Money and Models

(Originally posted April 5, 2014)

The Map is Not the Territory
One of the funny things about being human is that we almost always mistake our limited perception for objective reality. In general it is assumed that whatever seems to be, actually is that way, and anyone who disagrees is simply mistaken.

Our perception is limited in bandwidth, and because of that we have access to only a small spectrum of actual reality. When you look at an object, you get only the information contained in the light bouncing off of it. You have no idea what an apple tastes like simply by observing it from a distance. You are not able to access and experience all the information contained in the apple at once.

As you read this, subatomic particles are flying through your body at the speed of light, the particles that make up your body are rapidly blinking in and out of existence, and what appears to be static text is actually countless photons flying off the screen and into your eyes, where they activate retinal cells that send signals to your brain, forming an 2-dimensional image in your awareness.

But unless you’ve recently consumed large quantities of psychedelics, you’re likely not currently perceiving particles shooting through your body, or photons bouncing off your retina. Instead, we tend to live in a more human-scale world. Every part of the experience is not relevant to our survival, so we aggregate the information, take out the parts that are irrelevant, and focus only on the information that remains relevant. We build models of reality in our head, and then mistake them for objective truth.

This happens more and more as we grow up, even to the macro-scale objects. As children the entire world is a mystery — filled with shapes, colors, sounds, and taste. A wooden picnic table becomes the hull of a boat, a large box becomes a house. The world is filled with possibilities and meaning, our perception not only fully engaged but actively and creatively adding information to the world that isn’t necessarily there. But as we age, our minds optimize out things that we’ve seen many times. It’s not necessary to our survival to be overwhelmed with joy every time we see a room that may resemble a pirate ship. Instead we stop seeing the textures, shapes, and possibilities. Instead we just see “wall”, “door”, “floor”, “person”.

Our models of reality become so generalized that we are barely even engaging with most of what we experience. If it doesn’t pose a mortal threat and we can’t eat it or mate with it, our brains just ignore it — even before we get a chance to consciously decide how we feel. The entire complexity of a wall — all the texture, color, shape, depth, and history are simply condensed into “wall”. There are no more pirate ships lurking around each corner, no more magical possibilities.

But an even stranger thing happens at the same time — we not only begin omitting massive amounts of data from our already limited experience, but we become more certain that our tiny data set is a faithful representation of reality. We’ve seen so many walls, that we assume must know everything there is to know about walls. We actually become more confident in our perception while actively reducing the amount of information we are actually processing about the present world.

That’s like taking an apple, photographing it, then tracing the shape, writing “crunchy, edible” on it and assuming that’s all you’ll ever need to know about apples. With this highly compressed level of information, how would you ever make a delicious apple pie or a cider? In reducing our experience we may optimize our daily interactions with the world, but we also reduce our ability to create, explore, and understand on a deeper level.

A Million Different Currencies
One of the most important things that happens when you realize that you do not know anything about reality itself, but only models which you have constructed from limited data sets, is that you can begin to deconstruct your models, question them, and look at them from different angles. Every so often, altering the model you use will completely change the way you look at the world, and things that seemed impossible suddenly become obvious.

Let me provide an example that I think drives home the importance of this — Imagine a world in which there are a million different currencies issued by a million different people. Attempt to conceptualize fully how this works: Joe shows up at the store and attempts to give Joecoin to Bob, Bob gives Joe change in Sallycoin and Jillcoin which he accepted earlier from Jill. I don’t know about you, but this makes my head spin. I can’t even begin to fathom how this many currencies could possibly be used in any sort of sane way.

Okay, so I’m not being entirely honest. I can conceptualize this, but only if I change the model a bit. Instead of imagining a million different currencies, which are abstract, imagine a million businesses offering shares in their companies. Easy, right? Now imagine these shares are liquid and fungible. They can be traded just like money, for their market value, at any point of sale in the world. Much easier to imagine, right?

Taken even further, fiat money can be viewed as shares of a country issued and distributed to the people. A dollar represents a share of America’s material wealth and can be exchange for any of that wealth which has a worth equivalent to a dollar. After the purchase you no longer own a share, but instead actually possess one of the assets that the dollar previously represented.

While the real-world application of this may not be simple, it’s a model that lets you understand something that seemed impenetrable, and in a very simple way.

This is the point at which economists or monetary theorists might say that I’m wrong and this is not what money is. Or maybe some would agree and say this is what money is. Some might say I’m somewhere in the middle of wrong and right. But no matter which side they picked, they’d be wrong. This is a model of reality, not reality itself. But it is useful, because I can understand it. I can interact with it and modify it using only my mind.

