Crypto-Current (070)

§5.8733 — What have we seen so far? The most striking phenomenon has been a massive – and surely unprecedented – proliferation of monetary tokens. Alt-coins began to appear within a few years of the mining of Bitcoin’s Genesis Block (03/01/2009).[1] Namecoin and Litecoin arrived in 2011, Peercoin in 2012. The year 2013 saw the release of Dogecoin, Gridcoin, Nxt, Primecoin, and Ripple. That July, Mastercoin[2] – conceived as a supplementary protocol layer supported by and enhancing Bitcoin – held the first token sale (or Initial Coin Offering). Exponential growth continued into 2014, as Auroracoin, Dash, MazaCoin, Monero, NEM, NEO, PotCoin, Stellar, Titcoin, Verge, and Vertcoin, among others, deepened and broadened the product stream. Ethereum was introduced – and forked – in 2015. Tether appeared in the same year. Seven years into the crypto epoch, then, alt-coins had established themselves as a conspicuous part of the emerging monetary landscape. In the final years of the decade, the upward curve of the alt-coin economy would sharpen still further. 

§5.87331 — While many alt-coins are of questionable value – and not occasionally outright scams – the flood of varied crypto tokens promoted an economic innovation of scarcely deniable importance: the ICO. An ICO – or initial coin offering – raises start-up funding through money creation. The absolute sums involved remain quite limited when compared with more conventional methods of business funding, but the trend lines have been remarkable. The socio-economic originality of the ICO is yet more remarkable.

§5.873311 — ICO revenues amounted to less than US$80 million in 2016. On a monthly basis, they peaked in September, at a little over US$21 million. The take-off year was 2017, which saw a thirty-fold increase. During the second quarter of that year, they were more than doubling each month (the pattern broke in July).[3] Over the whole year ICOs generated revenues worth over US$2.4 billion. The peak was reached – once again – in September, when US$537 million was raised. The month of June 2018 saw an extraordinary US$4.17 billion reaped by ICOs, almost entirely for EOS,[4] contributing over two-thirds of the year’s total US$6.21 billion. Between spring 2016 and fall 2017, total alt-coin market cap rose from slightly under US$26 billion to over US$409 billion.

§5.873312 — An ICO is pure seigniorage. It thus restores to businesses an economic function which had been entirely alienated to the state. Unlike an IPO – the Initial Public Offering of a private company – an ICO executes a currency exchange, of a special kind.[5] The targeted (‘offered’) coin is characterized by its elevated virtuality. It has not yet, or actually, been in circulation prior to the ICO. Its value is thus discounted for risk, and for viscosity. This asymmetry on the actual-virtual axis – which is to say, in time – does the work of the ICO. Through it, the coin-releasing venture acquires actuality, bringing itself forward. Understandably, then, the ICO has been understood as an incremental advance in the formalization of an essential capitalistic function. Resourcing enterprise, through credit and then stock markets, was always an actualization mechanism. The difference lies in ever more overt and thoroughgoing monetization. Making money and making a currency communicate across a condensing continuum. Generalization of the ICO suggests eventual fusion. The end-game is for every economic project to be denominated in its own terms. At such a point, financing and currency proliferation fully converge. A new and distinct monetary epoch would not only have been initiated, but accomplished.

[1] A selective list and brief description of alt-coins is provided in the apparatus. Since over a thousand alt-coins had already been released by spring 2018, an exhaustive treatment is entirely infeasible.

[2] Mastercoin was subsequently renamed Omni.

[3] Source:

For month-by-month 2016-2018 aggregate ICO revenue numbers, see:

[4] EOS entered the crypto space with its EOSIO blockchain protocol, as a platform for smart contracts and decentralized applications. It competes most obviously with Ethereum. The coin peaked in May 2018, with a market cap of US$15.5 billion. Almost 90% of this value had been lost by the end of the year. … The EOS.IO white paper can be found at:

[5] The difference between an IPO and an ICO is not simply qualitative. Shares, too, are money, though at a comparatively low level of intensity. (More precisely, but still vaguely, they are included in Mn where n is undetermined but > 4.)

