Bitcoin and Philosophy (Session 2)

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 me 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 text 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 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 politicised to do with a formal equality and flatness. And it's a term that it's very interesting in terms of the fact it's very very provocative and stimulating up up polemics

I mean in both directions all the most agitated highly energized a sociopolitical confrontations of 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 a 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

I'm that is the peer-to-peer model I'm and it's a model that captures all antagonisms of the modern period and in what it's trying to do 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 left about what liberalism is about all tied up with this notion about the notion that two individuals or agents disengaged too 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 say peer to peer here where we can see how fraught the politics of Bitcoin are going to be we can see that the people who yeah yes of course so so let's say let's compare this to are

the file sharing protocols right and how quickly they were they were all being shut down because I 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. And obviously, you have to remember, Mo, 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 contraband goods, in all kinds of transactions that are...

obstructed by existing social authorities. I mean it's already again I think in this peer-to-peer thing. The Bitcoin is a find it has a natural inclination towards allowing any two agents 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 money to transfer is the fact that something is being trafficked or traded you know I think it's all its necessarily going to always be opened onto the social field. I mean, 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. Yeah, yeah, yeah. So, saying that is to say, on the one hand, it necessarily is already tangled up in these kind 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 I'm actual interests and if we have anything other than 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 things I mean it's publicly announced that those social zones exist it's not a secret that they do and secondly this agents who while having some official status within the within this the political administration

also nevertheless private agents and have private interests and do private deals and that are also going to be a cult hidden 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. I think if we can just coldly, without getting too excited about it, think about these regular associations between covert parts of the state and narcotics industries and the narcotics

trade because it allows them to have black funds to operate with people who are very influential in the kind of fields they need to, to engage in a whole series of fee, covert activity outside of the limitations posed by public scrutiny. If we find those kind of activities understandable, then surely we should expect that they were going to see Bitcoin and at least with half of their mind are going to think, oh, this is a resource of use to us. We could do a lot of things with this. So it seems to me while publicly the state has to say, look, this thing is basically a problem and 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 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. Yeah, that is strange. Yes, sorry, just to make sure I'm hearing you right, it's illegal in Iceland. Illegal, yes, not legal. Yeah, because I also heard legal, and I thought, okay, then it's just all the other places. 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 in a little introduction, it is currently not legal in Bangladesh, Bolivia, Ecuador, Iceland, Indonesia, Russia, Thailand, Vietnam. and Kyrgyzstan. Right. Russia! That's what it says.

I can't vouch 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 look at carefully. To be honest, 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 which is interesting well I followed the Chinese situation relatively closely and

and it also is ambiguous like this and because I think it's now illegal to engage in direct currency transactions with Bitcoin it was the case that 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 this massive Bitcoin mining operation, which is the same. Yeah, I watched the link that you sent, the short YouTube video link. 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 a thousand US dollars right you to one Bitcoin now it's down to 250 is there any correlation between the Chinese crackdown and well the Chinese crackdown wasn't responsible for I think the collapse in the in the price I'm I think that people expect it there would be a 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 like play off that rumor and crash the price on purpose. Right. And then re-long it and just like 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 say we completely break for if it was to accept this thing that it comes from the other side world and and we want to it I think when we see a sign a coin or track calling or something that they've been persuaded by

the model and that doing a an indigenous personal that could be identical could be perfect climb but it will just in some sense even it just all it keep the best and you know that to me is what would be expected I would be honestly stop if they would you know just to stick with symbolism is a country that's 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 from overseas it wouldn't work my

my question would be how do these different systems of Bitcoin talk to each other if there's already more than one which there there are and if let's say China or other places start start their own club because yes it won't be Bitcoin if they're not somehow transacting with each other so somehow you this triangle because as you know like I mean I follow old school old school monetary a little bit as you know Nick there's a bank in England called bank of international settlements right right and BIS is is actually the I argue is 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 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, and there's no war or boycott or sanctions, there will be basically one Bitcoin because Bitcoin BIS will regulate how all this works 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. basically if you 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 and 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 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 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 looking at the stuff at the Nakamoto Institute it still love those guys and I mean they are very very