When we mistake them for reality, models can leave us blind — but when we see models for what they are, they can allow us to imagine a world of infinite possibilities — and imagination is the womb of creation.

Rat Society

(Originally posted March 17, 2014)

Rat Park
In the late 1970’s a research scientist named Bruce Alexander had a revolutionary idea — What if addiction models were completely wrong? What if the reason rats in experiments chose to dose themselves repeatedly with drugs wasn’t because the drugs were so addictive, but instead the result of putting a social animal in a tiny prison cell and giving them only one outlet to feel good.

To test this they built a large cage with multiple rats — providing them with lots of areas for them to play and interact with each other. They called this area “rat park”. Rats which had never been addicted to drugs were mixed with rats that had been addicted, and they were all left to live and play in their happy little rat home, with infinite access to drugged sugar water.

So what happened? Did the rats all descend into drug-addled stupor? Well, no. The rats who had been addicted suffered the symptoms of withdrawal, choosing to socialize with the other rats, and overcome their addiction. The other rats who had never been addicted managed to avoid becoming addicted.

So this poses a question — if you were taken from your family and friends, put in a prison cell for an indeterminate period of time, and given a button that would feed yourself morphine, what do you think you would do? How long would it take you to give up on hope and give in to drug addiction?

The Human Animal
Human beings are tribal creatures. In the way that fish live in schools, lions live in prides, wolves live in packs — humans live in tribes. We are primates who have a limited scope for tracking other members of our group, but who possess the need for companionship and social support. Though we experience ourselves as individuals, most of us thrive in a system of tribal dynamics. This is the system in which we evolved, and the one which we are most suited for by default.

But we are also amazingly adaptive. So much so that we have created tools that have allowed us to pull ourselves out of the sticks and mud and create societies so large and complex that they would seem impossible only a few hundred years ago. We have mastered many aspects of our world that border on magic. I am typing on an object that once existed as ore. Somehow we have transitioned from a primate living in the jungle to the dominant species able to take rocks out of the ground and configure them in such a way that we can communicate with other members of our species all over the world. But we’re still tribal creatures.

We live in a world that celebrates the individual and the ego — we worship celebrities and the wealthy. We bow to those who dominate and conquer. But we’re miserable — we’re lonely and crowded at the same time, confused and misunderstood. We suffer depression, anxiety, and addiction at alarming rates. We place the blame on the individual or “chemical imbalances”. But never the social order.

But what if that’s the real problem? What if we’ve introduced all of these wonderful advancements only to destroy the structures that most of us need to thrive? After all — what is a newborn without its family? And what is a family without a tribe? What is a tribe without a culture of its own?

In a tribe, individuals cannot simply be disconnected egos fighting for dominance — they each have a role. Some are leaders, some are followers, some are defenders, some are loving, some are stoic, some are sensitive, and some are strong. Ideally, the individuals are distributed in such a way to make the tribe strong not only in the present, but also into the future, with genetic traits being expressed or suppressed as the internal and external pressures of the tribe shift.

The tribe is the protective shell which guards the individual from the harsh outer environment so that not only he or she can prevail, but so that the human species itself may persist. The individual exists for the benefit of tribe, and the tribe exists for the benefit of the individual. But the tribe is not temporally bound — its past exists as stories in the minds of its members — and it will persist indefinitely into the future dependent on how well it can respond to environmental pressures. The tribe lives with the knowledge that more will come, and it operates as such.

From the perspective of the human mind it is unnatural for us to be outside of a tribal group — for almost all of human history this meant danger and possibly death. The same goes for being around strangers, or being without fire. We have always had a deep engagement with and connection to our environment. After all, we are a product of it.

You and I are tribal creatures without a tribe. We are disconnected from our natural environment — our contact with fire and earth is limited, we are constantly around strangers, and we live in abstract worlds of earning wages and complex rituals. We are humans in cages of our own making. We have built a prison without knowing it — a huge, shiny prison, filled with new toys — media, drugs and sex. And we try it all. But it doesn’t fulfill us. No matter how much we consume we find ourselves empty, searching for more feeling, and more meaning.

To understand on a personal level how deeply we are connected to these things, you can look at your own connection to fire. In the rare instances that we are lucky enough to be near a beautiful, blazing flame, it is a challenge not to encircle it and stare deeply — mesmerized — trading stories about who we are and what we might be, connected to hundreds of thousands of years of our ancestors who depended on this fire to ensure light and life.