Crypto-Current (069)

§5.873 — The Bitcoin event is a monetary Cambrian Explosion.[1] Its signature, in certain regards, is diversity. The ‘coin’ – in its new sense – is a generic term, to reflect this. The multiplicity of ‘coins’ is less a matter of amounts than of types. The re-minting of the term responds to an extraordinary proliferation in the species of comparatively cash-like money.

§5.8731 — Two basic families of alt-coins are initially distinguishable. The first consists of schismatic products from the Bitcoin main chain, generated by hard forks, in cladistic order. Bitcoin Cash (BCH) and Bitcoin SV (BSV) are the relevant lineages. Both of these coins are among the top ten cryptocurrencies by market capitalization. The second family, unified only by its contrast to the first, is far larger and more variegated, consisting of coins without Bitcoin ancestry. A number of taxonomic approaches to the principled sub-division of this alt-coin family already exist.[2]

§5.8732 — Within cryptocurrency circles, alt-coins as such are profoundly controversial. Among Bitcoin maximalists they are considered a pestilence.[3] Their existence is interpreted as a pathological side-effect of Bitcoin’s emergence, and a distraction from its inevitable ascent to currency monopoly. On the other side of the ledger, strains of principled currency pluralism undoubtedly exist, even if heavily outnumbered by more opportunistic varieties of alt-coin promotion. Even if a plausible argument can be made for monetary natural monopoly, currency competition is not without a case.

§5.87321 — In respect to alt-coins, discursive controversy is not a tribunal of special importance. The market delivers a superior verdict on cryptocurrencies, with commentary – at most – as an annex. This verdict is currently mixed. The first point of note is that Bitcoin’s market capitalization considerably exceeds that of all other cryptocurrencies combined.[4] In mid-2019 it was almost eight times that of Ethereum (ETH, the second ranked) and well over thirteen times that of Ripple (XRP, the third). Bitcoin, then, is evidently not merely one cryptocurrency among others. On the other hand – if not quite equally – alt-coins are nowhere close to being nothing. The latter fact is quite possibly a leading clue. That is to say, there are reasons to suspect, in regard to alt-coins, that we haven’t seen anything yet.

[1] The analogy is close enough to function as a technical description rather than a figure of speech.

[2] The classification of alt-coins initiated by Wikipedia is almost certain to prove influential, and perhaps even decisive. It grounds the most fundamental level of taxonomic order in the variation between types of consensus mechanism. Proof of work cryptocurrencies, the largest phylum (including Bitcoin and its descendents, among many others), is then sub-divided by cost-function language (SHA-256, Ethash, Scrypt, Equihash, CryptoNote, X11, Lyra2, or other).

[3] A stance against alt-coins is implicit within the term Bitcoin Maximalism. Several essential ingredients of the monetary ideology make this claim uncontroversial. Bitcoin Maximalism includes at least the following commitments: (1) Any currency tends towards natural monopoly; (2) Bitcoin, as the best currency, is especially prone to exhibit this; (3) cluttering a currency with specialized traits or characteristics has no robust value, and; (4) inhibiting the ascent of Bitcoin to global monetary supremacy lacks strategic justification. Other than Bitcoin, there are only ‘shit-coins’ – in the argot of those most committed to the former’s absolute monetary sovereignty.

[4] Cryptocurrency price movements are not only notoriously volatile, they are also highly correlated. On empirical grounds, then, or by precedent, market capitalization ratios between coins can be expected to exhibit greater stability than their absolute values. Yet this hypothesis is not perfectly neutral. Bitcoin maximalists implicitly anticipate an era of price divergence, produced by a mix of ‘hyperbitcoinization’ and alt-coin extinction. Neither of these trends was yet evident in late 2019. While no truly reciprocal expectation is likely – based on assumptions of general alt-coin advance relative to Bitcoin – it would be surprising if specific alt-coins had no ‘maximalist’ advocates. The prediction of short-term price convergence – to eventual cross-over – built into such a position is, likewise, currently undemonstrated.

