up to up of some kind of a budget or a chart but we've already had that with like I mean I mean I use them marijuana parallel and I'm going back to the parallel again with example I'm sorry you just went silent there oh sorry I'm just I'm just trying to up I'm just trying to turn my camera on can you hear me yes yes now okay but what up but what the kind of the kind of transparency that that liberal transparency that Bitcoin

offers is a kind of like it actually shows that liberalism has been always communism of the privilege and say like hey well if you this is this is the real liberalism which is not the communism of the privilege in a name of liberalism I don't know if I if I think if that is the criticism of liberalism then that definitely holds a hundred percent and you know I think there is there is another criticism of liberalism that is more fundamental that even in its perfect ideal liberalism is about systematic de-socialization and de-democratization and that Bitcoin facilitates that to an absolutely

extraordinary degree because we're back to this thing about a peer-to-peer, a peer-to-peer relation. That is the fundamental, I would argue strongly, the fundamental liberal nexus in the classical sense is the peer-to-peer bond, in which implicit in that is a complete dismissal of any legitimate social interest in the transaction that is taking place. Now obviously for a lot of people, our deepest traditions of left critique, that is intrinsically deeply vulnerable to critique. So I don't think that Bitcoin, I don't think there's any point saying that Bitcoin is going to somehow elude that.

I would be stunned if that were to happen. But yes, I certainly agree that it's like in another more colloquial sense of democratization tight side up with notions like I'm I'm formal equality or is already in the notion of a peer to pair every node on the network whatever it may be has equal for more status not only by some matter again of an extrinsic transcendent entity saying you know you have to treat each other fairly but by the very nature of the system being incapable of not treating its different nodes

as having equal privileges dependent solely on this ultimate criterion of CPU power and obviously then on the on the higher level about the actual quantity of bitcoins that one has to engage in commercial activity with. You know, given the social essence or nature of humans, I think Bitcoin has to do a lot to completely overcome that social element and truly turn the participants into mere like singular isolated notes?

Well, I think it's you know a lot to do with what we think peer-to-peer is saying because I think there is a kind of way that it can be pushed into a kind of much more positive and maybe straw man state than is merely intrinsic in it. like and to say that any two nodes which of course needn't be in any each strong ontological sense individuals told and it's completely formal it could be anything they could be co-ops they could be arts intelligences they could be you know we with their it's just a mask that has a particular Bitcoin account

and so there's no positive ontological content if if someone was to say isn't this saying we should all be atomic individuals they are super adding a whole bunch of stuff onto that and making it much richer much more kind of positive in its social statement than it really is so I think it's important from the side of the left which I'm not pretending to identify with in the slightest but intrigued to understand in its most highly advanced form, to keep their eyes on the ball in terms of really what is the object of criticism here. And to see it as the abstract peer-to-peer relation and not any more rich and baroque

ontology of the primacy of the naturally understood individual or anything of that kind, which is extrinsic, which has been brought in from outside. So everyone, we have about 15-20 minutes left from the class. If you want to join in the conversation, feel free to come in because we only have 20 minutes left. I think maybe we should also at this point just look forward a little bit in sense that we've got a total of eight weeks but I think that it's

two components and we should have some sense of it as two as two four-week blocks and it would be very good to sort of in terms of the work people want to do for this and and systematize people's participation to start thinking I think coherently about how how that's gonna work and I think it would be nice to see the classroom used as a way of just formulating the particular direction on this material people want to take so I would recommend

that I mean next week is going to be the third week out of a four week thing I think it would I would recommend if everybody could manage to find just a very short state of their own sense of their orientation in relation to this material and the kind of angle that they're wanting to take on it and the particular problems a that they find most compelling that would be a helpful thing all around I think it would be interesting to everybody's classmates to get a sense to what people's interests are and I think it would be helpful for that us to just get a get a a kind of formal sense of their own direction and so I should just emphasize this really that should be

a short thing I mean long is fine if people want to do that but but don't feel if you if you can do three sentences comfortably do three sentences I mean I'm happy three sentences I would find that that helpful don't feel the some gone to your head that if you can't do 500 words it's not worth doing anything that's I don't think right say I was good I I'm you'd be great if people on could post those to that just as a suggestion to the classroom here for the next class so that and we can have a chance to read and maybe we can even discuss it if anybody want to discuss anybody's any had any questions Yeah, so Ian, I was going to suggest that those who are enrolled in a class must be

doing this as part of their like, because you know like it's almost like Nick is asking those who are enrolled in a class to do this which means it becomes class requirement. For the auditors and those members who are also taking the seminar or are going to watch these videos, they have access to the classroom and it's optional. So they just enrich the conversation by adding theirs. But those who are enrolled, please take note that this is sort of like a requirement and make sure to put it down. I myself am sort of like wearing two hats here. On one hand I'm just facilitating this as the technical person from the news center.