Technotribalism
We are mashing down on every button we can find to get a bit of these new drugs — facebook, instagram, email, cell phones, TV, pornography, sex, and even drugs. None of it really satiates our desires. And it likely never will. But we can build a new world — a human-scale world. One that is built around what we actually are and what actually serves us. We can create a world that supports the family as well as the individual and the tribe in ways that we can understand.

Our technology has evolved much faster than our monkey-minds, but we can choose the path that we take. We can build support systems for each other, maximize the value of the individual without sacrificing the family or the tribal needs. We don’t have to give up our technology and flee back to the jungle, nor should we. We have a lot of wonderful technology that serves us and which will be necessary to ensure our long-term survival. But we don’t have to live in a prison of our own creation either.

The tools that we have created have lifted us up as well as broken us apart. Now it’s time to put the pieces back together and build the world in our image — so that we may live to our fullest potential, exploring worlds both inner and outer, present and future- as deeply as we can.

Problem-based Problem Solving

(Originally posted March 16, 2014)

Solving Solutions
Earlier today someone came to me and asked if I had a string. I didn’t. But I assumed they were going to use the string to solve a problem — so I asked them what that problem was. It turns out they didn’t actually need a string — they wanted to tie up some flowers and herbs and to dry, and had decided that would be best done with string. So they asked me for string.

The trouble was — we didn’t have any string. The search for string was an impossible problem which would have ended in disappointment. But once the actual problem was identified, it became clear that we could solve it easily. In fact, not two feet away I had some twist-ties that worked perfectly for the job. This person didn’t come to me with a problem — they came to me with a solution to their problem, that had I not questioned more deeply would have left them with an unsolvable dilemma. That’s solution-based problem solving. You’ve already found a solution, and now you’re trying to solve the problem of implementing that solution.

This habit exists among all scopes of life — business, personal, and political. People have a tendency to identify the first idea they have as the ultimate solution to the problem. They then spend all of their time attempting to implement a solution that may be suboptimal at best, or completely wrong in the worst cases. I’m sure more money than could be comfortably admitted has been lost in dead pursuits of bad solutions.

In contrast, problem-based problem-solving is when you start with the core problem and attempt to solve for that.

Solving Problems
Einstein once famously stated that if he had an hour to solve a problem, and his life depended on the solution, he would spend the first 55 minutes determining the proper question, and this would allow him to determine the solution in the remaining five minutes.

There’s great insight here. How can we claim to have solutions for all the world’s ills when we don’t really even know what the problem is? Thousands of politicians all over the world can espouse an unimaginable number of solutions to the problems which face humanity. But there is no accountability, no rationality, and no meaningful process used to come to those solutions. Someone comes up with an idea based on some hare-brained view of reality, and then everyone fights over whose terrible idea gets implemented.

A question we should be seriously asking ourselves in the 21st century is — Why are fighting about politics as if it’s a religious debate? And another one is — Why are we attempting to subject as many people as we can to our poorly thought-out solutions to complex problems? We have scientific methods for developing hypotheses and testing them. Don’t cities seem like really great places to test policy and attempt social experiments? Maybe we could look at politics as what it really is — human beings prodding into the darkness, attempting to find solutions in a world that is far more complex than we were designed for. But to do that, first we have to start being honest with ourselves and admit that we are in uncharted territory.

Electing Incompetence
Popular opinion is not the best way to determine what policies go into effect to solve problems, and it’s a pretty terrible way of determining who gets to represent us. Let me provide an example that brings to light how this is true:

Imagine a world in where doctors do not go to school and study medicine, instead they run a campaign to be a doctor and are voted into the position of “Doctor”. Whoever could fund a campaign, organize a team, and craft the best message gets to perform emergency surgery on your child, medical knowledge be damned.

Now imagine that the techniques of surgery are dictated by popular opinion of the people who voted the doctor in — or even worse — by the corporations who funded his campaign.

What about Dentists, school teachers, or scientists? What if they were also decided this way? It’s clear that this makes no sense. It is obvious that the skills necessary to successfully politic your way into a position are completely decoupled from competency required to perform well at that position. Just because you’re able to coordinate a campaign doesn’t mean you have any meaningful insight into how the world should be run, how to teach a class, or how to perform open heart surgery.

A New Way
But why does this seem reasonable? In politics, as a theory, this idea is great — citizens elect a one of themselves as a representative to hold power, and if that person does a bad job the people take their power back and give it to someone else. It’s a less-terrible version of the way things worked before — Kings had divine right to the throne, or tyrants bloodied their enemies into submission for the right to dominate. In that light, electing someone to represent your group seems pretty sensible. Much better than having your head bashed in with a club.