A list of the top hundred coins by market capitalization can be found here:

Crypto-Current (063)

§5.8611 — Even before timestamps were conceptually, and then practically, linked, a timestamp was already a ‘trusted timestamp’ if it was anything. Verifiable dating of digital documents poses a problem closely analogous to that of digital money, brought to a point of criticality by the ease of perfect replication. In both cases, initial solutions involved procedures of formal vouching by trusted third parties. For timestamps, the role of supervised banks is taken by Time Stamping Authorities (TSAs).[1] Public Key Cryptography is employed to render time-stamps indelible – resistant to modification by anyone accessing the document in question, including its creator.

§5.86111 — Linked timestamping draws primarily on work by Haber and Stornetta, dating back to the beginning of the 1990s.[2] This work was directed towards secure notarization, which is to say the verification – within a digital environment – of a document’s historical existence, with special reference to questions of priority. A facility of this kind has obvious relevance to legal documents, such as contracts and intellectual property claims. Linking timestamps adds dynamic to the procedure, by extending it to digital entities undergoing successive modification, such as changing inventories, and accounts. At each (discrete) stage of transformation, an additional timestamp is signed, or (in later versions) hashed, constituting a chain, pointing into an increasingly edit-resistant past. Each timestamp in the chain envelops the preceding series. It thus establishes public order, or absolute succession, in which the past is uncontroversial, and secure. As Satoshi Nakamoto notes in the Bitcoin paper, “Each timestamp includes the previous timestamp in its hash, forming a chain, with each additional timestamp reinforcing the ones before it.”

§5.86112 — A series of linked timestamps is already, at least in embryo (or larva), a ‘block-chain’. The stamps operate as irreducible moments, whose order is settled (immanently) by embedding. Their time is sheer order, without cardinality. Any timestamping system nevertheless inherits a time-keeping procedure, amounting to a fully-functional calendar, whose granulated ‘dates’ it competently codes. Unix time is the most widely applied system of this kind. Bitcoin adopts it.[3]

§5.86113 — Taking timestamping into trustlessness was a development that had to await Bitcoin.[4] While linked timestamping provides the basic architecture for secure (edit-resistant) ledgers, their robust decentralization depends upon additional cryptographic advances, supporting validation, compression, and consensus.  

[1] As the Internet Society remarks in 2001, in proposing the RFC 3161 Internet X.509 Public Key Infrastructure Time-Stamp Protocol: “In order to associate a datum with a particular point in time, a Time Stamp Authority (TSA) may need to be used. This Trusted Third Party provides a ‘proof-of-existence’ for this particular datum at an instant in time.”


[2] See: Haber, S. and Stornetta, W.S. ‘How to time-stamp a digital document’ (1991)

[3] Unix time counts forwards, in seconds, from 00:00:00, January 1, 1970, (a Thursday). It ignores leap seconds, treating the length of each day as 86,400 seconds. It therefore gradually drifts from Universal Time.

When encoded in 32-bit format this time system reaches (Y2K-type) crisis on January 19, 2038. This poses no direct threat to Bitcoin, which employs a fully future-competent 64-bit Unix time code.

[4] See (for e.g.): Bela Gipp, Norman Meuschke, and André Gernandt, ‘Decentralized Trusted Timestamping using the Crypto Currency Bitcoin’ (National Institute of Informatics Tokyo, Japan, 2015)

Crypto-Current (058)

§5.8 — Whether history ‘in general’ is anything other than the history of money remains an open question. Certainly, the distinction between ‘history’ and ‘pre-history’ seems to have been decided by monetary innovation. The earliest digital recordings are accounts.[1] In the beginning was the registry. If this distribution of emphasis seems unbalanced, the fact that – in our own time – a distributed ledger manifests primarily as a monetary innovation tends, nevertheless, to vindicate it. Commentary in the “Bitcoin is about much more than money” vein, while copious, also comes later.[2] The monetary model sets the matrix.

