§4 - Humans are neither tigers, nor bees. Regardless of ethnic variation, or ideological faction, they are neither solitary, nor collective (eusocial[1]), but social, and societies are essentially middling, or ambiguous. The concepts of the social and the individual, or the public and the private, are reciprocal, and mutually compromised. Social beings are necessarily (always, but only) partially coordinated, through transactional bonds. They have neither group mentality nor perfect autonomy. The way they get along together is an ineluctable and perennial problem, resolved through precarious, transient, meta-stable solutions. All promises of definitive fusion or fission, perfected solidarity or independence, are strictly utopian. The perpetual tension of dynamic social arrangements is an unsurpassable human reality.[2] It occupies the zone of coordination.
§4.01 - The ineradicable ambivalence of the social animal is captured by the theory of games. A tiger does not play games with a prey animal, anymore than bees play games with each other. A game is a transactional integration, at once too intimate for a non-social animal, and too fractured for a consolidated collective.
§4.02 - Games, in the game-theoretical sense of the term – the one relevant here – are always played in the wild. That is to say, they cannot be exited by cheating. If knocking over the table is a move that can be made (in reality) and doing so ends the game, it wasn’t a game of any seriousness to begin with. In any game that matters, cheating is a permitted move, as soon as it is possible at all. It might be said, more precisely, that any game which effectively prevents cheating is embedded within a greater game where such prevention is actualized, as an outcome. Any regulated game is carved out of the wild, and it is the outer game – that carves – which game theory attends to. In this lies its realism, distinguishing its objects from circumscribed, ludic amusements. Games merit social attention precisely because they contain cheating as integral options. Trust has to be internally processed, not extraneously presumed. There are no external referees.[3]
§4.03 - Due to its extreme elegance, and consequent generality of application, Prisoners’ Dilemma (PD) has come to achieve broad acceptance as the archetypal game. The scenario is elementary, by design. Two prisoners are held in noncommunicating cells. Each has the same, binary (or ‘Boolean’) strategic decision to make – to betray the other, or not. The entire game can therefore be represented by a 2×2 matrix. Finally, each space (or outcome) contains two numbers, representing the payoff to the players. In PD this aspect is perfectly symmetrical – the situation of each player exactly mirrors that of the other. Every payoff is a weighted negative utility – dramatized as a prospective period of jail time. All of the information on the outcome grid (or payoff table) is objective. It represent the dilemma facing each player as both, equally, would acknowledge it, without controversy, or perspectival inflection. In principle, it is accessible to both prisoners, and guides their choice of ‘move’.
§4.04 - PD has no well-coordinated solution, unless the game is multiplied – to become iterated,[4] and mnemonic. This is because there is no strictly rational alternative to defection (betrayal) in the absence of additional information, such as the kind that would be provided by the persistence of reputational positions through multiple cycles. In this respect, PD models coordination problems of the tragedy of the commons type, in which the optimization of collective interest is practically unobtainable.[5] ‘Free-rider’ problems are sub-components of the same dilemma, which indicates that it is generalizable to parasitic relations of all kinds.[6] Within all of these cases, rational individual decisions aggregate to a collective failure, expressed as systemic collapse in extreme cases, or – more typically – as a deadweight (negative sum) loss to the population as a whole.
§4.05 - It bears repeating – or reiterating – because it cannot be easily over-emphasized, that Prisoners’ Dilemma has extraordinarily general application to coordination problems. It would, indeed, be quite reasonable to characterize it as the model trust crisis. When concentrated into an atom, the pure element of the game is a double chance of treachery – subjective and objective – arising from the ineliminable hazard, on both sides, of betrayal. What Bitcoin acknowledges, from the beginning, is that to escape the prison-house of distrust is no easy thing, once mere moral exhortation in the direction of altruism is theoretically shelved. The recognition of this problem as a problem_ is socio-political realism itself. It is at this fork in the road that almost everything is decided.
§4.06 - PD is a close analog of a number of other game theoretical dilemmas, of which the best known is ‘Chicken’ – itself based upon an abstract model of bipolar geopolitical conflict in the context of nuclear deterrence. Chicken has several variants, distinguished primarily by dramatization. In one, competitors wrestle at the edge of a cliff, and double ‘defection’ pushes both over the edge. Another version of Chicken sets two drivers accelerating towards each other in automobiles. The contestant who swerves, loses. If neither swerves, a common calamity results (equivalent to the double defection – or collective pessimal – equilibrium in PD). An important difference between classic PD and Chicken, however, is that in the latter scenario(s) the contestants are not held to be strictly non-communicating. While the final decision of each antagonist remains a black box to the other, thus preserving the core of the game-theoretical dilemma, preliminary expressions of commitment are permissible.[7] Chicken thus permits strategies that involve signaling.
§4.07 - The DSP tells us that signs are cheap. Communication of commitment, therefore, is no trivial matter. Semantically and syntactically flawless statements of exceptional rhetorical quality still commonly – and even typically – mean nothing.[8] To repeat the essential, in the ways that matter most they are easy to say (and their repetition is cheaper still). Unless a cost is credibly attached to them, their flourishes make no additional contribution. The problem of credible commitment, as it arises within the theory of games, thus closely tracks that of the contract in crypto-economics. In both cases the strength (or value) of the signal is directly proportional to a conspicuous contraction of discretionary power, corresponding to an irreversible operation. Only when it is impossible – or at least infeasible – to back-down, recant, or renege, does a signal acquire game-theoretical significance. Burning bridges behind oneself signals something that no rhetorical flight is able to match. Even the importance of precedent – or reputation – in iterated PD is based on the status of the past as an irrevocable commitment. If what had been done could be taken back, like a fumbled move in a friendly game of chess, it would count for nothing. The irrevocable consumption of freedom provides the content for strategic signs.
§4.08 - Bitcoin is a game, in the strong or technical sense, because it does not control cheating through a transcendent rule (upheld by a “trusted third party”), but rather through an immanent principle (Nakamoto Consensus). Its immediate ancestry, within the game-theoretic lineage, descends from the formulation of The Byzantine Generals’ Problem, dating back to the mid-1970s.[9] As Lamport, Shostak, and Pease explain the problem (with line breaks preserved from the original):
We imagine that several divisions of the Byzantine army are camped outside an enemy city, each division commanded by its own general. The generals can communicate with one another only by messenger. After observing the enemy, they must decide upon a common plan of action. However, some of the generals may be traitors, trying to prevent the loyal generals from reaching agreement.
The generals must have an algorithm to guarantee that
A. All loyal generals decide upon the same plan of action.
The loyal generals will all do what the algorithm says they should, but the traitors may do anything they wish. The algorithm must guarantee condition A regardless of what the traitors do.
The loyal generals should not only reach agreement, but should agree upon a reasonable plan. We therefore also want to insure that
B. A small number of traitors cannot cause the loyal generals to adopt a bad plan.
§4.09 - ‘Byzantine failures’ arise when parties distributed within a communication network, containing unreliable nodes, are obstructed from reaching agreement, because they cannot confidently establish among themselves what has in fact been communicated, or from which agents messages have been received. A global perspective appears unobtainable, and local perspective is vulnerable to compromise. The extreme difficulty involved in Byzantine communications makes them a model coordination problem, of special relevance to Internet-connected agencies. Crucially, for our purposes here, and beyond, the problem follows upon an assertion of immanence (a critique), since it is defined primarily by the absence of a transcendent tribunal with global insight. None of the ‘generals’ are able to stand outside the system, call upon an authoritative criterion from beyond it, or even direct their communications around it. Their relation to each other is technically flat (or peer-to-peer). Any solution has to be drawn from out of the system itself – which is to say, from the self-organizational resources inherent to sheer multiplicity.
§4.091 - Nakamoto Consensus, in game-theoretic context, is the name for a solution to the Byzantine Generals’ Problem, based upon proof-of-work. By including proof-of-work within each message (hashed block), the generals are able to make the measure of agreement reached – i.e. computational power committed – into an intrinsic property of their communications. Agreement about the message is folded into the message. As blocks are chained, securely, in strict succession, the signal of consensus strengthens. In meeting a reiterated proof-of-work criterion, the blockchain accumulates immanent credibility. It replaces an extrinsic – and intractable – question about the reliability of communications with an intrinsic communication of reliability. Trust is made into the message.
