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Posted July 29, 2020
In response to Reed Wommack and John Vallis discussing Bitcoin and Scarcity https://www.pscp.tv/w/1PlJQNzqAMBxE
While writing these words, I’ve just finished listening to Reed Wommack’s conversation with John Vallis. Both Reed and John are great thinkers and I’m proud to have connected and interacted with them both on several occasions. In the conversation, the abstract concept of “AlienCoin” was brought up. Imagine that a species of alien makes contact with earth and that we start trading with them. They’re using AlienCoin, a type of money with similar properties to Bitcoin but with a longer history and overall better properties. It is, in other words, a better Bitcoin. Would we humans switch to this coin or not in our search for an absolutely scarce asset that can be used as money?
I’ve written a lot about the concept of absolute digital scarcity and how it was more of a discovery than an invention and how it could only be discovered once. This is my definition of it, from Bitcoin — Independence Reimagined:
The One Shot Principle:
Absolute mathematical scarcity achieved by consensus in a sufficiently decentralized distributed network was a discovery rather than an invention. It cannot be achieved again by a network made up of participants aware of this discovery, since the very thing discovered was resistance to replicability itself.
Hal Finney said it like this:
“Any successful replacement of the Bitcoin block chain will forever undermine the credibility of any successor. How is an investor to know that it won’t happen again? Rebooting now may benefit a few thousand early adopters. What happens when hundreds of millions use Bitcoin 2.0? They’ll be just as jealous and envious of you as you are of others. Given the precedent you want to set, how will you argue against yet another reboot?”
In the interview, Reed mentions that there’s probably a finite amount of say, Bitcoin Cash as well as Bitcoin. This is not how I see it. As I’ve mentioned before, scarcity is all about how you choose to frame it. If you see Bitcoin Cash as a “Forks-of-Bitcoin”-token, it is not scarce. There are thousands of those. Around the time when these fork-coins were popular, there was a website where you could create your own by just a few clicks. My point about the discovery of scarcity on the internet is that we needed to frame this as soon and as rigidly as possible in order for it to actually work. I believe that the early history of Bitcoin was that framing process. It is not over yet. The fact that the Bitcoin Cash fork didn’t really work was one of the main things that convinced me that Bitcoin was actually decentralized enough to not give in to proposed monetary policy changes pushed onto the project from the outside. It could only be changed from within and I concluded that this was so unlikely that it would almost certainly never happen.
Now onto AlienCoin, a very fascinating concept indeed. Even though the probability of the scenario ever happening is probably close to zero, it’s a thrilling thought experiment nonetheless. A scenario like this wouldn’t even have to involve aliens, let’s just say that we discovered another decentralized computer network with better properties and more proof of work than Bitcoin somehow. I would still stick to Bitcoin and so should (and most likely would) everyone else. I’ll try to explain why.
Have you ever played Sid Meier’s Civilization? In every incarnation of the game there’s a technology tree. Some technologies are prerequisites for others. Bitcoin is standing on the shoulders of giants. Not only did it require cryptography, hashing algorithms, merkle trees and ASICs to function properly but before that mathematics, writing, hexadecimals, semiconductors, microprocessors, computer graphics and probably the wheel, agriculture, pottery and even ceremonial burial or archery as well. The point is that time moves in one direction and one direction only. The order in which events play out have a huge impact on the results. If you dry yourself off before you shower, you will have a very different result than if you do it afterwards. This is true for Bitcoin’s own history as much as it is true for whatever historical events that played out before it was discovered as well. Each day that passes, Bitcoin becomes more “Lindy”. People have a more and more concise view of what it is, and what history it has. Bitcoin was fairly distributed among humans because the earlier you got in, the higher the risk you took. More risk, more reward. I wasn’t truly 100% convinced of Bitcoin’s functionality until the Bcash fork happened and the users resisted the will of more than 90% of the Bitcoin companies by running their own nodes. An alien coin would have to convince every hodler of last resort on earth that switching to the new coin would be a good idea before they’d part from their bitcoins. Like I said earlier, scarcity is all about how we frame it. The hodlers have agreed already. They hodl Bitcoin, nothing else. The thing about this philosophy is that we’ve already decided what the finite unit for wealth transfer we have is Bitcoin. An AlienCoin would just be another altcoin, even if it functioned as Bitcoin for the aliens. At least for a very long time. In order for anyone that has lived through the early years of Bitcoin to change their mind, they would have to be convinced of the superiority of this new system and that would take a long time, if it’s possible at all. What guarantees do we have that another, even more superior system wouldn’t show up the next day?
Bitcoin is a four dimensional invention. The direction of time itself plays a huge part in what is. Having doubts about it is a fools game because the organism works and grows precisely because we believe it does. It feeds on human incentives and the more you learn about its connection to praxeology and thermodynamics the more convinced you become. This makes the system even more robust and valuable which will onboard, and convince even more users every day and on and on it goes. It is the optimist’s version of Roko’s basilisk. If we ever interact and trade with aliens in the future, we should exchange all sorts of things with them but we’d better hold on to our most valuable possession. The thing that makes us a type 1+ civilization on the Kardashev scale instead of just a 0,7 one. The best thing we have. The pinnacle of our achievements.
Some of us have been in Bitcoin longer than others and we’re all at different stages in our perception of it. I’m not saying that I’m 100% right and that everyone else is wrong, but I have come to realize one thing. This rabbit hole is way deeper than any of us can imagine.
Loved the conversation guys, now I can’t get AlienCoin out of my head! A final question: How do you know Satoshi wasn’t an alien in the first place?