§5.81 — A bitcoin, or part of a bitcoin, is a number of numbers, or several. In this it reproduces an abstract structure that is essential to the nature of money, in any of its variants, although realized at very different degrees of formalization. The semiotic complexity of money is expressed by a multiplicity of numerical dimensions. (Money not only quantifies, it quantifies multiplicitously.) Even prior to the introduction of allocation as a topic, monetary numbers divide by signification and designation. They function arithmetically as counting numbers and indexically as registry numbers (indices). The distinction is illustrated by the coexistence of a denomination number and a serial number on every bank note. The final term in the semiotic triad – the allocative number – corresponds to a tallying of bank notes, for instance – most concretely – through their bundling into ‘bricks’. These dimensions are primeval. Yuval Noah Hariri writes (in Sapiens: A Brief History of Humankind, p.182): “The first coins in history were struck around 640 BC by King Alyattes of Lydia, in western Anatolia. These coins had a standardized weight of gold or silver, and were imprinted with an identification mark. The mark testified to two things. First, it indicated how much precious metal the coin contained. Second, it identified the authority that issued the coin and that guaranteed its contents.” The coin bears an index of composition and a sign of credentials. The third semiotic dimension is added in a counting house, and introduces – from the beginning – the ledger.

§5.82 — Every commercial transaction involves a conversion into numbers. There is no primordial difference between monetary circulation and digitization, recognized as the historical process. In its narrower, electronic sense, however, the digitization of money does not date back very far. The first electronic money precedes Bitcoin by no more than half a century. Precursors are retrospectively identifiable, including charge coins, charge cards, ‘charga-plates’, and air travel cards. Western Union began issuing charge cards to frequent customers as early as 1921, but the runaway electronic ‘derealization’ of money is a far more recent phenomenon.[3] The first credit card[4] – accessing a bank account by means of a plastic identification document – was the BankAmericard, launched in September 1958 (and renamed ‘Visa’ in 1977). It took another eight years for the system to be extended beyond the United States (to Britain, with the ‘Barclaycard’, in 1966). The spread of electronic banking outside the English-speaking world was far slower still. Widespread adoption of the new monetary medium in Continental Europe, for instance, did not take place until the final decade of the 20th century. Most of the world skipped this stage of monetary evolution altogether.

§5.821 Electronic monetary transfers – as required by credit cards – are not yet an online payment system. The former involves electronic settlement, but not yet digital cash.[5] Electronic bank credit operates exclusively between trusted parties. The cash-like aspect of the transaction takes place offline, between the cardholder and the goods or services provider. Even here, some basic characteristics of cash are sacrificed, most notably anonymity. It is ‘cash’ in this reduced sense that is translated online by the first consumer-level digital money services, exemplified by PayPal.[6]

§5.83 — It was not the personal computer that set the frame for the next stage of money’s technological evolution, but the mobile phone. Within this new epoch of consumer electronics, ‘personalization’ is intensified, through heightened communicative-orientation and the massive distribution of computational capability.[7] It is easy to miss the full complexity of the mobile phone as a technological nexus. Not only does it serve as a telecommunications and Internet-access device, but also as a scanner, and a personal identity hub. In combination, these features enable convenient, efficient, and passably secure monetary transactions. The serendipitous contribution of an in-built camera to the mobile phone’s function as a monetary platform is especially worthy of note. A facile photographic shot closes the transaction. The era of the bar-code thus passes into that of the QR-code.