stimulating interesting and radical and what in their approach to this is got already mentioned Daniel Kravish is one Michael Goldstein is another guy Pierre Rochard there's a bunch of these characters who are very very uncompromising about it and on the other side there are people who are wanting to basically make Bitcoin safe venture capital and the most significant character by far in this is Mark and recent is very vocal about it very willing to poke libertarians in the eye and even trying to frighten them of 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 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 as a public ledger this is something that's extremely compatible even he would go as well as he has 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 what most just said that the you would expect to have internet national and international regulatory authorities and the overseers in some way of the way this is working but on the other edge I think that he looked at 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 and 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 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 they'll transfer some Sino coins to me, then how is something some financial authority going to impose its own sense of the proper regulation of that trade on that deal?

I just don't see how it's technically possible. So I think it's only if all the agents involved are actually welcoming the role of such an authority that that is going to be something that's plausible. As long as miners are willing to accept transactions into the blocks that they're creating regardless of their origin. So, and have an incentive to keep doing so. So you don't have to see the market cap or the total value of the Bitcoin being produced or 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 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 limb

in calling this an electronic cash system then in 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 going to try and find a word to hinge some of these debates on it would be precisely here like the Marc Andreessen's of the world are going to say look get real you know large chunks of capital are not and never will be cash you know they're too there's too much social investment in what is happening to those things so

no big company dependent upon goodwill of its national authorities concerned with its its public relations is going to treat its capital stock as cash to be just deployed at will on these peer-to-peer systems. So that whole piratical attraction of Bitcoin as people simply have this totally off the grid stocks of cash that they're engaged in private deals with is obviously something that the mainliners are saying, the mainstreamers are saying, that's just not a realistic way that this is going to play out. But yeah, that's the battlefield for sure.

So can I ask, are you defining cash then as an entity you can use as a form of transaction in private, so outside of regulation? Yes. What would be your simplest definition? My definition of cash, it's a strong definition and I think to be honest it's a bit too strong but the Bitcoin system to easily tolerate so it has a remain a slightly tense issue but I think it's the most economical and strict definition cast is its fully anonymous money in and it's the it's the equivalent a higher level of financial instrument 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'm you can redeem this said get your call back warehouse 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 taken place I mean where into the double spending problem here immediately I'll have to bracket off if it says on that on that piece of paper anybody what so ever 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 not become cash and because it's no longer there's no longer any former a institutional social approval

that needs to be super added to make that a transactional a and state you can just simply you know anybody who's got it you can strike a deal and if you end up with a bear upon then you got it and can be team and angry say that so that is what cash looks like when it's come all lies at a higher level and and obviously I'm that ideal I'm is feeding right into the Bitcoin protocol and has a deep history in previous e 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

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 former resources that have passed beyond any regulatory horizon and are freely disposable I'm and hence we get the Silk Road and all so sorta and on I'm so I'm gonna venture now even though there's a few

on explored words even in the title I think I'll a 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

I'm the 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 of that 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. And 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 system he's really saying that all power as it is being sort of brought to bear upon this system is being delegated to computers and the Nakamoto consensus the final decision about the nature of reality is decided by computer power. And computer power determined very precisely by the technical details of this proof of work system. We'll get to a

proof of work section, but just very briefly to skip ahead on that. The crucial point of 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 work by continuous commitment of volume, of computer power to trial and error activity piece by piece to solve these puzzles. So it's set up deliberately that nothing of cognitive

significance can come out of this task. And we 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 a 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 um uh... 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 CPUs to graphic chips in

game consoles that are just doing high-speed repetitive crunching activity with minimal sort of cognitive element to them all of that's actually being it's parting 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 today that it is able to do. And the reason for this