But also I am taking the course with Nick because I want to take this course with Nick. So I will be formulating my three or four sentences or more and put it there. And I encourage everybody else to do so. So we can make this, as Nik was suggesting, more productive in terms of actual research that's going to take place in the seminar. Great. So anybody has any questions or any comments? I have one insane question, which is going back to what you said about modernity, the problem of modernity.

The reason I say it's an insane question is because I realize it's huge. But unless I misunderstood you, it sounded like you were saying, Nick, that you thought the problem of double spending was the problem of modernity. Yes. And so I wonder if you could unpack that. Yeah, yeah, for sure. I think it's just, the good thing about this is that honestly, I think it's just, we're talking our text for this grand historical and ideological story is the first two sentences of the abstract of this paper. So, you know, it's extremely focused. And the way that the logic of this goes, as I'm seeing it,

is that there's a proposal of a peer-to-peer system. Now, I want to say, and this is a point where, obviously, I invite the most ferocious and concerted and multi-directional criticism, I want to say this model of the peer-to-peer relation is archi-liberal teleology and therefore is the determining driver of modernity as everyone sees it, whether on the left or the right. The fundamental structure of the modern social order is a relation to this germ of

teleological possibility of the absolutely unimpeded uninterrupted transaction between two nodes of a system without any kind of transcendent uh... intervention by the wider social body that's that's the kind of and then he says but the problem with that and the reason that we don't have that system and we did the reason that that relation is not has not been fully realized is I sorry let me take I'm going one step ahead of myself he says

rather than that what we see are these trusted third parties now trusted third parties I think I are the name in this paper for I am what off a cant a metaphysical disputes what of a marks the structures these large social structures a to do with them to state and and its particular modes of domination of sin a modern pair to relationship to capital and the state you see something very similar into this category its it's a placeholder trusted third party is the placeholder for

that element in social order that is responsible for I it's the objective critique I mean I was tempted to immediately go into most a moral political but to say it's the source of oppression or this is the language that would naturally flow it's the oppressor it's the tyrant it's the form of domination you know but it's better to keep it clean and just say its its the object of critique it's the non imminent instance that critique targets and to him that just to repeat for the once again he's very very consistent trusted third party is that

saying is that talk and and then so the final step is that he said so why do we have all of that stuff why why do we have that I about might my vocabulary things like because trusted to party sounds so so so more modest you know and and my claim really to this is that's not modest at all is vast I mean I'll just say for sure and because at least it's got a bit more like to the state why do we have the state set up as a problem in this and on on this kind of an arco sort of a vocabulary we have to state because of the double spending problem

the double spending problem explains why these institutions exist they explain why the ultimate realization of liberal teleology has not occurred those two things being absolute flip sides of the same historical problem you know and therefore we get to this thing which of course is grandiose but I think is also extremely strongly supported that this is saying the fundamental problem of modernity is explained by a failure to resolve the double spending problem and then as soon as you've said that the Bitcoin paper is put in this position as being this key

to the whole political and historical dilemma of modernity. Nick you and the paper refer to it as double spending but I'm sure you understand that this double is actually triple, quadruple it's an endless doubling right yes because it in it I think I know enough to suggest that double is also kind of like modest and nice it's actually it's an endless doubling that happened is in the monetary system we already have right yes yes totally I mean I think that doubling often does that it's like I'm you know when we do a doubling period

we're not talking about stuff doubling we're talking about stuff X loading in and and mass proliferation and like like I mean I'm almost tempted to make this a kind of course a course topic is the is the relation to crime you know where that's about doubling every time you do a time violation there's a double a and then if you see I mean I will try and attach a link to this fantastic char of the time the primer timelines by the end of that movie there is this one vast population of all of these doubles have been produced as the doubles themselves go through the time loop and get redoubled and people go through again to try and sort out and double themselves

again and this body stopped in the attic and this people can center when the saris and the whole movie is just crammed around the edges with this explosion of doubles so I mean I totally agree I I take it I that from now on when they're using doubling and doubles and all this language in in this context remain the opening to proliferation without limit because that's how that's how our fiat currency has operated I mean it's doubling of the doubling of the doubling it's like it's constantly like replicating and doubling. Yes, yes. Once you let... This is what I was going to say, the real function of the trusted third party has been