§4.1 - Explicitly acknowledged ‘network problems’ long pre-exist the electronic era, by centuries, if not millennia. They constitute a guiding thread within what has been called ‘the tradition of spontaneous order’.[10] Order is spontaneous if it solves a coordination problem without appeal to any organizational element at a higher – or super-social – level. Spontaneous order, social self-organization, or immanent social process, is thus counter-posed to transcendent social design (from above, or beyond), and to its corresponding theoretical justifications, which amount to a social metaphysics, typically serving concrete functions as guiding ideologies of super-ordinate control. As long recognized by its opponents, the assertive recognition of this theoretical conundrum cannot be practically dissociated from an implicit political stance.[11]
§4.11 - In the absence of superior guidance, solutions to coordination problems have to emerge, out of – and as – games. This is only to say that cooperation between the agents involved cannot be presupposed, but has to arise from their interaction, if it is – indeed – to appear at all. To assume altruism or solidarity in such cases is a failure to think the problem at all. Coordination is the explanandum. The collectivist dogma is not an answer, therefore, but an alternative to the question. An answer is a trust machine, for which Bitcoin is the model. It is strictly complementary to a minimal presupposition, that of trustlessness (for which it is the solution).
§4.12 - Byzantine generalization extends to the very limit of network communication problems, to the difficulties of establishing coordination within radically dispersed (and thus zero-trust) multiplicities, encompassing non-idealized societies / populations of every variety. It is not, of course, that the concrete existence of trust is simply denied, only that it is rigorously thematized, as a social product requiring explanation – and what counts as an ‘explanation’ cannot, whether overtly or covertly, merely presuppose what it is called upon to explain. (This demand, as we have seen, is already totally – even ultimately – controversial.) If there is trust, there has to be a trust engine, conceived without pre-existent bonds of trust as a part. At the most abstract level, therefore, this is a topic that would have been familiar to the thinkers of the Scottish Enlightenment, as to all those participating productively within the theoretical tradition of spontaneous order. It is exactly this same problem of decentralized coordination (in the absence of any transcendent contribution provided by assumed altruism or common purpose) that has been the essential guideline for realistic social analysis within the ‘whig’ lineage of descriptive liberalism, exemplified most famously by Adam Smith’s figure of the ‘invisible hand’.[12]
§4.13 - Evolutionary biology, as a science of emergent networks, has engaged very similar problems from its inception, often with identical tools. This is especially evident in the modeling of ecological equilibrium within large, long-term biological system dynamics, in which the absorption of extinctions defines the ‘true network’ (by the absence of indispensable nodes). A more recent attempt to formalize such coordination is found in the game theory of John von Neumann, which has itself been effectively applied to biological networks at a variety of scales.[13] The latest – and still rapidly self-transforming – incarnation of this tradition can be seen in the science of ‘complex adaptive systems’ as exemplified by the research programs of the Santa Fe Institute.[14] In each case, the defining theoretical object is emergent coordination, in which no appeal to any centralized, superordinate, or orchestrating principle is made, unless this can be identified with the system itself, as such. The target of such researches is transcendental order, as captured by the immanent rules of distribution (which are ultimately indistinguishable from the real correlate of mathematics).
§4.14 - Games, strictly understood, therefore, arise under the minimalistic assumptions tolerable to an analytical anarchism,[15] that is: after the methodical subtraction of all presumed coordination, or the conversion of such presuppositions into formal theoretical problems. The implicit critical impulse driving the construction of such research programs is evident. That which might have been asserted, as a transcendent principle, or metaphysical dogma, is to be instead explained, as an immanent, emergent, or ‘evolutionary’ outcome. Whether explicitly understood in such terms, or not, every such enterprise is a regional application of critical philosophy. Spontaneous order is the correlate of critique. The solution, however, cannot correspond to a philosophical thesis (of any traditional type), or even to a ‘machinic proposition’ – an engineering diagram, simulation, or protocol – but can only emerge as the synthetic product of such a proposition, when executed. The notion that coordination problems (of significant complexity) can be anticipated in detail by a process of pure ratiocination is a philosophical disease, of recognizably pre-critical type. The idea of the diagonal is not the diagonal.
§4.15 - If the discovery of spontaneous order as a problem corresponds to the execution of critique, it can be formalized through a diagonalization matrix. When the pre-critical opposition of centralized coordination to uncoordinated dispersion is tabulated, it draws a graph isomorphic with the Kantian schema. At the level of the abstract formalism, this latter is echoed with such extreme fidelity that we can borrow from it freely, while switching its terms through a simple hash. Substitute centralization for analysis, decentralization for synthesis, order (coordination) for the a priori, and disorder for the a posteriori. As with the Kantian original, the first diagonal term fails – there is no centralized disorder, any more than there are analytic a posteriori judgments. Centralization is an intrinsically anomalous distribution, necessarily threatened by the prospect of a fall into disorder. Its complementary conception, ‘simple anarchy’, is no less invulnerable to theoretical dismissal. The previously acknowledged terms, centralized order, and decentralized disorder (like the analytic a priori, and synthetic a posteriori) are therefore preserved. Common sense is not abolished, at least, not initially. In the exact formal place of Kant’s invention/discovery of the synthetic a priori, the critique of coordination, too, generates a viable diagonal product – decentralized order. (Quod erat demonstrandum). This is the Great Oblique worked by all realistic social theory since the inception of the modern epoch.
§4.16 - In Cyberspace, the tradition of spontaneous order has been massively accelerated. Classical coordination problems have been reformulated as experimental fields, opened for exploration by the emergence of increasingly-powerful computer simulation tools, and consolidated as practical solutions through the implementation of cryptographic systems and P2P platforms. Philosophical reflection has, to a very considerable extent, been side-lined by technical applications reinforced by far superior criteria of evidence, which is to say: practical demonstration. In the age of electronic information technology networks can be tested as products, and it is possible to ask of a complex idealization, as never before, does it work? This transition, through computer simulation, from explanation to implementation, registers a process of technological envelopment without definite limits. It corresponds to an interminable tide of disintermediation that established institutions of intellectual authority have not yet begun to fear enough.
§4.17 - While institutionalized philosophy has tended to lag the network trend, rather than pioneer it, something that might reasonably be called ‘abstract network theory’ has nevertheless arisen to become a guiding philosophical theme since the mid-20th century. Among those modes of philosophical writing that have been most influential upon the wider humanities and social sciences, this attention to the distinctive characteristics of networks has been especially notable.[16] Appropriately enough, this ‘discourse’ – or dispersed conversation – has no uncontroversial center of authority, stable common terminology, shared principles, or consistent ideology. Its rhetoric tends to systematically confuse advocacy with criticism, and both with analysis, as it redistributes partial insight around a number of relatively tightly-interlocking social circuits (which are overwhelmingly dominated by a familiar set of theoretically-superfluous moral-political axioms).[17] Yet, however deeply regrettable this concrete situation might be considered from the perspective of austere theory, it cannot be simply wished away. Intellectual production itself occurs within networks, and those with greatest promotional capability are among those least optimized for pure intellection.
§4.18 - The cultural systems in which the philosophical (and sub-philosophical) formalization of radically decentralized – or ‘true’ – networks has emerged, through a multi-decade self-reflexive process, are eccentrically articulated, very partially self-aware, and only weakly integrated. Yet even in these noisy and deeply compromised circles, cross-cut by vociferous extraneous agendas, and subjected only very weakly to a hard reality criterion, convergence upon the rigorous conception of a model network has been inexorable. An especially influential example is the rhizome of Gilles Deleuze and Félix Guattari, which provides philosophy with its most rigorously-systematized account of acentric and anorganic order.[18] is itself a part of the rhizome. …” (ATP 7-13). Manuel DeLanda proposes the term ‘meshworks’ for such systems of flat, heterogeneous, interconnectivity, which he opposes to (comparatively rigid and homogeneous) ‘hierarchies’.]
§4.19 - A network, in this sense, has no indispensable nodes, entitling it to the adjective ‘robust’. Once again, the Internet – at least in its idealized conception – exemplifies such a system. It is typical, at this point, to recall the origins of this ‘network of networks’ in a military communications project (ARPANET), guided by the imperative of ‘survivability’ realized through radical decentralization.[19] As will be repeatedly noted, on the crypto-current the security criterion is primary, providing system dispersion with its principle. This suggests, as an ideological generalization, that there is no basic ‘trade-off’ between liberty and security. Rather, it is through security (alone) that liberty establishes its reality. The term “crypto-anarchy” condenses this conclusion into a program.
§4.191 - Such invocations of the strategic investment in distribution and redundancy, however predictable, remain conceptually productive. They are especially valuable as a corrective to modes of discourse – typical among contemporary humanistic studies – which tend to haze the harsh selective or eliminative function of critique into a vapid metaphor. It is the military ancestry of the Internet that is tacitly referenced in the celebrated maxim of John Gilmore (1993): “The Net interprets censorship as damage and routes around it.” In order to save command-control, it was necessary to fundamentally subvert it.