But it’s a new world, and it’s clear that politics bordering on religiosity is not the optimal way to run a society. There is a new and complex social order, with people running much more advanced social operating systems within their minds. It’s not the middle ages, it’s not even the 1800’s. People are more educated, more connected, and more capable of engaging the world now than they were 200 years ago. We no longer travel by horse and buggy, so why are we still using a political system as antiquated?

Fighting for which side’s poorly formed solution is going to lead us to peace and prosperity is not the optimal method to the problems we face. Chances are the Democrats, Republicans, Libertarians, Communists, and any other isms or rats are completely wrong. So what we need isn’t solutions — it isn’t even a framework for determining solutions.

What we need first is a framework for determining and clearly defining the problems. Then, and only then, can we even begin to ideate on possible solutions to those problems. Once we have developed a number of workable solutions we can then apply them on a small scale in communities or cities, expand them to counties, then states, then countries, then the world.

Doesn’t that seem like a better way to do things?

Unintended Consequences

(Originally posted Feb 26, 2014)

On August 7, 1991 Tim Berners-Lee made a post in the alt.hypertext newsgroup introducing the World Wide Web, and overnight the world changed.

It didn’t change because of what that post did directly — it changed because a new world became possible. In a connected world in which anyone could publish their thoughts and creations, the content producer dynamic is forever altered. The birth of the web was the death knell of traditional publishing and the birth of something brand new. What once required a large organization with writers, sales people, editors, managers, printers, distributors etc… became possible for anyone with a computer and internet access. The internet, once a seemingly dark and cryptic place — now had the potential for consumer participation and appeal. Whether or not it was immediately apparent, publishing had just become democratized.

Tools for Revolution
When you give a people a tool, they will use it — even in ways that weren’t necessarily imagined by the creators. In 2014, traditional media has still not fully accepted its inevitable demise, but it is more likely that a citizen in a war-torn country will inform the world about civil and political unrest through Twitter than a news organization will be on the front lines. News organizations regularly cover twitter posts in articles and on television. The uprisings in the Middle East were coordinated and publicized through social media. Occupy Wall Street would have never happened without the web.

A simple post on a newsgroup had the unintended consequence of empowering people living under repressive regimes to coordinate, execute, and publicize on the world stage their revolutionary plight. What was technically possible in 1991 did not become practically possible for 20 years. It took a critical mass of adoption, the creation of more user-friendly hardware and software, and a cultural understanding of how to use it all.

Bitcoin
In 2008, someone going by the pseudonym Satoshi Nakamoto, published a paper to a cryptography newsgroup which outlined a system of decentralized, trustless money he called Bitcoin. At that moment, Satoshi Nakamoto did for money what Tim Berners-Lee had done for publishing. Money was no longer a technology requiring centralized controls and paper. Its production and distribution had become democratized. Anyone with a computer and internet access could participate in the creation, ownership, and distribution of currency.

In the five years since the bitcoin client was release into the wild, it has grown into an international phenomenon, reaching a market cap of over 7 billion dollars. When you give people a revolutionary tool, they will use it.

The Theme
At this point, a clear theme is emerging. Anything that has existed in paper form is going to be replaced by a digital version. Pieces of paper become text files, books become e-books, newspapers become websites, money becomes cryptocurrency. Paper has been the technology we have used to store and distribute human ideas. But ultimately it is a tool created by humans. Its utility and scope are vast, it has served humanity well for thousands of years. But in comparison to the digital tools we now have, it is supremely limited.

Everything that can be pushed into the digital space — will be.

The Future
In November of 2013, a 19 year old Canadian named Vitalik Buterin began distributing a paper describing a technology he called Ethereum. Based on a bitcoin-like blockchain, it outlined a method for embedding turing-complete scripts into the blockchain, regulated by the protocol’s currency. Though the idea had been talked about before, it was the first detailed proposal by someone who had the expertise necessary to actually implement it. Vitalik had travelled the world working on Bitcoin and projects based on it. He understood the protocol — the implications, and the limitations.

What Tim Berners-Lee had done to democratize publishing and Satoshi Nakamoto had done to democratize money, Vitalik had just done to democratize contracts. At first glance that may not seem revolutionary, but it is. Humans use publishing platforms to proliferate ideas and keep each other informed about current events, they use money to store and transfer value, and they use contracts to organize… everything. Corporations, governments, sales agreements, child custody, marriage, just to name a few.

Regulations, legal contracts, political representatives, social contracts, and even systems of governance will now have the potential to exist — distributed, completely transparent, enforced by the network, and directly programmable — by the people who are affected the most. But if history is any indication — we can be sure that what we currently imagine doesn’t even begin to cover the possible applications.