§5.831 — The age of mobile payments dates back only to 2007. In that year, Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania respectively, released their M-Pesa mobile-phone based finance application, developed by Vodafone. ‘M-Pesa’ abbreviates ‘mobile money’ in hybrid tech-jargon and Swahili. The application was designed to support elementary banking services on wireless telecommunications, in drastically under-banked societies. It enabled monetary exchanges between users, with the additional capability to facilitate microfinance credit. Anybody with identity certification (such as a national ID card or passport) could use M-Pesa to deposit, withdraw, or transfer money through their mobile device. Its rate of adoption exceeded all expectation, resulting on social, cultural, and commercial success on a now already legendary scale. From its take-off point in East Africa, the service was subsequently expanded into Afghanistan, South Africa, and India, reaching Eastern Europe in 2014. It has been in China, however, that the new fusion of money and telecommunications has developed most explosively. China’s mobile payment market has been opened by its Internet giants Alibaba and Tencent. Up to late 2015, Alipay dominated, accounting for over two-thirds of mobile purchases by value. Tencent’s competitor system, based upon its WeChat[8] social media application, consolidated its position through a highly-successful marketing campaign themed by digital emulation of traditional ‘red-envelope’ monetary gifts. By the first quarter of 2017, Alipay and WeChat between them were servicing 94% of the country’s mobile payment market. Chinese late-mover advantage has enabled the country to leap-frog plastic, transitioning directly from paper to wireless. By early 2017, US online payments amounted to scarcely 2% of the Chinese figure (which had reached the equivalent of US$8 trillion).

§5.84 — The story of electronic money is not exhaustively subsumed into that of banking. In has various quite separate lineages, of greater and lesser independence. One of the most important of these passes through online multi-user environments and games. The fictional quality of in-game monetary systems has shielded them from regulatory scrutiny, to a degree that cannot easily be philosophically defended. They thus open a zone of special interest in regards to the ontology of money.[9] What is the relation of ‘real’ money to simulated money? Virtual currencies, such as the Linden Dollars (L$) of Second Life, made this question ineluctable. If online ‘pretend’ currencies had an exchange value denominated in offline ‘real’ currencies – as they soon did – how solid could any ontological discrimination between the two be? It began to dawn upon commentators that a new age of private currency issuance had been surreptitiously initiated. It is perhaps a matter of mere historical contingency that far more consequential developments have not yet been catalyzed in this zone. There are few obvious limits to what might have come.

§5.841 — The industrialization of virtual currency production in the crypto-epoch was partially anticipated by the phenomenon of ‘gold farming’ in the world of MMORPGs (or Massively Multiplayer Online Role-Playing Games). Many of the most popular MMORPGs permit trading in items of in-game value. For instance, a special weapon acquired at the cost of much (in-game) effort and peril, and therefore scarce enough to be precious, might be surrendered by one avatar to another in exchange for an out-of-game payment between their respective players. Such arrangements called out for economic rationalization, through specialization, concentration, and Internet-enabled geographical labor arbitrage. China’s business renaissance during the reform-and-opening period coincided with the emergence of this opportunity, and its new entrepreneurs moved nimbly to take advantage. Tedious game play was quickly transformed into commoditized labor, as cheap, capable, Chinese youngsters were organized by upstart businesses to undertake grueling virtual activities. Such ‘gold farms’ thus functioned as exchanges. Through them, game currencies could be laundered into ‘real’ money. A Möbian economic circulation now crossed seamlessly between the virtual and the actual.

[1] See Denise Schmandt-Bessera, The Earliest Precursor of Writing (1977 / 06): “Evidently a system of accounting that made use of tokens was widely used not only at Nuzi and Susa but throughout western Asia from as long ago as the ninth millennium BC to as recently as the second millennium.”

[2] Morgen E. Peck writes: “… money is only the first, and perhaps the most boring, application enabled by Bitcoin technology.”