§4.2 - War games are built into the fabric of the Internet. This is at once a matter of uncontested genealogy, and of an as-yet only very partially explored transcendental-strategic landscape.[20] As we have seen, according to one (comparatively mathematicized) formal meta-description, Bitcoin arose as the solution to such a game – the Byzantine Generals’ Problem. This immediate context is so closely tied to the achievement of the Bitcoin Protocol, by those most closely associated with its formulation, that it has been widely adopted as a definition.[21] Yet even if the solution to Byzantine coordination establishes the game theoretical significance of Bitcoin, it does not exhaust it, even remotely.
§4.21 - Bitcoin is both less than, and more than, a mathematical theorem, because it remains a game in process, and also a meta-game. There is an irreducible informality to Nakamoto Consensus, insofar as it remains open, or unsettled, at multiple levels. As a concrete procedure, it effectively invokes a sociotechnical process of uncertain destiny within its demonstration, making it ill-suited to the purposes of mathematical proof.[22] If the mining procedure – rather than the reward criterion – could be fully specified in advance, and thus support predictive deductions, it would do no work. Incentivization – in every case – presumes non-deducible outcomes. Bitcoin, like all incentive systems, is a synthesizer. It produces a social process, as an event, and an arena (or agora), and thus advances experimental game theory, through an artificial environment especially conducive to the emergence of spontaneous (‘trustless’) coordination. Concretely, this space is a hothouse for business innovation, which constitutes the leading – and perhaps still ‘bleeding’ – edge of microeconomics, where generalized theory and practical enterprise have yet to dissociate. The boundaries of the Protocol, while strictly defined in certain respects, are profoundly unsettled in many others, and there is no strongly economical way to settle them. ‘Where does it end?’ is a question that has to be explored historically, without conceptual short-cuts, by an irreducible synthetic process. It is thus roughly modeled by the Bitcoin mining procedure, where the ineluctable necessity of trial-and-error – or uncompressible method – precludes all possibility of rapid philosophical (i.e. purely conceptual) resolution. Bitcoin is a game, and is like history, in that it cannot be worked out without being actually played – or hashed.
§4.22 - Real games are far-from-equilibrium processes that approach formality without actualizing it. They consume freedom – by contracting discretion – with every move that is made, and prolong themselves by reproducing it, in a circuit. Only insofar as this holds do they include incentives, as an irreducible teleological element. The open-ended mechanization of purposes is the diagonal along which they proceed. When apprehended at sufficient scale, this process is equivalent to industrialization. With the arrival of Bitcoin, money is – for the first time – subsumed into industrial revolution. A great historical circuit is cybernetically closed (which does not mean finished, but something closer to the opposite, i.e. initiated). Techonomic fusion – the singularity guiding modernity’s convergent wave – can for the first time be retrospectively identified. On Halloween 2008, the end began. What modernity has been from the start was then sealed.
§4.23 - Friedrich Nietzsche’s On the Genealogy of Morals dedicates itself to describing how man became “an animal with the right to make promises”. The story has turned out to be even longer and more intricate than his work anticipated, but the quasi-paradox there explored, knotted into the concept of debt, retains its pertinence into our time. How is a free commitment possible? Bitcoin attends explicitly to the same problem. “Transactions that are computationally impractical to reverse” – of the kind Bitcoin facilitates – constitute voluntarily-adopted mechanized commitments, immunized against all vicissitudes of will. Since algorithmic irreversibility enables an inability (or disables an ability), there is much here that seems self-contradictory upon superficial consideration.[23] Yet such a facility – or, indeed, power – of self-limitation is already fully implicit in the word ‘bond’, and in any serious sense of commitment. A contract is an expenditure of liberty. The motto on the coat of arms of the London Stock Exchange, Dictum Meum Pactum (‘My Word is My Bond’), extends the principle – by etymological suggestion – to the most elementary cases of formalized social association (‘pacts’). Society is a game, which arises from its ragged edges. The deal describes the frontier.
§4.24 - During a ‘Fireside Chat’ on ‘Bitcoin and the Future of Payments Technology’[24] Larry Summers makes exactly the same point:
This is an area that I think is rich with irony. … the single most important development in the history of the common law corporation was when the legal principle that it could be sued was established. And you might ask: why was it good to be sued? Well, because if you can’t be sued you can’t enter into a binding contract, and only when you could enter into a binding contract could you carry on commerce in a major way.
§4.25 - Bitcoin subtracts the option to defect (or double spend). The protocol sets the rules of a new game, in which the violation of contract ceases to be a permissible ‘move’. By automatizing this constraint, and thus withdrawing it simultaneously from the realms of contractual agency and regulatory oversight, Bitcoin instantiates algorithmic governance in its own, specific domain. Human discretion is displaced to the boundary of the Bitcoin commercium, and into the zones of meta-decision (for economic agents and authorities respectively) whether to enter or permit Bitcoin. These dilemmas introduce a knot of complex and typically highly-recursive games that can be grouped under the umbrella term ‘Bitcoin politics’.
§4.3 - To propose that the political controversy associated with Bitcoin can be expected to escalate in approximate proportion to the crypto-currency’s success, as quantified by its total market value, is unlikely to provoke feverish dispute. Yet such distribution concerns are comparatively trivial – at least at the level of political principle – when set alongside the questions of sovereignty that crypto-currency raise. Bitcoin is a limit strategy of depoliticization, which – at the cliff-edge of historical irony – announces an ultimate political contest. No stroke can be more intensely politicized than one threatening to sweep away a whole field of political decision-making. As a purely ideological challenge, therefore, Bitcoin organizes a terrain of political antagonism in advance, provoking (in reaction) a defense of politics of unprecedented conceptual purity. Crypto-currency self-regulation elevates the menace that has long-spooked left-articulated [25] political interests under the guise of the autonomization of capital to an almost parodic height. It ceases entirely to be answerable. Dialectic loses all purchase. This is widely grasped, even though the thing itself cannot be. Bitcoin is a game-changer.
§4.31 - It can easily become confusing to talk about games. An allusion to non-seriousness need not be a great problem – what, after all, is seriousness? More obfuscating is the invocation of rules. Insofar as a ‘game’ is thought to be essentially rule-bound, the train of associations is guided in a direction that is radically misleading. Games are defined by rules, but they are determined far more informatively, by the absence of rules than by their presence. The game occurs in the unruled area – and insofar as further subtraction of rules can be achieved, the game is thereby intensified. Rules set the boundaries of a game, but the strategies that compose the actual (or executed) game’s positive characteristics substitute for a rule. They are synthetic. There is a difference, therefore, between transcendent and immanent principles, or – more strictly – between rules of transcendent and immanent genesis. The former, determined in advance of ‘play’, set fixed parameters, or ideal competences, comparable to axioms and exposed in advance to analysis. The latter emerge – synthetically – from the performance of the game, as demonstrations, or discoveries. A game is always improved, qua game, when its set of transcendent principles is reduced, through conversion into immanent principles (or emergent outcomes). While there is a Bitcoin protocol, Bitcoin is not reducible to it. Bitcoin is rather the outcome of being ‘played’, in conformity with those rules that the protocol – firmly but non-comprehensively – establishes.
§4.32 - When games turn back upon their own rules, absorbing them into strategies as variable outcomes (of performances), they pass into politics, on their way to war.[26] It follows that politics makes itself difficult to talk about, since the analytical frame necessarily becomes a disputed frontier. If the games that matter were comprehensively structured by uncontested explicit rules, they would not be happening at all. There would be no field of contestation, and thus no contest. Loyalty to the game, as such, has become the axis of potential defection. Strategies marked as ‘cheating’ within a commercial context are elaborated, and acquire a very different self-representation, as resistance. To thus identify game-theoretic defection with social solidarity – or collective refusal – demands a thorough re-organization of meaning, and eventually nothing less than a cultural revolution.