The Backbone
Without the internet none of these technologies could have been realized. It connects us and allows us to imagine and build entirely new worlds — ones which exist only in hyperspace — and others that exist as interfaces to physical reality. It has catalyzed its own development, inspired and molded the children who have since grown to become the adults guiding how it is utilized. It has allowed individuals to change the trajectory of history with little more than a text file of ideas.

And the internet was the product of US government funding and research. That’s right — the most revolutionary tool in human history was funded by the most powerful government in history.

The future is coming, and it is programmable. The Decentralized Autonomous Society is just around the corner, and it’s up to us to build it. When you give people an evolutionary tool — they will use it.

Note: This is the second of a handful of articles I began writing over two years ago, long before Ethereum was launched, when the current technology was little more than a few ideas a handful of people were discussing. They were originally posted on Quora, and I will be reposting them here, as some of the concepts discussed are becoming more relevant than ever, while some are simply interesting historical documents.

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Myth of the Free Market

(Originally posted Feb 25, 2014)

It’s taken as dogma by many that markets will self-regulate when made “free”. The problem is that in order to believe this, you must ignore many facts which are undeniably true.

Humans, like every other living thing on the planet, are products of evolution. While we did evolve the amazing ability to use and modify the environment to create tools and technologies — we didn’t evolve with markets or money. We invented them — they are fully products of the human mind.

What is claimed by free market proponents is that somehow the only thing necessary to build a human utopia is money and the ability to earn and spend it. According to them, what stands in the way of this amazing reality is one evil thing — government.

Government is another thing human beings didn’t evolve with — a tool cooked up in the mind and unleashed on the people. But tools are not crafted and technology is not developed unless there is some pressure provoking it. Weather too cold? We invented clothing. Prey too hard to catch? Build a sharp tool to throw at them. Rain leaving you soggy? Build a roof.

It’s clear that governments do a lot of terrible things. They are responsible for wars, genocide, propaganda, prison, and so on. This is unquestionably true. But before we dismiss them outright it’s important that we ask what they do for us? What pressures caused us to create them?

The simplest explanation is that they are protection schemes — very advanced and evolved gangs. You join this society, and in exchange for providing whatever value you do, the government ruling the society promises to keep you safe so that you can focus on that. It’s hard to do anything productive when you’re spending all of your time fighting off violent hordes who have nothing better to do that travel the land burning villages, raping your wife, and murdering you. The government promises to stand between you and those hordes so that you don’t have to.

I don’t know about you, but that seems pretty useful to me.

A Lawless World
In a lawless world, giving you a handful of money doesn’t really dissuade anyone from attacking you and destroying your life. In fact it incentivizes them to come after you. Who better to attack than someone with lots of money with little to no ability to defend themself?

What are the free market responses to this problem? Security task forces? The same rules that apply to governments apply to security forces — the bigger and badder, the better. In order to protect people, the security forces would simply become armies. Except they wouldn’t be beholden to the state — they would be beholden to the shareholders. They would optimize to market forces. What’s the most effective way to generate income when you have a dominant force? We don’t have to theorize, we simply look at the way lawless markets have traditionally worked. We can look at crime families, gangs, and countries with collapsed governments such as Somalia.

You offer people protection — from you. Anyone who doesn’t pay gets fucked — by you. You are incentivized in this lawless world to help create the problem that you solve. If anyone attempts to create an opposing force the solution is easy — you simply destroy them. Or, if they are successful, you are ousted and they take place at the top of the protection racket scheme.

Government is Not the Problem
Governments, particularly participatory governments such as Democracy were a solution to this problem. Instead of letting anyone with market power control this security force, we give people the power to pull the plug on anyone who misuses the force for their own benefit. A power that was once centralized in the hands of a few people to the detriment of many instead becomes decentralized, under the power of the citizens who vote.

The people who believe in the “free market” seem to avoid this obvious reality. But you know what? The market started free, and it got to where it is now out of necessity, in response to market pressures. There are bad actors who are not going to follow the nonaggression principle. They will manipulate their way to power, and they will build a world that benefits them and no one else.

Government is not the problem. Unchecked centralization of power is the problem. No market can fix this problem, no matter how “free”. In fact, markets are filled with actors doing nothing but attempting to acquire as much power — in the form of money- as they possibly can. Democratic government is supposed to be a mechanism for decentralization state power amongst the citizens. But with clever manipulations, people utilize their positions as public servants to centralize power in their favor. Do away with the government and these power-hungry individuals will simply invade the market and corrupt it.