to actually either authorize these doublings or actually be the doubler itself. in states in which government owns the the central bank right state is doubling and in places like United States where the Federal Reserve is a quasi independent yes I think this is complicated I think this is complicated I mean met you know it's one thing that I think we should definitely put on our agenda if we can we can definitely get started on it now but I think we should put it as an agenda item the next time as well and because I think

to address it well we have to actually look more concretely history finance and I think one I know this is something you want to do and I think one thing that we definitely need to look at is just mainstream history of banking and in particular I'm obviously the operation fiat currencies which are obviously in the background to all of this because it's a at that I'm are gold simulation is is a critique of the fiat currency model and as soon as we is that we're talking about I'm fractional reserve lending and so I think I mean correct me if I'm getting this wrong and there's more to it than this

because we're still talking about 19th century early 20th century phase but I think as soon as you have fractional reserve lending you have a certain kind all institutionalized tolerated double spending I'm you know if if we look at the way operates obviously this is something the Austrians and all the hard-money people was said you know you go back I'll endlessly going back to this but I'll go back once again right now you go back to your your gold depository you put gold in there in the depository you get a note it says you're entitled to

reclaim your gold from the depository so I'm assuming that that gold depository behaves an extremely archaic traditional fashion and simply locks that gold away so it's out of circulation there is no increase in the money supply whatsoever and so there is a there is a I an absence of the possibility of double spending in that there's no way that you can go along with your no claiming this goal and the person from the gold because she can take the lump of gold and also go and spend it so that has in would in that case have been a taking tax and already that would be endless

proliferation because if if it were the case that the owner of the gold deposit she was able to take that lump of gold and treat it as currency they could obviously take it to another gold deposit you get a note use that note is there some sound problem it so I getting a quick feedback back here is that yeah it was John who came in and he didn't have his mic muted but I think it's fixed okay I mean so if there's someone who's wanting to talk because I'm probably rambling on about this but I just want to say did that the mainstream institutions all fractional reserve lending is obviously immediately involved in the problematic of double spending

in a constrained for because there are sort of reserve requirements in a there are certain structures that try and prevent it igniting into a complete hyperinflationary chaos. But still you can see that money is being spent twice or multiple times and basically your reserve requirements are the reciprocal of the multiple of spending that is permitted by that banking system of the actual hard money as would be defined by Austrians or anybody else. Do you think that's related to the sort of assumption of infinite growth that a lot of people argue, I mean I think that sort of can be generally agreed is built into you

know capitalist industrial models up to this point that infinite doubling, so that the The fractional reserve assumption is both dependent on the assumption, so the capital reserve practice is both based on the assumption that lending out more of this money than you actually have is going to be met, that that credit is going to be met in the future by growth enabled by that lending out process and that that also guarantees that there won't be a bank run in which people are coming back and all trying to get that actually isn't there for their money and that that links to the infinite doubling that's made possible by double spending understood not as you know literal Dublin by two but as an operation, an exponentiation operation

is isomorphic to the exponential growth of capital or of an industrial society. I think the relation is really complicated. I think the relation... And maybe the best place to start with this is if you look at the, there's a negative exponential based in Bitcoin, because there's 21 million Bitcoins that can be produced altogether. and a every four years didn't mount a bitcoins released for certain amount or of work in the complicated sense the weird sense that we've been saying haves

so you can see that this is actually like on the surface on the superlift superficial level is you know near you know it's your going half the way to the wall every time and So it's a perfectly smooth exponential series, but going in reverse. Sorry? A logarithmic. I think it's referring to the old monitoring system. OK, sorry. I missed what the last two things people have said there. Sorry. Can I get a? Yeah, it's a logarithmic growth in the amount of currency. It's a negative logarithm. in the sense that it's that the Bitcoin expansion is a negative locker room

and and the interesting thing about it is that its intended to be a compensation for the positive locker room all that captured in Moore's law and which as far as Satoshi Nakamoto is concerned is this fundamental as you say dynamic of industrial capitalism with a doubling period to certain kinds of exponential improvements in performance so rather than it actually being at in reality as you know me and a suppression of of a Bitcoin production it's supposed to simply balance

out the fact that people's Bitcoin mining operations and all of this stuff are following these capitalist dynamics doubling in power and so in compensation for that the protocol should have this breaking mechanism to make sure that the Bitcoin production isn't just blasted out within a few years and then stops. It's an attempt to actually spin out the process of Bitcoin production and those incentives involved in Bitcoin production in the face of a Moore's law that's natural tendency is to push those all out as quickly as possible.