§4.33 - A very brief digression into the articulation of politics – which is also the politics of articulacy – imposes itself at this point, beginning with the ‘structural linguistics’ of Ferdinand de Saussure,[27] a theoretical framework which attained a voguish authority over the politicization of commanding cultural institutions during the second half of the 20th century. In the non-STEM fields of the western academy, in particular, the influence of these ideas is difficult to exaggerate. A ‘structure’ in this specific theoretical sense is a system of differences – or significant discriminations – which distributes meaning within a hierarchy of contrasts. Its semantic atoms are produced through relations of reciprocal determination, most commonly represented by ‘binary oppositions’. Within an opposition of ‘A’ and ‘B’, ‘A’ is ‘not-B’ and ‘B’ is ‘not-A’ – and this exhausts their production of meaning, when extended across the concatenated differentiations of the linguistic totality. Saussure insists there are no positive terms. Signs acquire significance only through their distinctions, as these are applied to an intrinsically amorphous world, sub-dividing it into ‘signifieds’ – reciprocally demarcated plots or allotments of meaning.[28]
§4.34 - If we ask – in the degraded ideological mode (alert only to power-oriented, motivated reasoning) – why this type of linguistic theory rose to such an extraordinary position of cultural dominion, suspicion properly falls upon one particular assertive presumption: the arbitrary nature of the sign.[29] As the mantra of choice for a radically-generalized anti-naturalism, this doctrine lays down a welcome mat to politicization, and has thus contributed immensely to the self-consciously Gramscian reconstruction of the western academic humanities and social sciences during the mid- to late-20th century. What was being said about signs in this context and what was being done with them evidently interconnected, but only indirectly. The highly-formalized – and thus conveniently replicable – ideological signaling system that had been put in place by this cultural revolution established the rules of a new game, or rather, submerged those of the old one. The new dispensation was not to be predicated upon the formulation of protocols, but upon the management of faction. Friend-foe identification procedures rapidly attained uncontested authority, invigorated by blind convergence upon the essence of the political (as found in orchestrated in-group / out-group antagonism).[30] The practical economy was impressive, and in fact irresistible. To obstruct the process of identification was to identify oneself (as hostile), and thus to auto-eliminate the obstruction. In the name of an overturning of ‘privilege’ the new order of institutional-cultural meaning had privileged absolute, unchecked (or ‘arbitrary’) political discretion in the last instance, and through retro-projection. There had never (any longer) been anything but politics. The political collectivity alone decides, overcoming its alienation or false-consciousness in the dissolution of objective nature and complementary recognition of its own (naturally and traditionally) untrammeled power of reality-production. This commitment defines the Left, in its critically-coherent manifestation. It describes a generalized absorption into politics that the Gramscian (or Left-hegemonic) academy self-consciously facilitates, under the banner of the arbitrary or illimitably contestable sign. Across large swathes of the contemporary academy, such thinking has manifestly triumphed. Academic authority, and even the strictest kinds of academic credentialization, has been increasingly digested by it. Everything that organized intellectual activity touches upon is to be democratically challenged and policed, under the direction of the dominant – mass – faction, though (of course) through its institutional representatives. All values are resolved into ethico-political obligations, and thus submitted to inflamed moral struggle (recognizably post-theistic Protestant in type). The institutional consequences have been starkly evident. Polemic inflates along an axis of raw signal-amplification – which is finally shouting. When Bitcoin secures itself against voice, this is what it effectively succeeds at ignoring.[31] No shouting can conceivably be loud enough to perturb it. Like the crew of Odysseus, bypassing the Sirens, its ears are sealed. A certain strategic desensitization approaches its limit.
§4.35 - An overtly differential – and volatile – polarization of meaning follows upon the politicization of signs, when they are taken up as markers of organized antagonism, functioning as rallying points and signs of aversion, comparable to heraldic devices on a medieval battlefield.[32] The partisan adoption of linguistic signs, as ‘flags’, destabilizes them in peculiar ways. Structural determination is systematically aligned with faction, and subsequently warps in accordance with political vicissitudes. Ideological terms are driven into unusual migrations of meaning, through rapid twists, turns, and complicated zig-zags, which model – non-coincidentally – a dialectical process of development, in which everything becomes its opposite, on the way to absorption into totality. The word ‘liberal’ (and its associates) – for important reasons – provides the most remarkable case, pressed into crazed meanderings across nearly the entire field of political significance, even as this domain asserts itself as all-encompassing. ‘Liberal’ and ‘anti-liberal’ are terms that have evolved – or degenerated – to such a point that they have become near-perfect synonyms, serving only as indications of evanescent factional identification. The meaning of ‘federalism’ has undergone a comparable process of structural devastation. It is natural then, to expect the signs of pure political polarization to manifest an extreme degree of semantic instability, and this is precisely what we find with the words ‘right’ and ‘left’ (in their political usage).[33] Unsurprisingly, these words are regularly denounced – from all sides – as mere triggers for conflictual group dynamics, and as an invitation to intellectual chaos. The semiotic in-group / out-group rituals of micro-sociology have a far firmer grip on such terminology than that enjoyed by political philosophy. As is typical of political language, these words have become signals of group belonging, while only very secondarily preserving the capability to designate any definite grounds for the social or cultural categorization in question. Flagged allegiance (‘us’ or ‘not us’) swamps – and drowns – all positive meaning. Insofar as the intrinsic interests of philosophy are concerned, therefore, it is impossible to over-emphatically denounce the cognitive destructiveness of partisan identification. This is the basis for the admirable maxim adopted by the rationalist website LessWrong: “Politics is the mind-killer." [34] It is also why the very idea of intrinsic philosophical interest has to be systematically derided from the side of politics (typically, as the mask for a hidden or crypto-politics).
§4.36 - If every discussion of money is vulnerable to corruption by politics, politics itself is pure corruption, at least from the classical liberal perspective that is re-animated in crypto-libertarianism (even if there are far more complimentary ways of expressing this point). Politics is the place where language goes to die, sacrificed – by necessity – to ulterior motivation.[35] The evidence of linguistic history could not be more unambiguous in this regard. Whatever is seized with partisan enthusiasm becomes – almost immediately – philosophically unusable. It is proposed here, therefore, that thinking the political spectrum through Bitcoin, is an approach with inherently superior prospects to the extant – and almost certainly doomed – alternative of attempting to conceptualize Bitcoin politics through a system of ideological articulations which has already been broken. Such an undertaking can only be impure, which is to say (at least) double. It cannot avoid assuming terms of contention, even while pursuing that which eludes them. There is a game within, and also over – or about – the rules. No simple denunciation ‘from without’ can suffice. Though pontification from a place beyond faction is a tantalizing ideal, it is also a transcendent pretense. We are lost in the world of games. There are no referees. Nothing could be more laughable than the claim to represent the voice of neutrality (only the blockchain – or emergent consensus – can do that).
§4.37 - If there is to be a double game, it has to engage those most inclined to defect in advance – or at least enough of them to sustain credibility as a site of unrigged competition. Bitcoin’s primary lines of absorption, then, are both predictable and comparatively easy to detect. It was along these paths of assimilation that it drew a supportive constituency into the germinal crypto-currency – as designers, miners, speculators, users and promoters – on the basis of pre-existing dispositions. In this regard, Bitcoin politics has been flavored by a number of supportive ideological themes, among which decentralization and deflation are by far the most emphatic. Both of these themes cater initially to the arch-liberal right, represented by classical liberalism, libertarianism and anarcho-capitalism, and affiliated to the right-wing antipolitics of economic autonomization, deregulation, disintermediation, distributed production of security, and – at the limit – algorithmic governance (or local political extinction). The decentered commercium, intrinsically secured against political intervention, is the incarnated ideal of arch-liberal order, and Bitcoin has been seized upon, in very substantial part, due to its conspicuous affinity with this social model. It has been adopted as a path to the realization of apolitical distributed governance, in compliance with the techonomic partial-teleology of a sovereign spontaneous order (oriented inherently to the programmatic dehumanization of power [36]).
§4.371 - Decentralization is a highly-contested ideological term. Its alignment with ‘the right’ is pronounced, but nevertheless controversial. The existence of ‘left libertarian’ factions and affinities is the most obvious indication of its complexity. [37] It requires diagonal (critical) apprehension. As Bitcoin demonstrates, it passes between the global and the local, the integral and the disintegrative, at an oblique. A multiplicity (considered as a substantive) draws the same line, which every flat network is pulled onto. To promote decentralization is to multiply, cohesively, without tolerating the arising of super-ordinate nodes of unification with quasi-transcendent functions.
§4.372 - Deflationism, as overt valorization of capital, is less ideologically ambiguous than decentralization. It directly aligns with property, and against politics, by seeking to exempt monetary signs from the domain of discretion. In order to defend money against fiat, its supply is either subjected to systematic constriction in accordance with counter-inflationary policy or, more radically (as with Bitcoin), deleted entirely from the list of policy-sensitive economic variables. Money is thus strengthened in its function of unilateral social command, as a super-political criterion, or economic reality signal cleansed of all interference. It becomes essentially policy-insensitive, against the predominant grain of 20th century political economy. Any crypto-currency with intrinsic deflationary bias is a right-wing revolt against macroeconomics. It takes itself out of political and administrative service, which is to say, in a philosophical register, that it secures its transcendental function relative to the social process. [38] At the level of its real abstraction, property places itself beyond question, through the closure of negotiable issuance. Naturally, precious metals anticipated this socio-political function exactly. Bitcoin’s actual deflationary bias is a strict consequence of its metallist model, which was (of course) selected for precisely this purpose.[39] The great enemy, then, against which Bitcoin explicitly defines itself, is the principle of discretionary money-production, or monetary socio-political dependency. It thus corresponds to an absolute re-commercialization, without possibility of compromise. (Mere possibility, in this context, would already be compromise.) No one is under any illusions about this fundamental orientation. Unsurprisingly, the objections of ‘gold bugs’ to the Bitcoin protocol tend to be technical, tactical, and transient. Their favored asset now has a digital or (superficially) ‘non-physical’ competitor, which flatters by emulation.