The failings of government are really a failing of technology. Until now, we have relied on human language to encode the rules of governance, because it’s the best we had. This has opened up massive systemic flaws which have been exploited by bad actors, and these systems which are supposed to decentralize power no longer work properly.

Until now we have simply not had the technology needed to decentralize power reliably and effectively — but we will soon.

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(Originally posted on Quora Feb 24, 2014)

At its core, any government is simply a codified set of ideas. The ideas are created by people, enforced by people, enacted by people, and ultimately become corrupted by people. In a perfect world, if a more compelling and fulfilling reality is made available and presented to the masses, then it would immediately be enacted through consensus. Until now however, there have been technological limitations that made this functionally impossible.

With the advent of decentralized currencies and the introduction of decentralized contracts backed by programmable money it will soon be technically possible to create a decentralized system of governance, allowing for the birth of a voluntary state that runs on distributed, block-chain based social contracts.

It will not be necessary to confine this state to any geographic boundaries, so it is not necessary to wait for the acquisition of a piece of land, or billions of dollars with which to rule. Because the system lives in a digital space, the only thing required is internet access and an ability to interface with the protocol. Anyone who has the ability to participate as an economic actor in the system can agree to be a member of the decentralized state. We can start building this state and accepting applications for citizenship at the moment at which the networks which give birth programmable contracts are stable enough to resist external attacks.

Some will likely join simply because it is interesting, but that is likely not enough to reach and maintain a critical mass. It is necessary to ask questions about how the state will be formed, what benefits it provides to those who are participants, as it will initially not be able to provide what is arguably the central benefit of living under a state — protection from individual and state violence. But other avenues may be possible — things such as a basic income and healthcare may be workable incentives.

The social contracts which give birth to the government can be crowdsourced. We can collectively decide the rules we live by and how to enforce them. The state itself can be crowdfunded by its future citizens. The currency of the state can be generated cryptographically and distributed digitally. The future is programmable, transparent, and democratically decided.

The contracts which construct the state will be accessible to all of the citizens of the globe as well as a means of trading economic value between those citizens and the state — and back again — in a trustless manner. The poorest and richest of the world can now be linked economically and politically, for free, across trade boundaries which have previously been impossible.

Tech revolution, meet political revolution.

People who are not part of the ethereum community, and who are financially invested in harming it are brigading the /r/ethereum subreddit. This guy eventually went back and deleted all of these comments, but I saved them for posterity. There was more to the conversation, in which I asked him why he shouldn’t be banned, and his response was that he would create ten more accounts and increase the rate of his trolling each time.

The recent price movements are not the market reacting to the fork. The price of ether stayed relatively stable, all things considered. It is the result of people attempting to manipulate markets by creating uncertainty. These are people who don’t care about the ethereum or crypto communities, and are only here to create chaos. As I pointed out before, this is not a zero-sum game. The best case scenario is both chains survive. The global economy has more than enough space for both to grow 100x.

But people who don’t care about, or even seem to fully understand this technology have decided to attack it for a few dollars of personal profit.

They are making it impossible to moderate by using the community’s ideological positions against them, creating double-binds that are impossible to respond to effectively. The first double-bind was the claim that absolute consensus is necessary to do something like a hard-fork. This is, obviously an impossible goal, but making this claim within the crypto space provides some semblance of a moral ground that they can then cite as their reason for attacking.

They are exploiting the dislike of censorship to brigade and concern troll to push the price down. Because of the structure of reddit, it is almost impossible to clearly define and enforce rules in a way that cannot be exploited. If the foundation takes a stance, they will rally against ethereum as centralized. If the foundation is silent, they will say the foundation is weak. If the community itself asks for better moderation, the community will be called hypocrite authoritarians. They are making it traumatic for supporters of the technology to participate in the community. They are carefully goading the community into situations that are lose/lose.

Studies have been done on trolls, and the results were basically that they’re the worst people on the planet, belonging primarily to the dark tetrad of sociopathy, narcissism, machiavellianism, and sadism:

https://www.psychologytoday.com/blog/your-online-secrets/201409/internet-trolls-are-narcissists-psychopaths-and-sadists

Add market incentives, and you apparently have the perfect shit storm — allowing these people to make money through their pastime of tormenting others.

When the DAO launched, my first thought was that a DAO can’t meaningfully exist until the fundamentals of decentralized governance were solved. I knew there would be fallout, but I never could have imagined this.

These people are not part of the community. They are not invested in its long-term success. They are invested only in their own short-term gains and personal entertainment at the expense of others. They do not deserve a voice in the community, in the development of the technology, or any weight given to the things they say — because they are not part of the community. At the end of the day, they are a problem to be solved, just like any other - and doing so will bring even more value to the ecosystem.