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

notion of powers it comes in 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 she application massive computing a volume to to to the problem I'm the time element of course is because it is all done by I time stamping that that I'm all that needs to be decided in the system what the consensus is based on is succession all a transactions

and he says I think just a little bit further down the most helpful thing going just pushing for didn't 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 timestamp 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 will receive

so all of this is about creating an artificial order of time and then settling on it through this consensus system based on pure volume 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, not like you were talking about how Bitcoin operations are like a step in the wrong direction from artificial intelligence in terms of like 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 want to do like somehow line that up with this sort of like also like 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 networked and everything is simultaneous. Like 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 it is also like reflected in its type of time binding that Bitcoin it like operationalizes right or am I wrong I'm you could be somehow related yeah I 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 attachment to. I mean, one is obviously this question that you seem to move through quite fast about.

It seems to be in a certain antagonism to the notion of the concurrent network. But that seemed to be a passing thing. And I think the deeper point you are making is one I'm not entirely getting yet on this. So basically to respond to what you just said Nick, what basically I'm trying to get at I guess is there a way to see these two, I mean in the same way you sort of talked about 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 role, but it's in conjunction with it. So I agree with that. saying like no no no it we should we should create this polarity but I'm saying like there must be something that 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 sort of like a little bit seems backwards or like seems old-school and very like linear and very like chronological and And that's how credibility is established in Bitcoin, right? Yeah. Okay.

I mean, this is obviously the thing I need 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. We could find a whole lot of interesting synonyms 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 to this. It's through the construction of a past that the system is securing itself. But I think there's a philosophical point you're making here about a certain transition in the way that people are thinking about time that is not being taken up into the Bitcoin system.

Am I getting you right on this? Yes, but also 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-based or precious metal-based 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. Sure. With all three, like you mean the limitation of like how much Bitcoin could actually be made and how like 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? I mean search Bitcoin, go to Google images, you see this gold thing, gold metaphor, visual metaphor. Something that plus this repetitive work which is kind of mining, which is factory work, plus this idea of time binding in Bitcoin 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 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've created a double in the way that time travel movies like Primer looping through the past creates a double of the coin or of the traveler in temporal terms establishing a stable timeline that exhibits linearity and a chronology and so forth you have to avoid global causality violations which is what it would be 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 I'm so so to go back from from Jake's thing back to most is for sure I think this reference to a time violation is absolutely fantastically helpful I'm you know it it it is really establishing laws of time so that when

When you talk about what's going on in time travel movies and preserving the timeline or yes, to just repeat this vocabulary, violating, time violation, all of this is actually now being instantiated in software, in the protocol. I think that's totally, totally right. And I think the gold reference is huge and we're going to be there a lot. And I also agree that it definitely deserves this understanding and this kind of language to do with a certain type of retrogression. It's a fascinating retrogression. The intensity with which Bitcoin focuses on simulating the economic function of precious

metals is absolutely remarkable. You know, it's in no way a casual metaphor. a very, very deep simulation of the abstract economic function of precious metals. And there's almost no way you can overemphasize the importance of that to the way Bitcoin is working. I think it's when I'm now going into a state where I'm less totally sure about, I mean, obviously I introduced this whole thing about the proletarianization of computing power, but obviously we are talking about computing power.

I mean, so I think it's really worth sort of struggling with this a little bit and trying to disentangle it, because the very notion that work is best defined 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 suggest? 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 Bitcoin operations, right? And basically it's kind of like home grown marijuana in a way because you have to sort of like, it's very similar to that because you have to think about energy consumption and how this will raise your energy consumption. I mean if it's illegal, then probably police will look at your energy consumption and come to your door and say, why are you using that much electricity in your home? But if it's not illegal, then it's not like, why do you want a production? Because you know what I mean, it's okay to use all that electricity in your home somewhere. So that's a major thing for people who mine, is electricity. And really, literally, 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 like CPUs you're going to set up and how it's not based on IP, it's based on CPU and like you really have to be very good in like sort of like patching them up together and doing this and that so they work together. So it's totally like a little form of computational labor. It's like a labor camp. Yes. No, it is. It's just I would really want to insist upon the perplexity and perversity and ambiguity of that notion of computational labor. I mean, I totally agree, and I totally agree on the importance of it.