§4.3721 - It is no coincidence that ‘Neoliberalism’ [40] – the (defeated) counter-revolution against the Keynesian politicized economy – broke into the public sphere with a disinflationary macroeconomic platform. Comparatively ‘hard’ (non-inflationary) money was advanced as a direct object of policy, under the label of ‘monetarism’. While still representing a massive concession to the principle of macroeconomic management, the limited monetarist proposal to subtract discretion from national currency administration was a sufficient departure from the post-war academic-bureaucratic consensus to remain tainted by intellectual scandal. Monetarism threatened the principle of monetary politicization, by removing the inflationary option from the macroeconomic tool-kit, and re-installing monetary integrity as a meta-political axiom. Since what was thus envisaged was a permanent self-binding of political authority by itself, in respect to monetary management, the political incoherence of the project are easily seen. An enduring political hegemony aligned with the monetarist analysis was implicitly presupposed as a condition of monetary stability, grounding money supply – and therefore value – in regime security. The foundations of monetary integrity remained entirely politically conditioned. Clearly, the crisis of economic liberalism – resulting from its formal subsumption into democratic mass politics – had not been significantly reconfigured. Monetary value was still held hostage to a popular vote. Even a gold-standard is grounded in the preservation of political commitment. It rests upon politically-revocable decision. By any reasonable definition of neoliberalism, therefore, Bitcoin is something else (as BitGold already was).
§4.38 - The apprehension of Bitcoin politics as a re-animation of hard-libertarianism is an attractive simplification, reinforced by a great deal of supporting evidence. It remains a simplification, nonetheless. The Bitcoin event – in its full historical expression – overspills all guiding purposes. In this regard, it is closely analogous to the Internet, or indeed – following the nested sequence further out, and in reverse – to the conflicted installation-processes of electronics, electrification, and ultimately self-propelling industrialization as such. Even if (as seems eminently plausible, in each case) the machinery has a radical capitalistic affinity, [41] its development is not susceptible to detailed ideological direction.
§4.4 - Perhaps it is still premature to entirely write-off the prospects of a political orientation mobilized against Bitcoin (which is to say, a game played in opposition to Bitcoin, rather than through it). This is a resistance struggle still to be expected, despite the historical momentum of its target. Realistic estimation of the odds are rarely decisive in such mobilizations and, even when such calculations are made, manifest futility can inspire no less than it discourages, especially in respect to oppositional intensity (as the word ‘desperation’ announces). Bitcoin merits a Luddite backlash no less than any of the mechanical dehumanizations of social process that have preceded it. Yet successfully back-tracking to the primordial fork – where Bitcoin was initially destined or decided – in order to decide differently would require an impractical reversal of established techonomic advance, without obvious precedent. The blockchaining of the Internet is – if ‘only’ virtually – a done deal. [42]
§4.41 - Even at the level of established ideological alignments the politics of Bitcoin strays from the PPD, at least when this is conceived in its strictest political-economic sense. The cryptocurrency has, for instance, already been raised as a topic of concern on grounds of gender discrimination. [43] Race, ethnicity, sexual orientation, and other dimensions of identity-political grievance cannot be far behind, since disparate impact in this case – as in so many others – approaches logical inevitability. Far more important, however – from the perspective of Bitcoin and its future, if not that of a wider ethico-politically tortured world – is the internal struggle for the ‘soul’ of the crypto-currency, conducted in terms that are essentially oblivious to all extraneous agendas. It is here that our pursuit is pulled onto the remote side of the double game, and into alien tracts that Bitcoin itself opens.
§4.42 - Politics is not easy to kill. This claim would be typically interpreted as an extreme understatement. To dismiss it as no more than a truism, however, is to slide into sheer thoughtlessness. Everything is missed this way. One would then no longer be talking about Bitcoin, but rather justifying a refusal to talk about it. This is not uncommon, of course, but it has become less common, and will become less common still. The conditions for politicization, while broad – and, more significantly, systematically broadened by the core modern socio-cultural process – are not without limits. [44] Reciprocally, the scope of depoliticization tends to be underestimated, due to its (merely) theoretical attenuation within the modern mind, which casts everything as arguable in principle, without realizing how little real purchase this presumption brings. Every institution, of any kind, marks a termination of argument. Finally, that is what an institution is. In particular, property is the installed negative of argument. There is a social economy of argument, or motivated contention, and in reference to this the ideal of total politics – ‘revolution’ in its dramatic political-economic sense – is an inflationary fantasy. There is a real argument budget, quite independent of any libertarian construction of politics as a lamentable social cost. Critical attention has radically-finite capacity. Things are not brought into question for free. Cryptographic developments, by vastly increasing revision costs, are able to skew this economic calculus further against the prospects of effective interference. To bring any phenomenon into socio-political question – as a phenomenon – presumes its prior decryption. There is no politicization of that which cannot first be hacked, and then publicly assimilated, as symmetrical, or dialectical, controversy. Between the cryptic and the sub-, pre-, or anti-political there is no sustainable difference. Whatever escapes argument, eludes the political sphere. This point is not, in itself, dialectical, or partisan-controversial. Critics and advocates of Bitcoin-teleology equally subscribe to it. The zero-degree of political opportunity, coincident with the full actualization of algorithmic governance, is the horizon of the Bitcoin-process. Gauging the remoteness of this horizon is the single greatest question of political economy in the current age.
§4.43 - Even on the hard-libertarian and anarcho-capitalist outer fringes of the Bitcoin Ultras, the resilience of politics is not seriously in question. The prospect of algorithmic governance generates positive (supportive) excitement only in proportion to the estimate of the political obstacle – but that is immense. It is ultimately indistinguishable in scale (and much besides) from artificial intelligence as a practical problem. This is to say that the project, in abstraction, requires the provision of robust autonomy to complex synthetic systems. The final techonomic sense of freedom is nothing else.
§4.44 - The primary recomposition of politics within Bitcoin is organized by the anticipation of consensus failures, corresponding to hard forks. [45] Such fermentations correspond by close analogy to threats of secession, or horizontal crises shaped by a potential disintegration of the polity under conditions of intolerable stress. Politics here, no less than elsewhere, exhibits its inner complicity with a notion of imperative unity. It is undertaken in order not to split.
§4.45 - Any constitution is (already) a protocol. It does not require any appeal to figurative language, therefore, to describe a prospective split as a ‘constitutional crisis’. [46] This was clearly exemplified by the conflict between ‘Bitcoin Unlimited’ and ‘Bitcoin Core’,[47] which escalated into the first Bitcoin hard fork. The controversy has been nucleated upon the ‘blocksize debate’, whose antagonists are divided by the trade-offs between efficiency (system-wide transaction-processing capacity) and decentralization (the reciprocal of technical demand or computational load upon a full Bitcoin node). In this way it recapitulates, and concentrates, the principal polarity within the Bitcoin cosmos, differentiating Mainstreamers and Ultras. The failure of the Mainstreamers to become the mainstream within Bitcoin, at least up to 2019, cannot escape notice. Its grain appears to run against them.
§4.46 - The world of Bitcoin development and commentary [48], then, has its own characteristic spectrum, or primary political dimension, irreducible to the Left-Right PPD by any obvious geometrical transformation. It stretches between poles defined by ‘Ultras’ and ‘Mainstreamers’ – roughly, those prioritizing the integrity of the crypto-currency, and those invested in its maximally-accelerated growth. Of course, the former did in fact come first. Their primary attachment is to robust decentralization. Smooth user-functionality is willingly traded away for security, which is to say: for the practicality of mining. Concentration is resisted in principle. The Mainstreamers, in contrast, tend to envisage Bitcoin as a new Internet application, comparable to any other Silicon Valley product suite, despite its abnormal revolutionary scope. If the erosion of its crypto-anarchist rough-edges is the price to be paid for accelerated adoption, they would accept the deal without hesitation, [49] or at least without paralysis. These groups represent what Krawisz identifies as the “two ideologies” of Bitcoin. They correspond to a fork in the liberal lineage, dividing those primarily inclined to antagonize or to cooperate with the state. In this regard, its axis runs orthogonally – or at least obliquely – to the PPD. There are Left and Right factions at both ends of this spectrum, even if the entire complex of controversy it summarizes tends distinctively rightwards. Sociologically, it tends to differentiate entrepreneurs from investors. In other words, it economically distinguishes between the value of bitcoins and of Bitcoin-related businesses. This articulation is complicated, however, by the emergence of a Bitcoin business-sector that is comparatively indifferent to transaction volume, and thus immune to Mainstream seductions. [50] The block-size controversy, in particular, has brought these mutually-antagonistic tendencies into direct confrontation, and a hard fork.