At the time of this writing the combined market cap of Ethereum and Ethereum Classic is just over 1.1 billion dollars. That’s approximately 1/9th the current valuation of Bitcoin. The valuation of all three combined is just over 11 Billion dollars.

Facebook is worth $328 billion dollars, almost 30 times as much as each of them.

The world economy is valued at approximately $74.31 trillion.

Watching people behave like there is not enough space in the world for ETC and ETH is kind of mind boggling, because it assumes that there is a finite space in which we are competing for dominance, and that it is preferable that one chain win. Both of these assumptions are untrue.

First let me address the idea that the chains are somehow competing in a finite space: The world of value is emergent and generative. This means that we collectively create things that bring more value to the world. Soccer is a multi-billion dollar industry that only has value because people like to watch it. You can’t eat soccer, you can’t live in it, it does not sustain life in any direct way. If no one had invented soccer, those billions in value would just be absent from the current reality we live in. But because value is emergent and generative, we are capable of bringing valueless things into existence, that over time come to be worth a lot, simply because people care about them.

Not only is there ample space in the world simply based on the scale of the world economy compared the tiny minority that cryptocurrency represents, but even if there weren’t, there would be room for both to grow without requiring a winner. This is not a zero-sum game. The winning hand is to let both chains live.

Secondly, there are many use cases for ethereum as a technology. Some are politically or legally contentious, but may be fine against most people’s moral compasses. Things such as darknets which people use to move goods and services which may harm no one, but are culturally deemed inappropriate, and are therefore illegal can potentially be built on this technology.

If the primary chain were the only one to exist, there is a risk of legal and cultural pushback if these types of services were implemented atop it, setting back the legal and practical applications of the chain. Since the development team and the foundation are an easy target for liability, simply deploying these types of dark services on the secondary chain allows for the best of both worlds — lack of culpability for development of ethereum the technology, while still being able to experiment with grey area applications. This is an obvious advantage, and you could not create a better circumstance than the one that has been presented.

Lastly, the fact that the same coins are duplicated on both chains is a net positive, as it hedges everyone’s holdings, and because value is emergent and generative, allows anyone who chooses to stay fully vested in each the ability to tap into the large potential growth.

This fighting, arguing, and trolling is unnecessary. It is a waste of time and resources. We are one community who may not fully agree on why we’re building this stuff, but it’s okay, because we’re building it. We have far more in common than we have differences. There’s a whole world of people who don’t even know we exist. Can we please be happy that there are two chains and just stop the trolling?

It feels like the cartoon has come to life in the form of ethereum’s two chains.

The day the fork happened I was hanging with Matt and Martin from Gnosis. I mentioned I had a gut feeling there was a meta-attack on ethereum that wasn’t obvious, but that I wasn’t really sure what it was. When I saw Ethereum Classic, I initially laughed it off. But upon being added to Poloniex things got a bit real. I realized this was the meta-attack I had been sensing possible.

The thing is though - I’m not against it. Within any system you have the ability to talk or to leave, these principles are generally called “voice” and “exit”. My suggestion previously had been people who didn’t feel heard to go back to bitcoin, but this is an interesting alternative.

The one thing that I will note, however, is that I still feel that the most toxic elements of the cryptocurrency space have found something to rally around. Browsing the /r/EthereumClassic subreddit is like looking into a black pit of aggression and fear. It feels like what the Ethereum community would have looked like if it had initially been created by Donald Trump supporters.

I’m not sure there’s enough information to know whether this will be the death of the ETC community, or its ultimate strength. It’s not clear if it will result in an ultimate failure in the form of a pump and dump, or an infusion of ideological blood that the ethereum ecosystem didn’t have before. It might even save bitcoin and ethereum by giving the trolls something constructive to do with their time.

The weird thing is, anyone who was economically linked to ETH’s success now has, by default, their bet hedged on two chains, and as someone who loves hedging bets, this isn’t really something I’m mad about.

Don’t get me wrong. I still think the Ethereum Classic are a bunch of assholes with personality disorders who may ultimately self-destruct. But I’m not mad about ETC. Godspeed.

It was not until I started exploring the ideas behind blockchain and thinking through their application in a greater social context did I find them in any way interesting. I began thinking about the trust-based applications that could be created on top of trustless systems, and my interest was piqued to the degree I stopped what I was doing and started looking for people working on systems like I had been imagining.