and but I think it's like it's not that we can just treat it as a metaphor for previous political a 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 its it's something very all it and very which we don't have a lot of preparation for if we're not, if coming out of the computer science side, I guess it's a very straightforward thing coming out of notions of politics and political economy, philosophy of society, all of these kind of more historical

fields, it's an extremely weird, strange, disorienting thing that is happening with that notion 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 of what you're saying to do with this just energetic element of it? You know, I'm sure people, really no one expected that as a technological infrastructural development, Bitcoin mining would set such strong, dramatic imperatives

on the direction of a certain type of hardware development. and and that those two 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 that 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 and these blocks more efficiently for less power input they go out of business their basic equation in terms of whether they're doing something like economic sense is has their electricity bill as one as the fundamental cost factor in in the equation and you know this is something that we can now see looking at this paper we can see this it makes sense you know 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 conceiving this system

from the 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 that gold so far because our electricity is is not all solar or not all nuclear right so and even if it is nuclear you have to mind the nukes 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 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 Fossil based energy and how this 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 You have what Marx called in in Grundyries. 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

I mean it's I think again you can get a long way just by pushing this gold mining simulation hard I think he's very consistent about the economics of this. Why does gold? If you go through the history of political economy on gold, you go through certain stages of naivety. At the most crude level, the most primitive level, you just say, oh, gold is rare. Gold is precious because we like it and it's rare, it's scarce. It immediately gives it value. you. But then when you get the sort of dawnings of a more scientific level of political economic

analysis, people say, well, what does that really mean to say it's rare? You know, there's gold in the ground, which we haven't extracted. It's obviously not as common as some other things 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 and the role of labor and production that what the scarcity of gold really means is that the effort required to extract a certain unit of gold is the thing that is going to determine is going to determine the value of gold. Like anything else, you're going to 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 inrush of 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 with obviously energy costs as one part of that, you know, labour, energy, all the other ancillary costs involved in the process put into mining and at a certain point the return in terms of

new gold production for that investment is at equilibrium with the global gold price. 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 it's there's no naivety about that in this Bitcoin system it's like if we're if we want Bitcoin to have value then we are saying necessarily that we are incentivizing a form of industrial mining activity and it makes no sense to say that we're not incentivizing that activity up to the equilibrium point set by the Bitcoin

price. So no one can be surprised that it has, insofar 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 some people like, I think it's called, ZeroCoin is an altcoin that tried to get people to solve useful scientific puzzles in the process of mining coins. And there's a very good article which I'll dig out, I'm sure it's on the Nakamoto Institute.

I think that also might be a crap actual or gold standard sure and saying that if you think this you're not understanding that if you think that Bitcoin mining should be doing anything other than producing value through the production bitcoins you you you're not understanding why it's more called on gold you're not understanding why call 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 sheer volume of mining activity that therefore entitles you to a certain proportional say in the

Nakamoto consensus which then settles the nature of reality. So you're in a circuit that involves this mining activity, obviously, as a crucial factor. And the very, very strong analogy of that 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 could like governments who have leverage could play with this in order to bring to attract gold bitcoin mining to their economy by lowering the energy prices or all sorts of other stuff in the real world that can somehow sort of like block or facilitate the production of the production of bitcoins. of bitcoins yes for sure for sure

that would require a huge economy of scale to already exist in multiple mining actors because you have to have already bought a lot of CPU hardware to 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 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

I'm not sure exactly like I mean my sense of it for instance with these Chinese Bitcoin operations which are obviously deliberately going for scale so maybe they cross the line that you're already saying but it definitely gave the impression that the fundamental cost control element in their business was their electricity bill I mean they were I think they were saying it was costing them 80,000 US dollars month to pay their electricity bills so I mean I'm probably off base there then I didn't realize that that's a

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?