So if you look at what's happening there, it implies that there's a total decoupling of expectations about capitalist dynamism and currency growth. And that is typical again of a kind of Austrian hard money position. I mean they would say that the relation that you have sort of indicated between bank credit relaxation and capitalist growth is a kind of perversion that has happened and the natural course is towards monetary deflation so that

as industrial capacity naturally increases the value of money let's say originally gold should increase in compensation just as with bitcoin it's obviously criticism from certain quarters is is intended to be deflationary and the rate of deflation should be direct the direct reciprocal of capitalist economic economic growth so obviously these are just expectations I mean someone can say you know you're just wrong about that and you will if you have a deflationary money system you will actually throttle Right, but that's a problem that a cryptocurrency or any digital currency doesn't necessarily have in the way a physical one does because you have infinite divisibility.

Well, gold is in theory infinitely divisible. Right, but bitcoins are in practice. Yeah, it got, bitcoin as in all of these things is super gold. You know, everyone treats gold as perfectly homogenous even though of course you get down to the nano scale and that falls apart. I mean bitcoin, there is no nano limit to it and it's the same in a whole kind of other dimensions. you know that the monetary protections of gold are just not stop a certain amount by am not that I wanna I wanna like I wanna suggest something you know what we were already four minutes past our time but but this has been like I've been wanting to ask this for the like ever since you

and you and Jake on this conversation which is the real basis are and you know by the way we we are not now operating, at least as far as American dollar is concerned, we're operating in a QE mode, I don't know, it's 4.0, 6.0, whatever, QE mode, in which Federal Reserve is no longer legislated to even announce how much cash, how much U.S. dollar they're producing and putting out. That number was one of the consequences of the last economic meltdown, the 2008 economic The problem was that Federal Reserve made that announcement kind of like secretive. So we don't even know how much doubling is taking place. Yeah, yeah.

Right? Yeah. So all of this operation which began sort of like with doubling and ended up with like this like exponential growth thing, to me as someone who's been studying it and looking at it since 2000, as someone who's got like a Sunday painter interest in it, I'm not an economist, I'm not like a political economist, I just have an interest in it, is a way of so these theories kind of like come, like my predictions or the naive way I looked at it has been kind of like substantiated by great work done by Esposito, Sohail Malik, and all these people who look critically at the way capitalism function as a way of sort

of quantifying future human capital in present, right? So when you print money, you're actually taking a bet or making a bet about future output because that's how the bottom doesn't fall. That's how this pyramid does not collapse. because there's actually exponential human activity, social activity, productive activity that somehow support this doubling and tripling of cash, right? But you have to somehow be... Pardon me? It's making good on the bets, either directly or as it turns out, arbitrarily, indirectly, is making good on the sum of bets made in the present. But that also destabilizes the currency. Yeah, it's not all Bernie Madoff, right?

It's not all like a pyramid scheme. It's like saying, okay, we're going to put out $3 trillion this year out there because based on economic data we have, we know this much activity globally will absorb this dollar and make it operational without it becoming a pyramid scheme, right? So moving to Bitcoin, it's kind of like shifting from this type of fixing of the future to almost fixing of the past, right, like we were talking about. It's about creating that lineage to the credibility of this goal. That's where the notch up comes from this shift, I think, also part of it. This shift from fixing the future to sort of like thinking about the past maybe.

I don't know. I'm just thinking loud. Yes. I don't know. It's complicated, I think. I mean, my concern with that model that it's like in proliferating, I mean, let me just again take one step back. It's just to say that I think it's absolutely right that there is this threshold of change that goes beyond standard fractional reserve banking into something genuinely odd. and probably all it to has faces you know with the first wave just after World War two of Keynesian macro economic management and then into the really bizarre stuff that's happening now I honestly doubt anybody really

understands you know that's a strong statement but I'm skeptical whether anyone it's an experiment for some concern that people do not understand but if you look at what's happening there there that there is no a positive correlation between any realistic expectation of the level of future economic activity and the increase in the quantity of monetary stimulus is there I mean isn't the relation closer to inverse that that is precisely when the economy seems to be flatlining on to a on to a level of minimal growth that the one puts once for down to the pedal love a financial stimulus and purchase I

got them you have to write well that's the center there's another way good to the interaction with the future that makes the idea is a cyber medics there you have a feedback loop that can be operated in both directions and so stimulus is taken to jumpstart the economy because when you put all that extra money out, it operates as investment, which produces the production, which then, you know, causes the future production that the bets that is needed to make good, the bets implied by increasing the money supply. And it seemed to me, maybe you could argue that that process, you know, started to collapse or went nonlinear with 2007, 2008 and the beginning of QE. I mean, I agree with you.