I was lucky enough in my timing to be one of the first members of the Ethereum team. One of the things I really liked about the ethereum project and the community around it was the lack of ideological rigidity that seemed to infect the Bitcoin community. The people in the community were different; less obsessed with money, and more engaging to interact with.

Two years ago I began writing a blog called “Decentralized Autonomous Society”, which was a term I coined to describe a society built utilizing decentralized technologies and ideas. The posts I made were designed to provide a framework to use in thinking about the types of problems that need to be solved, to identify new ways of thinking about them in the new technological context we have created, and to avoid the pitfalls of thinking that pigeon hole things like bitcoin into ideological black holes from which they may never escape.

While watching the fallout from the DAO hack, and listening to people complain about breaking immutability, I have come to realize that I have not been loud enough. The toxic elements of bitcoin ideology has followed users as they became participants in the ethereum ecosystem. But from my perspective, many of them are intellectually stunted in terms of what is possible. This misunderstanding of the ultimate application of these technologies has caused them to take hard-lined, quasi-religious positions. I outlined the risk of this problem in a DAS post. I defined two types of problem solving: problem-based, and solution-based.

Problem-based problem solving focuses on the core problem and attempts to implement solutions against that problem, without becoming attached to any specific solution. Solution-based problem solving defines a problem, then defines a singular solution, and then commits blindly to that solution. Problem-based problem solving is the ideal method, and solution-based is a good way to fail.

The problem we are trying to solve with blockchain is one of trust. Bitcoin does this through irreversible trust-free transactions. Ethereum allows for this, but it also allows for other solutions to the problem of trust, ones that will be more practical, and which can be more nuanced than the transmission of digital tokens between pseudonymous parties. My involvement in ethereum has always been predicated on the notion that its ultimate contribution to humanity will be allowing a general platform for solving the problem of trust. It is not attempting to solve this problem with the silver bullet that bitcoin is. This is ethereum’s ultimate strength, and this is what the disciples of Bitcoin fail to understand.

You can solve the problem of trust in two distinct ways: build systems that do not require trust, or build systems that augment trust. Bitcoin relies on the former, ethereum allows for both. Unless we are planning to build a world in which we are physically strapped into chairs and interact only through VR, humanity will continue to require interpersonal trust for most interactions, and any technology that allows us to bolster this is a net win.

The reason that we must focus on trust is because of bad actors. Many disciples of bitcoin fixate on established power structures such as governments, but the government is simply an aggregate of individuals, and the individuals may or may not be bad, and the collective output of the group may or may not be bad.

Since “bad actor” is ambiguous, I will define a bad actor as anyone which engages in anti-social behavior. This can be overt in the case of murder or theft, or less cut and dry — such as acting in bad faith or lying. There are degrees of bad actors, but in general the goal of social constructs are to limit the damage of anti-social behavior, and to bolster the benefits of pro-social behavior.

So to reiterate — the reason we are building trust systems in the first place is because some people cannot be trusted. They act maliciously, and we are attempting to make that malicious behavior as impossible and undesirable as possible. This is the core foundation of bitcoin. It is the core foundation of ethereum. It is the problem we are trying to solve. Blockchains are simply an implementation of a type of solution which allows the problem of trust to be solved in a way that scales.

The person who committed the DAO theft was a bad actor with malicious intent, who acted in bad faith to exploit a bug in the system for personal enrichment. If the DAO heist was allowed to persist, it would have created an incentive structure contrary to the intentions of bitcoin and ethereum. It would have made it more beneficial to be a bad actor than a good actor. “Immutable” blockchains were an implementation of a single technical solution, which is not the only solution for solving the foundational problem. To focus on “immutability” is useless, as any immutable system does not require discussion - because, by definition, they cannot be modified. Even deeper than that, it is attempting to protect the technical solution while destroying the actual core solution we are looking for.

The reversal of the DAO is not only in line with both the foundational principles of Bitcoin and ethereum — it is the single most important thing that has happened in blockchain since Bitcoin was released, and it is potentially the single most important thing ever to happen at the intersection of society, governance, and economics. When the housing market crashed it took many years and required massive systems in both governance and banking to recover. When Mt. Gox was hacked it required the effort of multiple government agencies from multiple countries, and many years to recover just a fraction of what was lost.

When $50 million worth of ether was stolen, the community came together in a matter of weeks and collectively decided to reverse the theft. No government agencies required. No federal reserve. No drawn out and complicated legal battles. The will of the network simply set right what once went wrong.

This is the future. It is not ideologically immutable. It is here to serve us, to supplement trust, and code is law. Unless we all decide it isn’t.

P.S. Let’s be a little more careful next time.