[3] Conceived as a popular cultural theme, the guideline to the plastic phase of money was invisibility. In this respect it evidences a teleological model, defining an axis of progress. Monetary improvement is sublimation, or dematerialization. In accordance with classical precedent, finality is identified with the pure idea, beyond all contamination by, or compromise with, particular substance. As previously noted, something more than a convergence with mathematical Platonism is at work here. The history of money – whether actual or fantastic – does not draw upon idealism as an extrinsic inspiration. Rather, it idealizes practically, and even preemptively. Elimination of friction – as implicit and later explicit goal – serves as a convenient proxy for the monetary ideal. Keynesian derision of the “barbarous relic” – the primitive lump sum – is once again the critical reference. Progress – conceived implicitly as financial dematerialization – is projected into space as a ripple pattern. Differential adoption rates and patterns of diffusion mark out stages of development, organized by a definite telos (distinguishing advanced from primitive money). According to this schema, at the end of money, the transaction coincides exactly with its Idea. The medium is then nothing. If the notion of a direct private relation without frictional mediation carries certain historic-religious associations, these are probably not coincidental.

[4] The term ‘credit card’ seems to have first been employed by Edward Bellamy, in his utopian-socialist novel Looking Backward (1887). 

[5] Marc Andreessen says of Bitcoin, in a Washington Post interview (May 21, 2014): “…if we had had this technology 20 years ago, we would’ve built it into the browser. […] E-commerce would’ve gotten built on top of this, instead of getting built on top of the credit card network. We knew we were missing this; we just didn’t know what it was. There is no reason on earth for anybody to be on the Internet today to be typing in a credit card number to buy something. It’s insane …”

[6] PayPal was created from the merger of Confinity (founded in December 1998 by Ken Howery, Max Levchin, Luke Nosek, and Peter Thiel) with (founded in March 1999 by Elon Musk). The new company was established in March 2000, acquiring its name the following year. PayPal went public in February 2002, in an IPO that generated over $61 million. The company was sold to eBay in July of the same year for $1.5 billion. (The resulting Musk and Thiel fortunes have been among the most nourishing seed-beds of 21st century capitalism.) The extreme synergy between eBay’s online market-making business and PayPal’s secure digital payment service propelled its initial growth, first in the US, then through eBay’s international business, and finally beyond eBay. PayPal was spun-off from eBay in July 2015, following the firm recommendation of hedge fund manager Carl Icahn. It began to accept bitcoin in September 2014, announcing partnerships with Coinbase, BitPay, and GoCoin. While PayPal has been rewarded by the market for its pioneering role in facilitating financial transactions over electronic networks, its limitations are severe, and in the age of cryptocurrency increasingly obvious. Its users are entirely unprotected from the company’s radical discretion, and receive no exit benefits from the service in respect to the national-financial regime in which they operate. Essentially, PayPal adds a new ‘trusted third party’ to the financial ecology, and one of minimal autonomy. Nothing very much has been disrupted by it.

[7] The resonance between mobile consumer technology and portability as an essential monetary quality cannot be coincidental to the emergence of mobile currency. A desktop wallet is patently inconvenient. By its abstract nature, money is destined to eventual convergence with the communicative situation in general, which it tends to haunt as an accessible semiotic dimension. Wherever speech can occur, the potential for contractual execution will finally follow. Only in this way is Homo economicus completed. At the confluence of these currents lies the inevitable formula: Money is speech. It not only assumes, in the Anglosphere cultural context, informal and formal constitutional protection in the cynical culmination of liberalism. The claim extends further – into identity with the claim as such. Money – the pure power of acquisition – seizes for itself the mantle of realizable logos. The conceptual fusion of the smart contract is reversible. Transactions can be augmented by machine intelligence because intelligence is inherently transactional. Minds and market-places tend to convergence.

[8] The scale of WeChat (微信, Wēixìn) can be hard for those outside China to appreciate. With over a billion regular users, the application is truly ubiquitous. WeChat messaging accounts for over a third of the country’s (massive) mobile phone usage.

[9] Given the striking philosophical importance of (ludic) virtual currencies, the social under-development of the problem is remarkable. An obvious exit ramp from the Macro financial regime has been almost entirely ignored.