§4.461 - The Mainstreamers want Bitcoin, above all, to grow – into a mainstream financial platform. Predictably, therefore, their attention is locked upon the scaling problem, which they are compelled to make into a central controversy. From their perspective, block-size is the crucial bottle-neck. Small blocks make transaction processing capacity a scarce resource. This can confidently be expected to make it expensive, when it is not rationed in some still less efficient fashion (by lengthened queuing, most obviously). The infotech sector has become especially accustomed to supply glut as a driver of explosive market growth, in transistor manufacture first of all, and then still more dramatically in software and digital content. This recent techno-commercial heritage often leads its established players to sympathize instinctively with the Mainstreamer case. “Bitcoin offends the sensibilities of resource-conscious and performance-measure-maximizing engineers and businessmen alike.” [51] Larry Summers represents it well, while acknowledging the Ultras in contrast [52]:
My guess is that the tradition from which Bitcoin emanates, which is a kind of hyper-libertarian tradition, is going to be a tradition that – if it succeeds – it will leave behind … And so I think one of the retardants of the growth of these technologies is the hyper-libertarian aura that has surrounded them and that continues to play a role in the statements of some in the community …
In a May 2014 Washington Post interview Marc Andreessen nailed his colors to the mast [53] with a comparable absence of ambiguity: “Bitcoin … came from the fringe. And … is in the early stages of mainstreaming today.”
Even if the mainstreaming camp is rarely quite so definite about its partisan position, the basic inclination is comparatively clear. As Bitcoin development becomes increasingly associated with the prospects of serious money (in the traditional sense), the lure of the mainstream – and all its pragmatic compromises – will inevitably grow.
§4.462 - Aaron Van Wirdum concisely identifies the critical concern of the ‘decentralist’ faction: “Bigger blocks tend to centralize mining.” [54] Large blocks take longer to transmit. As the rate of block propagation declines, it increases latency. Access by miners to the current (or updated) state of the network is delayed, with the result that more mining activity is wasted on obsolete blocks. The miner who finds a block also benefits from a head-start on the next, and as latency increases this advantage widens. Such dynamics of increasing returns incline to concentration. They also incline to cryptographic compromise. When mining activity is anonymized, through the Tor network, latency is compounded, which crushes incentives in proportion to block-size. Hiding is made increasingly expensive, and in fact automatically punished. As block-size rises, therefore, it increases selection pressure against small-scale and anonymous miners – exactly those agents most important to the decentralized nature of the system. Since large publically-exposed mining entities are disproportionately sheltered from these effects, they provide the mainstreaming camp with a natural constituency.
§4.4621 - There is still another centralizing incentive resulting from large blocks: it drives miners to accelerate production through pooling. When a miner enters into a pool, responsibility for block validation is delegated, compromising the dispersion of the system. The individual miner no longer contributes an increment of effective distrust, or check, operating at the level of their own discrete hashing activity. Rather, this distributed policing responsibility is partially re-centralized, at the level of the pool. In other words, the pool itself crystallizes a new species of ‘trusted third party’ through collectivization of the mining security function, becoming an intermediary institution. Trust is a short-cut. In the case of pooling, among many others, trustlessness (security) is compromised for speed. The incentives for individual miners to make this trade-off are sharpened as the processing burden placed upon them is increased. Mainstreaming promotes a relaxation of distributed vigilance. The block-size conundrum thus exposes profound tensions between the freedom from transcendent or ‘third-party’ direction – which Back calls ‘policy neutrality’ – and the pragmatics of ‘corporatization’. In Van Wirdum’s words, “It’s only through decentralization and anonymity that the system can remain free from outside influence, such as government regulation.” Intrinsic Bitcoin politics is thus polarized by the trade-off between security and performance, with ‘security’ translatable as systemic independence and flatness. The same virtues can be conceptualized as ‘social scalability’.[55] They enable secure expansion beyond the bounds of traditional trust mechanisms, as constrained by human neurological capacities for social processing.
§4.5 - The centrality of the scaling question is not easily over-estimated. In no other aspect of Bitcoin’s concrete historical process has it tended more strongly to outpace – and out-date – its apprehension, such that practical problems overwhelm visionary conceptions, and an agenda inherent to the phenomenon imposes itself. Whatever Bitcoiners might want to talk about, this is the topic that incessantly asserts its priority. It is tempting, then, to extrapolate, and to ask: Can block-size controversy be confidently identified as a perennial primary tension? This question, while obviously speculative (or even science fictional) in appearance, is less intractable than this impression suggests. Insofar as it is answerable, the key can only be transcendental, which is to say: a matter of ultimate or unsurpassable arrangements. We ask, then, what does decentralization reliably necessitate? Bitcoin has a reflexive specialism in this regard. It produces the unalterable, as a synthetic, robust past, or secure cultural memory. Yet the essential point reaches further than this. Like a Leibnizean monad, the whole of Bitcoin is contained within each of its parts. That is what a distributed ledger means. It is the characteristic that enables the system to be disciplined by the criterion of consistency with itself. Each copy of the blockchain provides a check upon every other. Vast redundancy – comparable in principle (if not yet in scale) to the copying of the entire genome within every cell of a metazoan – supports information integrity. The inefficiency of the system, i.e. its extreme functional non-specialization, provides the basis for its robustness. Its decentralization, redundancy, and resilience are conceptually inseparable from each other. It follows, reciprocally, that certain vectors of efficiency optimization will essentially compromise security. In other words, since some degree of centralization is the real implication of the mainstreaming project, its tacit imperative amounts to an economization of security in the name of efficiency. [56] We then glimpse the eternal enemy.
§4.51 - Resistance to mainstreaming, through defense of comparatively-tight block-size restriction, requires an alternative solution to the problem of transaction volume. If the block-size bottleneck cannot be relaxed significantly without menacing the decentralization of the system, another path has to be taken. The obvious recommendation is stratification – or ‘vertical’ decomposition of the Bitcoin ecology to support differentiated layers of security / fluidity trade-off. In such models, the maximum-integrity core of the system would be dedicated to value protection, while commercial momentum – especially of small payments – would be delegated to lower levels, or peripheral facilities, organized as side-chains. In other words, from this perspective, the mistake inherent in the reckless imperative to block-size expansion is the conception of Bitcoin as a settlement system, rather than a payments system.[57] Core developer Jeff Garzik makes this case clearly:
Bitcoin is a settlement system, by design. The process of consensus ‘settles’ upon a timeline of transactions, and this process – by design – is necessarily far from instant. … As such, the blockchain can never support All The Transactions, even if block size increases beyond 20MB. Further layers are – by design – necessary if we want to achieve the goal of a decentralized payment network capable of supporting full global traffic. … Bitcoin payments are like IP packets – one way, irreversible. The world’s citizens en masse will not speak to each other with bitcoin (IP packets), but rather with multiple layers (HTTP/TCP/IP) that enable safe and secure value transfer or added features such as instant transactions.
§4.52 - It is tempting to see a microcosmic recapitulation of capitalist history in this conflict. It suggests that economic – rather than ideological – competition has been the most formidable adversary of hard liberty. The uncompromised market demands a transcendental price, resourcing the system as such, which many of the most substantial market agents have been reluctant to pay. If economic pragmatism has proven less ruinous to principled capitalism than to principled socialism, the difference is only a matter of degree. “Freedom isn’t free,” the old saw goes, and it seems that economic history supports the proposition. Sacrifice of the market (as such) [58] to the commercial interests of its most significant participants is among the most prominent themes of political economy, considered as a tragic genre. Massive incentive misalignments introduced by the regulatory state devastate the micro-economy, as its most significant private agents defect. The market is treated increasingly as an abused commons. Despite its ingenious incentive orchestration, Bitcoin / bitcoins ontological difference is not invulnerable to comparable dilapidation. Private fortunes explore, motivate, and resource ever more elaborate ways to ‘game the system’ – precisely because there is not, and can never be, any real source of transcendent oversight. The absence of God spawns idols. ‘Trusted third parties’ are not magical impositions. They arose, at least in substantial part, for immanently-economic reasons. To the extent that capitalism in-itself is a learning process, this is the problem it trains upon, and against.