The technical check, you know, just troubleshooting and so forth, having technicians on site and dealing with problems. But I think 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 immature 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. Yeah, that's 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, yeah, because of course we're talking about the whole question of irreversibility, which is one of the big time dimensions, and it's just vast in this whole thing. We've already come across irreversibility when we're down in the introduction. but if I can just stick just for a minute to this to this question we're on about 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, the impression I got from this Chinese video was that the people are just sitting down there, they're not weird libertarian cyberpunks saying, you know, we'll use this thing to overthrow the state or something like that. I'm not dissing those guys because I love them dearly, but they're not those people. They're saying, look, this is a business opportunity. It has certain costs, it has certain preconditions, certain 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 I if they're just all be charging economic activity as we expect is the 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 because you're producing a certain period you have a normal profit right I'm 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 isn't it? 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. you know where we're talking for instance about this thing about mining equipment where

we're but with the cost of the equipment the function of the equipment the electricity consumption of the equipment the level of expertise that is needed to employ that equipment that 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. businesses are just making these machines to sell to Bitcoin miners I'm that allow them to optimize that Bitcoin production

and given these other costs given the Bitcoin price and the particular conditions where those workers are situated and so this industry has its own deep logic that I think is very dry and this sort of lacking in sorta is the complete opposite of some things we talking about earlier in terms of ideological excitability, it has none of that at all. It's just much to do with profit and loss accounting and the certain very specific technological demand that is now being introduced within that framework. If nobody has a question, I want to just ask a 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 it 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 two directions. I mean, if I can take just one step back on this, a lot of the – I'll go further

now. People that I think really get what Bitcoin is about, not on the computer science level, I mean that's interesting and people can have a brilliant technical grasp of that and make a contribution to tweaking the protocol if they can get the consensus right and all of these sort of things. So that's a particular constituency. But people who understand it as more as a social phenomenon and an industrial revolution say that the whole centre 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 this this capability becomes absolutely essential and the and the mentality of the I'm Bitcoin man and I'm sorry if I'm just using a few constrained Marxist and now it's just 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 that particular irritating characteristics or all that corruption or certain kinds of

kind of a annoying affectations of security or any of this trivial thing because then you're getting distracted he said the crucial thing about the Bushwazi is that they have a fundamental and son incentive structure that is intelligible in terms of the system and is is essential to an understanding of the way that capitalism functions and that did it has a certain economy to it in in the sense of a kind of cleanest you know its its 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 the system itself should police itself for this ideal bourgeois mentality in terms of the management 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 Bitcoin the Bitcoin miner is simply wanting to maximize their production of bitcoins act as we've seen there with these then

these questions are on the cost side to at minimal at minimal cost and in doing that in this purely sort of flat economically incentivized a direction they will then police the system they will supervise the system they will carry out all of these functions all systemic overview that have previously been put in a completely different department of social understand you know these are governmental functions their functions that people had associated with some strong sense of responsibility or ethical notions to do with a commitment honesty a lack corruption sound government

public interest all if these highly sort of ethically charged notions of responsibility the Bitcoin protocol wants to collapse them entirely into these very very basic economic incentives and 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 optimising their Bitcoin production at minimum cost.

So, I think that ties in with the point that Mo is making about this, about co-option. Because you can't really co-opt a Bitcoin miner, because they are down to this degree zero of basic economic incentives. 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 is 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 I've slightly undermined my capacity for full agreement because of what I've already said about the relation of Bitcoin to the deep and dark state. I think that 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 beneficent or malign, has reason for interest in this technology. Yeah, so why do drug runs from Colombia to the United States to then use the money in the dark CIA budget when you can just buy servers and just make extra money for the security apparatus outside of Congress's approval, right?