Crypto-Current (051)

§5.5 — Conceptual conversion of A-money into C-money has been an automatic outcome of modern financial history. It can formally, but only artificially, be disentangled from the development of banking procedures and institutions. The credit (or reputation) of the financial institution supplants the positive asset value of money, as it replaces the monetary commodity with authorized notes. This financial reconstruction of exchange introduces an element of non-simultaneity. A moment of indebtedness is inserted into the synchronous swap, a period – however fleeting and notional – in which payment is owed. Even a simple purchase can be formally elaborated in this fashion. Payment need only be preceded by a ghostly double – a liability – arising in the non-instantaneous space of commercial reciprocity. A pseudo-consecutive schema insinuates credit into exchange. It is only on the basis of a systematic social hallucination of a decidedly metaphysical type, however, that it can be considered always, necessarily, to have been there.

§5.51 — Credit money, then, presupposes a suppression of simultaneity. We are returned to generalized spacetime, although now on the other side. If arithmetic is the formalization of time, in accordance with the Kantian understanding, simultaneity translates to zero. It is the temporal determination of space (or the pure form of non-separation in time). Events occur simultaneously when no time separates them. Under such circumstances, the credit relation is impossible. The critique of monetary financialization is thus bound to the philosophical – and even, by strong analogy, cosmo-physical – problem of simultaneity. If the very notion of the same time, in its global application, is judged irredeemably delusory, then the financial model of transaction is vindicated, as a universal truth. Relativity and fundamentalist credit finance share a metaphysics, in which the absolute occurrence of instantaneous transactions is de-realized, and subordinated in principle to qualification, or mediation. “Simultaneity is a convention,” Poincaré insisted. The subsequent relativistic revolution in physics has trained readers to invest this statement with a maximum of intrinsic skepticism, as if it amounted to the claim that simultaneity could not – in principle – ever be actually realized, unless as a standing social illusion.[1] The inversion is then total. Since it is the function of (positive) money to restore simultaneity, the very possibility of any such non-credit currency is in this way dismissed. Hard money contradicts generalized financial relativity, and that has become our common sense. A return of hard money, as anything beyond a relic, can only be manifested as an alien invasion.  

§5.52 — Transcendental aesthetic is exhausted by the blockchain. In restoring absolute time (pure succession), Bitcoin recovers simultaneity at the same time. The term blockchain already tacitly says as much. The block is a chunked unit of simultaneity, just as the chain is an order of succession. Each is reciprocally determined by the other, despite their real difference. Critically, a block is validated as a whole, at once. It contains no internal temporal articulation. Each block is all space, in the temporal sense, or non-decomposable duration. It is a true moment, or a ‘now’, even when sedimented (chained) into the past. Transactional simultaneity is thus realized. As we have seen, this is the negative of financialization, and its actual condition of impossibility. The credit relation has no reality on the blockchain, even though all of its associated signs can be recomposed there.[2]

§5.53 — Profound historical tendencies ensure that this point will be misunderstood, even as it stubbornly – and with at least equal necessity – re-asserts itself. Bitcoins are not credits. Furthermore, and still more controversially, none of the items of economically-significant information embedded within the blockchain are, or could be, credits, unless from a perspective, which is also to say an apparatus, that transcends the blockchain. The temporality of the ‘block’ ensures this. Nothing unsettled survives the automatic editing process. Only positive signs persist.

§5.531 — Consider a simple safety deposit box. It physically and institutionally protects anything placed inside it. ‘Intrinsically’ precious items (collectibles) are the neatest examples – gold or silver coins, jewels, antiques, or works of art. As with the blockchain, however, complex semiotic objects – such as contracts of any kind – can also be safely deposited. The critical question now arises. Does this mean that such a secure storage facility protects promises to pay?