§4.53 - For the ‘hyper-libertarian’ Ultras, Bitcoin is a soft weapon aimed unambiguously at governments and their subsidiary institutions. The inherent unacceptability of the crypto-currency to public – and also concentrated private – government is sheer feature (and not at all bug). Any official approval, beyond mere – and optimally reluctant – tolerance could only be considered an unfortunate indication. Contra the Mainstreamers, the Ultras have no ideological interest in a project of debugging Bitcoin for the purposes of institutional assimilation. The institutions that would assimilate it are, from this hard-decentralist perspective, precisely the “trusted third parties” that Bitcoin first routes around, and ultimately marks for social extermination. Since algorithmic governance is precisely the avoidance of negotiated solutions, it cannot expect to emerge from one.
§4.54 - Among the Ultras, firmness of libertarian principle easily tilts into the wild tracts of piracy. At least historically (and in fact more fundamentally) Bitcoin has an evident affinity with black markets. Bitcoin makes commerce ‘censorship resistant’ – extending the cryptographic protection of information exchange into the wider economic realm. Regulation of voluntary exchange is made radically impractical. By effectively disinhibiting Nozickean ‘capitalist acts between consenting adults’ it facilitates private transactions falling entirely outside the realm of wider social approval. Online proscribed drug markets and gambling were among its enthusiastic early-adopters, but any specification of merchandise or services is a theoretical distractions. The important point is that Bitcoin provides a route-around. It was the first native currency of the dark net. The Open Secret, or ledger of crypto-secured transactions, supports rigorous commercial commitments without penetrating social exposure, or endorsement. The subtle pseudo-paradox invoked by a ‘black market’ is thereby resolved. Everything happens in the open, while masked. There is an inevitable tension between the project of mainstreaming Bitcoin, and the preservation of a heritage which deliberately places political-economic respectability beyond reach. Crypto-currency tilts intrinsically to crime, at least in the sense of the ‘counter-economics’ that extends the commercial horizon beyond the scope of social oversight. [59] All legal restrictions on contractual interaction are insulted (by indifference) even when they are not positively abused. Deference to the polity is re-set automatically to zero. The implicit definition of liberty invoked here is unconstrained commercial discretion. Notably, it is at once a power of money, and a political dissociation of the individual (configured as base-unit of commercial agency).
§4.55 - Ultras and Mainstreamers are engaged in a game with government, pursued along very different strategic lines. Neither (simply) represents government, but government too – in some fashion – gets to play. For governments, Bitcoin presents a complex of opportunities and threats so heterogeneous that it tends to disintegrate the very idea of a coherent state-perspective, both in theoretical principle, and in practical reality. If the state is understood through its own ideal image of legitimacy, as the sphere of public authority, there seems little room for ambiguity. Bitcoin threatens to significantly constrict its scope. Yet the relationship of government – in reality – to the ideal of public accountability is itself necessarily complicated, long before Bitcoin (even in potential) complicates it much further.
§4.56 - While the governmental response to Bitcoin is doubtless guided by a strategy (or strategies) of capture, this does not reduce to an agenda of public regulation, still less suppression, but also includes cooptation in accordance with deep state functions, as well as the private interests of state agents. [60] Official position statements are unreliable indicators, in this regard. Insofar as every real state includes a ‘deep’ or sub-public aspect, it will inevitably relate ambiguously to the emergence of elusive social capabilities, although this ambiguity will be only minimally reflected in its public relations pronouncements. The empowering of private agents to evade state scrutiny and regulation represents a manifest erosion of government or ‘public’ authority, and is almost certain to be denounced on those grounds (if not always transparently in those terms). Yet the crypto-secure transaction systems responsible for such governance complications are also opportunities for covert action, and are therefore to be counted as virtual assets. [61] The things Bitcoin enables are exactly the sort of things ‘secret agents’ want regularly to do. [62]
§4.57 - The politics of Bitcoin can be expected to catalyze a multitude of obscure metamorphoses in the nature of the state. The novel functions introduced by Bitcoin tend to the exacerbation – or sophistication – of agency problems. ‘Official’ and – more specifically – public policy positions are unzipped from confidential executive assessments, to an unprecedented degree. If the distinct but overlapping occult fields of clandestine security functions and resilient sub-public interests are bundled into a provisional concept of the dark state, it can be quite confidently predicted that the balance of attraction and repulsion between such elements and crypto-currency will be highly asymmetric with respect to public communication. The appeal of Bitcoin to such agencies is comparatively unavowable, while the erosion of public accountability it implies demands (public) denunciation. There is no upside to government officials admitting to a taste for the dark. It is realistic to assume, then, that the openly stated position of public authorities in regards to crypto-channels of all kinds, very much including Bitcoin, will be systematically misleading, in a dismissive direction, and should therefore be drastically discounted. Bitcoin tends to empower the invisible, and to disempower the visible. As Krawisz writes: “It takes time and meditation for people to take Bitcoin seriously because most of its value is in the future. … Thus, Bitcoin is protected from attackers by being initially beyond their understanding.” [63]
§4.58 - Such intra-state complexities are compounded by inter-state competition for Bitcoin business. Here, too, there is a coordination problem of daunting intractability. As Bitcoin comes to be recognized as a supranational strategic ‘territory’, national security considerations switch polarity. Even if it might have been preferable (under certain constructions of the dilemma) for states in general to prevent Bitcoin ever arising, such calculations have no purchase upon a world – fractured between states – in which a globally-coordinated response to the emergence of crypto-currency exists only as an incredible fantasy. Differential hospitality to the new monetary technology then becomes the consequential factor. The iron law of modernity holds that, within such a world, anti-capitalist social options are punished at the level of geostrategic leverage. In other words, regimes are disciplined ‘by the market’ – as the left has long lamented. Such dynamics are certain to be positive for Bitcoin adoption, and even essential to its geopolitical lock in. There is a threshold, most probably already passed, across which missing out on Bitcoin becomes strategically unthinkable. Exit-pressure intensifies. [64]
§4.59 - The inception of Bitcoin marks a critical threshold in the history of secret agencies. The agent corresponding to a Bitcoin wallet could be anything.[65] Ultimately, therefore, the games in which it is involved have to be approached with sensitivity to potentialities of extreme abstraction. Insofar as methodological individualism is applied to the analysis, it can presuppose nothing about the nature of the individuals considered. Only their original non-coordination characterizes them. Crucially, no assumption of economic – or wider strategic – rationality is required. Any emergent correlation of Bitcoin holdings to competent performance within the arena is an outcome, not a presupposition. Competence is defined – informatively – through a discovery process (or by synthesis) rather than analytically, through some pre-given model of rationality. A wallet is nothing more than the plot for a player, whose features are left entirely undetermined. It is extraordinarily decoded. The wallet-holder might be anyone, or anything: a man, a multiplicity, a machine-mind, or something yet unimagined. How it thinks can only be inferred from what it does.
§4.6 — In the tradition of transcendental philosophy, radically decoded agencies have been a central topic. Critique of the empirical ego raises such theoretical concerns automatically. Once psychological identity is theoretically exposed as a mask, or personification, with only apparent reality, or – more precisely – reality only as appearance, the ‘inner’ or ‘underlying’ nature of the will or true agent is posed as a problem. The initial critical response is sheer abstraction, or skeptical bracketing. Agency is liberated from its concrete image. Under extreme critical analysis, teleological articulation is collapsed onto the circuit, or the diagonal, of will-to-power, for which means are the end. To will the end – whatever the end – is to will the means, automatically.[66] This is a cycle so basic that psychology can only be a surface effect. It assumes nothing concrete about the agents modeled by it.
§4.61 — Ultimately – which is to say critically, or transcendentally – the game has no meaning outside the game. The final point of Bitcoin is Bitcoin. To imagine anything further is to misunderstand. It is to fail at nihilism (in a way that Bitcoin itself cannot do) by remaining stuck in the transcendence tolerance that constitutes the deluded precursor to dimensional collapse. There is nothing further. Autoproduction is an absolute limit, conceptually inconsistent with any further teleological dependency. No extraneous function or purpose can explain it. The terminal subject of strategic significance is Bitcoin itself. [67] It tends relentlessly – from real necessity – to subordinate all preliminarily formulable uses and agendas to its own self-cultivation. Only that which contributes to building it gets passed on. The passage can be made (in reverse) through transcendental-empirical difference, to cash-out the value of bitcoins into Bitcoin. In the completion of the circuit, Bitcoin is what bitcoins are for. Bitcoin utility is itself a teleologically-subsumed function.