So it's like, yeah, so there's all sorts of people and powerful people who can get into this business who want to make money off some kind of budget or a chart. But we've already had that. I use the marijuana parallel and I'm going back to the parallel again with the example I'm… Sorry, you just went silent there. Oh sorry, I'm just trying to turn my camera on. Can you hear me? Yes, yes, now. Okay, but the kind of transparency that, like liberal transparency that Bitcoin offers is a kind of like, it actually shows that liberalism has been always communism of the

privilege and saying like, hey, well, this is the real liberalism, which is not the communism of the privilege in the name of liberalism. I don't know if I may. I think if that is the criticism of liberalism then that definitely holds 100%. You know, I think 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's 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, tied up with notions like formal equality or it's already in the notion of a peer to peer every node on the network whatever it may be has equal formal 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 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 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 need and 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 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 and it's in its most highly advanced forms to keep their eyes on the ball in terms of really what is the object criticism

and you know to see it as the abstract peer-to-peer relation and not any more rich and a rope ontology of primacy of the naturally understood individual or anything of that kind, which is extrinsic. We've been brought in 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 the 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 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 I'm 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 this material and the kind of angle that they're wanting to take on it and the particular problems that they find most compelling, that would be a helpful thing all round. I think it would be interesting to everybody's classmates to get a sense of what people's interests are

and I think it would be helpful for that person to just get a kind of formal sense of their direction. And so I should just emphasize that really that should be a short thing. I mean, long is fine if people want to do that, but don't feel... if you can do three sentences comfortably, do three sentences. I mean, I'm happy with three sentences. I would find that helpful. Don't feel there's some gun to your head that if you can't do 500 words it's not worth doing anything that's I don't think right so yeah I was good side oh yeah well I mean it would be great if people could post those to the just as a suggestion to the classroom yes or the next class so

that we can have a chance to read them and maybe we could even discuss if anybody wanted to discuss anybody's any had any questions yeah yeah I was gonna 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've just enriched 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. I will be formulating my three or four sentences or more and put it there. I encourage everybody else to do 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. 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, But 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 it is 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 a 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 this are reason 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 were 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 an absence of the possibility of double spending in that there's no way that you can go along with your no claiming this gold 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 depository was able to take that lump of gold and treat it as currency they could obviously take it to another gold depository 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'm sorry 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 can be generally agreed is built into capitalist industrial models up to this point that infinite doubling so that the fractional reserve assumption is both dependent on the assumption it's 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 gold 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 a literal doubling 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 this visit this she at maybe them best place to start with this is if you look at the arm as a negative exponential based in in Bitcoin where you know because there's 21 million bitcoins act can be produced altogether and a every four years them mount bitcoins released for certain amount or of work in the complicated sense the weird sense

be been saying halves so you can see that this is actually like on the surface on the most super superficial level it's xenonian 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 longer a very well your your other system okay sorry I admit I missed what last two things people upset so sorry key can I get get a work yeah it's a logarithmic growth in the US or yeah it's a negative logarithm in the sense that it's the the Bitcoin expansion is a negative

locker room and the interesting thing about it is that its I'm 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 I suppression of 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 and to make sure that that the Bitcoin production isn't just a blasted out within a few years and then stops it's an attempt to actually and spin out the process of Bitcoin production and those incentives involved in Bitcoin production in the face of a Moore's law that's that's a natural tendency is to is to and push those all out as quickly as possible

so if you look at what's happening there it implies that there's a at a total decoupling of expectations about capitalist dynamism and a currency growth and and that is typical again of a kind of Austrian hard money position I mean they they would say that the the relation that you have sort of indicated between bank credit relaxation and capitalist growth is a kind of a perversion that has happened and a 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 at 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 all 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. Bitcoin, as in all of these things, is super gold. You know, I mean, everyone treats gold as perfectly homogenous, even though, of course, you know, 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, the monetary perfections of gold are just notched up a certain amount by Bitcoin. I want to suggest something, and you know what, we're already four minutes past our time,

but this has been like, I've been wanting to ask this for like ever since you and Jay got into this conversation, which is the real basis of, and you know, by the way, we are 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. dollars they're producing and putting out. That number was one of the consequences of the last economic meltdown, the 2008 economic problem, was that Federal Reserve made that announcement kind of like secretive.