Certainly I don't understand exactly what the ramifications of the threshold change that happened there were, but I don't know, it seems an important point or like a supporting point for the idea that fractional reserve, that the fractional reserve process depends upon assumptions about the future, that there's another half of the circle. And so that makes the activities, the Keynesian activities make sense. I would just say that the cybernetics are dementedly complicated in the sense that there are a lot of these different loops. Let me just give you one example that I saw recently just on a sort of economics blog, but I thought was absolutely fascinating on this.

where one motivation for QE and financial stimulus is obviously to try to generate a certain level of what's considered to be healthy inflation. And healthy inflation being that people will not want to hang on to cash. This is now going back to the traditional Keynesian thing you know where the basic problem is that there's excessive cash preference that takes on an irrational state that owners of of wealth do not want to invest in productive activity and want to just hold on to it as money and if you want to drive them out of that and it certainly seems that that's a huge motivation and a lot of world central

bankers, like why, for instance, Germany have negative interest rates now and these sort of things. You use inflation to try and basically prod owners of capital into productive investment by generating a certain level of acceptable inflation. I think the Japanese central bank is completely explicit about that. They say, look, we have an inflation goal. nowhere near meeting that goal and say we're gonna stimulate until we can actually get people to circulate yen that's a greater velocity than they're currently but the situation but the circulation and this is the critique of the left right I mean I mean the left that really understand what's going on

in in in in in the financial world is that is that quantitative easing has only cause people with cash to sustain the stock market activities, to keep the market afloat and keep the market going up, which in an old Marxist view of how economy works in terms of real economy and fictitious economy does not really have any bearing on actual productive forces. It basically, the quantitative easing put the cash out and then it's lended to investors. it's landed to investors investors in instead of holding on to it and a coring interest on it date by financial instruments with it and by through by financial instruments

whether their stocks or bonds or derivatives they somehow keep their economy going because all the numbers would look good when you wake up next morning and and and and what do you call it that the Wall Street is doing well right but it doesn't actually end up going down it just keeps that keeps the one percenters up to protect the one percenters from feeling the effects of the real downturn but but if you am if you just try and be generous with this interpretation and say that it works some extent like say for instance the am the whole fracking gas patch hot unit tight oil thing in America where

huge amounts capital has gone into that very cheap money I'm in so far as it does work it obviously builds up productive capacity builds up out produces a supply class and therefore depresses prices and therefore produces deflation So you can't, what I'm saying about this is you can't even, the feedback loops are so strange and tangled that you can't even be confident about very basic and seemingly inevitable causalities. I mean, I would have said a year ago, if you churn out, if you mass produce money through a central bank, you can only produce inflation.

You know, how could that possibly be deflationary? but I mean there are arguments that it can be deflation and precisely what we're seeing now worldwide is the deflationary fact a massive economic stimulus by producing huge surplus of otherwise economic capacity supply a lot price collapse and deep inflation so whether or not you know I think this is too complicated and not trying to persuade people that that is what's happening I find it actually quite persuasive some of the patterns we've seen like you know even oil price seems to me to be something that could be put into this model

quite neatly but leave aside whether or not this is right what what I think is definitely the case is we cannot confidently anticipate what kind of cybernetic circuitry we're actually dealing with hair you know we just don't know how these what that even the polarity of these up these feedback loops are and if we're sort of I think with undue generosity saying that central bankers understand even roughly what the facts at these policies are its at least questionable you know they depend upon certain models and the exclusion of others.

Maybe this is a good place to end the class because we are already almost like we definitely 15 minutes overtime so if people don't have questions maybe you should like and the class and move the rest of the conversation to the classroom and also remember to do are makes request up coming up with few sentences for next class and so as a sort of them as a thread I think we we can fall back on pushing our way through the through the paper that people can read that on their own I'm obviously bring in stuff from anywhere in it I would try I don't think there's any point trying to get us it to be too linear about the

way we're working through this and I'll be very interested to get a sense of people about the particular angles approached their wanting particularly to issue about this this material okay so everyone very much thanks everyone a great class thank you next 10 a.m. Eastern and see you in the classroom. Thank you. OK, have a great week, everyone. You too. Bye.