§4.62 — Consensus is agreement. That is to say, it is coordination realized as immanent production. Such agreement is neither assumed (as the settled product of a transcendent element) nor imposed (through the legislative action of one). Transcendence plays no role in it. The irreducible multiplicity, or distributed system as such, alone decides. It thus formalizes the liberal ideal of non-coercive collectivity. The difficulty of this formalization process is easily understated. The term ‘spontaneous order’ naturally lends itself to inaccurate estimations in this direction, [68] insofar as it suggests that work is the alternative to spontaneity, rather than something far closer to its essence. An unplanned result is groundlessly translated as an achievement without difficulty. Yet it is only from the perspective of pseudo-transcendent design that evolution seems to come for free. In reality, it has been never less than painstakingly sifted. The “work” of biological history – like that of cryptographic hashing – is measured in immensities of trial-and-error.
§4.63 — Among any beings with centralized nervous systems, the extent to which the germinal sense of self, ego, or person represents the organism is already that to which it instantiates the solution to a collective action problem. Adequate representation, in the sense of agency, is never simply given. It has to be meticulously tuned, and within biological history the complexity of this task has in very many cases been sufficient to place the adaptive value of advanced cognitive capabilities into question. Brains have no use to genomes, unless they strictly remember what they’re for (or operate as if they did). If this is not obvious, it is because natural selection has hidden its work. Within social systems the abstract considerations are strictly comparable, and perhaps more elaborately theorized. Every representative is a potential traitor – and even a traitor by default. This is the situation recognized as the principal-agent problem. Within modern social structures, the legal category of corporate personality operates as an analog to the socio-psychological ego. In this case, too, genealogical obscurity is parenthesized for practical purposes. A locus of responsibility is assumed, as required by the game. As with all organisms-become-persons, such entities summarize, for ease of strategic calculation, the complex production of coherent – i.e. teleologically integrated – beings. Company direction poses a complex meta-managerial problem, to which the board of directors attests. Treacherous management (under other names) stalks the nightmares of business owners. Exit through equity markets offers the most resilient corrective. The principal-agent problem is sharpened – though never fully exhausted – by asymmetric information. Epistemological delegation complicates the alignment of incentives, but does not originally misalign them. Non-alignment of incentives within real multiplicities is in every case the default, given realistic assumptions about the absence of any pre-established harmony.
§4.631 — As Public Choice Theory reveals, there is no escape into politics. ‘Public’ agencies are at least as prone to incentive misalignment as private ones, except with added altruistic illusion. [69] A ‘public servant’ is a teleological ideal, not a factual description. There is no realistic reason to think it can be closely approximated. The game-theoretic situation of the individual is not soluble without remainder within public purpose. The defect option is not eliminable, and incentive structures finally dominate. The fractured idea of the agent is the key, as it occurs in both economic and political domains. The ambiguity of the term is essential. An ‘agent’ is both – or alternatively – a subject with the capacity for action, and one who acts on the behalf of others. [70] This ambivalence is supremely telling. Between agency and an agency is the difference between self-direction, and representation. Conflicts of interest (determinable as ‘moral hazard’) illuminate the divide. The situation is necessarily complicated by the fact that the disparate interests concerned typically have powerful incentives to obscure themselves. To be an employee is always, in part, an act. A uniform, in particular, tells you who you’re pretending to be, dramatizing a delegation of agency that runs in two directions. [71] It represents a deal. No one is employed to be themselves.
§4.7 - The potentialities of large multi-agent games are not predictable in advance, by anything less complex than themselves. They are not compressible except by increasingly unreliable approximation. In consequence, their systemic behavior is surprising – or informative. In Kantian terms it is said to be synthetic. Like all complex adaptive systems, such games are synthesizers, whose coordination searches produce discoveries. They are modeled by simulations which themselves demonstrate synthesis. The conclusions reached by simulating the behavior of complex systems were not analytically accessible (‘in advance’). They were not even accessible before, in the narrowest empirical-historical sense. Were there an essential trans-historical faculty of reasoning, it was unable to reach them. Computers were required to do that. The game, if it is serious enough, has to produce – in detail – its own conditions of cognitive apprehension within itself. The most elementary perception is already ‘a move’, downstream from strategy. Nothing is given, everything has to be won.
§4.71 - The intractability of such games to adequate simplification does not follow from any ineffable characteristics of their component agencies, but from the sheer number of independent nodes. A game, or network, is able to be more or less intrinsically numerous. It would be understandable, if finally misleading, to gloss this spectrum as a measure of intractability to coordination. The initial plausibility of some such deciphering is informative, nevertheless, since it acknowledges resistance to unification, or resilient diversity, as a quantitative axis of variation. [72] Numerousness is not only the context of strategy, but in certain significant cases its objective. In one direction, the primary – if typically tacit – aim is to become more, in the sense of many. In the other, alternative imperatives prevail, and robust distribution is assumed rather than positively targeted.[73] The distinction between Bitcoin Ultras and Mainstreamers is flush with such an axis.
§4.72 - In respect to the systems (games, networks) relevant here, decentralization, numerousness and complexity are roughly equivalent, and argumentatively interchangeable. In order to facilitate formalization, it is theoretically tempting to hold the number of players or nodes down and constant. Yet methodological convenience in this case has a theoretical cost, and one that is finally unaffordable. It makes of multiplicity a transcendent parameter. In other words, the complexity of the game is treated as an extrinsic frame, independent of all strategic inclinations within the game. As we have seen, the implicit assumption thus made is questionable under any actual circumstances. Under those of unfolding crypto-currency dynamics, it becomes an intolerable obstacle to understanding. It should have long been uncontroversial – given the existence of an overt ideology oriented to decentralization – that the multiplicitous, as such, is able to constitute a strategic objective. Thus, the complexity of a game – as measured by the number of agents involved – is not only a parameter, but also a factor in the payoff matrix, making a contribution to calculations of success or failure, victory or defeat. Bitcoin ‘politics’ is unintelligible except as a game of this type. For at least one of the parties in competition, concentration counts as a loss. This holds equally for conflicts about, and within it. The architecture of the game is folded into the game, projecting a diagonal line. Recursion is basic. The spiral is irreducible.
§4.73 - It might be asked (and, in fact, increasingly is being asked): does Bitcoin adequately incentivize the decentralization of its own machinery? Concretely, this question addresses the protocol’s horizon of practical controversy. The final stakes of the block-size debate manifestly belong here. Posed a little differently, the problem is this: If the block-size debate remains ulterior to the operation of Bitcoin, a metaphysical order has been preserved. Bitcoin, as a game, has not then been (cybernetically) closed. An extraneous decentralization imperative – perhaps inherited from precursor crypto-anarchist commitments – would, under such circumstances, continue to impose a secret dependency. The distribution of the system would still rely upon supplementary incentives, which is to say upon partisans, who were not merely players, but also supporters. The passage into autonomization would not, in reality, have been made. The polemical formulation: If Mainstreaming can work, Bitcoin has failed.
§4.74 - The name Bitcoin, at its point of philosophical extremity, designates a game that ‘automatically’ – i.e. mechano-liberally – produces and protects its distribution. This is so even if the adequacy of its actual application remains in doubt. Such a thing has now been thought, with unprecedented technical rigor. It operates as an effective model. Arguments from principle can no longer scratch it. The game is diagonalized when it makes a strategic objective of its own complexity. The existence (persistence) of the game, and actually its inherent escalation, defines a ‘victory condition’. Thus, the conditions of spontaneous order are extracted from transcendence, and re-instituted as rewarded performances. A meta-market is realized, in which the trade-matrix becomes an object of commercial attraction. The invisible hand, Escher-style, draws itself. Cybernetic closure is achieved. At the transcendental horizon of this tendency lies auto-production. Much – if not all – of this is already captures by the near-truism the value of Bitcoin lies in the network.
§4.75 - The human (social) animal is an amphibian between the public and private, irreducibly. This is a distinction drawn between the game and its allotted player-positions. Between the two there is real difference, but no true option. Public and private are not alternatives, but co-dependent components of a system.[74] As asymmetric cryptography demonstrates, the distinction between a public key and a private key is neither an illusion nor a choice. The relation is in the strictest sense co-operative, or co-efficient. … To understand the PPD simply as a contest between the public and the private, therefore, can only be a misleading simplification. The more substantial questions involve the reducibility of the public sphere to the state, or the private sphere to the enjoyment of collectively-allotted rights. There is a transcendent hypostasis of the public sphere on one side, and of collective subjectivity on the other. Either a privileged agent (‘the state’) is identified with the whole, or the whole (‘the people’) is conceived as a possible agent. Both errors break the public-private distinction in their attempt to ideologically operationalize it. The game is collapsed into an agency (within the game). This is the way sociology does metaphysics. It represents decentralized order through elevated agencies (“trusted third parties”). A fantastic crystallization of public purpose is the consistent – and philosophically-predictable – result.[75] Even economics has fallen prey to it.