So we don't even know how much doubling is taking place. So all of this operation which began sort of like with doubling and ended up with like this exponential growth thing, to me as someone who has been studying it and looking at it since 2000, as someone who has 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 come, my predictions or the naive way I looked at it has been substantiated by great work done by Esposito, Suhail Malik, and Nitzan and Bishler and all these people

who look critically at the way capitalism function as a way of sort of quantifying future human capital in present. 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. It's 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… That'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 into like out there because we, 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 gold. That's where the nudge up comes from this shift, I think, also part of it.

the shift from fixing the future to sort of like are thinking about the past maybe I don't know I'm just thinking about yes I don't know it's complicated I think I mean my you know my concern with that model that it's like in proliferating I mean let me just take and take one step back is 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 too has phases 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 that I honestly doubt anybody really understands you know that's a strong statement but I'm skeptical whether anyone it's an experiments for some concern that people do not understand. But if you look at what's happening there, there is not 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 of that? that it's precisely when the economy seems to be flatlining onto a level of minimal growth that one puts one's foot down to the pedal of financial stimulus and produces…

Oh, shit, I forgot that. You're absolutely right. Well, that's the sense. I mean, there's another leg to the interaction with the future that makes… There's a cyber medics there. of 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, you know, maybe you could argue that that process, you know, started to collapse or went non-linear 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, like a supporting point for the idea that the fractional reserve process depends upon assumptions about the future, that there's another half of the circle. and that makes the activity the Keynesian activities make sense we I would just say that the cybernetics are dementedly complicated in the sense that how we you there are a lot of these different links I mean let me just give you one example that I saw recently just on a on a sort of economics blog but I thought was absolutely fascinating

on this way and you know one motivation for a 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 kit that 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 want to just hold on to it and 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 and you know like why for instance is Germany have negative interest rates now and these sort of things so you use inflation to try and basically fraud 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 that we have an inflation goal, we're nowhere near meeting that goal and so we're going to stimulate until we can actually get people to circulate yen at a greater velocity than they're currently willing to do. But the circulation, and this is a critique of the left, right?

I mean the left that really understands what's going on in the financial world is that quantitative easing has only caused 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. Investors, instead of holding onto it and incurring interest on it, they buy financial instruments with it and through buying financial instruments

whether they are 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 what do you call it, the Wall Street is doing well, right? But it doesn't actually end up going down. just keeps keeps the one percenters protect the one percenters from feeling the effects of the real downturn but but if you and if you just try and be generous with this interpretation and say that it works some extent like say for instance the the whole fracking gas patch you know tight oil thing in

America where huge amounts of capital has gone into that very cheap money in so far as it does work it obviously builds up productive capacity builds up output produces supply gluts and therefore depresses prices and therefore produces deflation so you can't 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. 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 effect of massive economic stimulus by producing huge surplus of otherwise economic capacity, supply price collapse and deflation. So whether or not – I think this is too complicated. I'm not trying to persuade people that that is what's happening. I find it actually quite persuasive of some of the patterns we've seen, like 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 I think is definitely the case is we cannot confidently anticipate what kind of cybernetic circuitry we're actually dealing with here. You know, we just don't know how these, what even the polarity of these feedback loops are. And if we're sort of, I think, with undue generosity, saying that central bankers understand even roughly what the effects of these policies are, it's 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're definitely 15 minutes over time. So if people don't have questions, maybe we should like end the class and move the rest of the conversation to the classroom and also remember to do Nick's request of coming up with a few sentences for next class. And so as a sort of, as a thread, I think we can fall back on pushing our way through the paper, but people can read that on their own. Obviously, bring in stuff from anywhere in it. I won't try. I don't think there's any point trying to get us to be too linear about the way we're working through this.

And I'll be very interested to get a sense from people about the particular angles of approach that they're wanting particularly to pursue about this material. Okay. So, thanks everyone very much for this. Thanks everyone. Have a great class. Thank you. Thank you. Next time 10am Eastern and see you in the classroom. Thank you. Have a great week, everyone. You too. Bye.