§5.532 — The answer is not entirely straightforward, since it depends upon the obscure undercurrent of the question. What does it mean to keep a promise? If all that is required is to remember it, then safety deposit boxes can certainly help – and the blockchain vastly more so. If it is further required that the promise be fulfilled, or settled, what is demanded is the time-sensitive elimination of a discretionary factor. In keeping a promise, a tacit betrayal option is cancelled. This is not something a secure deposit, or blockchain, can maintain, because neither is able to hold such an option open.[3] Potential defection (‘default’) does not require risk-pricing in such an environment, because it cannot occur. Whatever risks there may be to Bitcoin transactions, this is not among them. On the blockchain, no difference between a ‘deposit’ and an ‘account balance’ can exist. Credit risk is necessarily zero. There are no negative balances, but only positive holdings, recorded as a history of mining events and transactions. Anything running on a blockchain inherits this characteristic. Smart contracts, for instance, insofar as they are fully-immanent to the blockchain, cannot be credit instruments. They are, instead, hard commitments. The future is effectively pulled forward, and metalized as destiny. (This is a point to be more adequately engaged shortly.)

§5.54 — When attempting to grasp what, through Bitcoin, money ceases to be, the relationship between credit money and fiat currency merits particular attention. This relation is certainly not simply analytical, despite the intimate historical connection between monetary financialization and politicization.[4] Over the course of recent centuries, the problem of trust – as dramatized by episodic banking crises – has functioned as a relay. As previously noted,[5] the spontaneous evolution of paper money (from warehouse receipts) profoundly exacerbates the double spending problem. Considered as the most economically intimate field of media development, it subsumes forgery into printing, on a path that leads to electronic digitization. Within the modern history of money, however, this semiotic main-current is a side-stream. Deliberate fraudulence, involving cynical fake-money production, has not been the principal trust problem generated by financialization. Credit creation, through fractional reserve banking, has been vastly more consequential as an engine of trust catastrophe, precisely because it separates the question of trust from suspicion of criminality, and thus from the sphere of traditional law-enforcement mechanisms. A banking crisis is not – unless contingently, or under the aspect of polemical extravagance – a crime. More generally, those socio-cultural forces disposed to consider inflationism in all of its aspects as essentially criminal have been so thoroughly defeated that their objections have lost all engagement with effective mechanisms of legal enforcement.[6]

§5.55 — To recapitulate the discussion from Chapter Three (§3.06), when fractional reserve banking turns bad, it is exhibited as a double – and in fact multiple – lending problem. Any bank deposit can be loaned out multiple times, with the proportions of potential bank credit to assumed liability decided by the reserve ratio. (A reserve ratio set to cover 10% of loans outstanding permits a ten-fold credit multiplication effect, prior to inter-bank lending.) Under conditions of general financial confidence, this facility is welcomed as a business opportunity for banking institutions, as a quantitative relaxation of credit restrictions for borrowers, and as a general adrenalization of the wider economy through increased liquidity. Historically, the resulting incentive structure brought banks, borrowers, and governments into alignment, in the direction of financialization (or compressed reserve ratios). The attractions of money creation are so self-evident they obliterate the counter-factual case.[7] How could the financial alchemy of fractional reserve lending, with its seemingly magical multiplication of profits, borrowing opportunities, and commercial stimulation, conceivably have been resisted? And once it had ceased to be resisted, what could possibly have gone wrong?

§5.56 — On the opposite side of the ledger, multiplication of credit money through fractional reserves was balanced by the unplanned invention of a new type of credit risk. Local default was now potentially amplified to the level of the global bank run. The credit multiplier, when toppled into reverse, became an engine of financial catastrophe. Quantity has a quality all its own.[8] Systematic banking crisis posed an existential threat to political regimes.[9] The risk involved, therefore, tended – as a matter of sheer magnitude – to escape narrow economic categories. Confidence sets out on its long journey into becoming an explicitly-recognized macroeconomic variable. At a certain threshold, sheer aggregation of private actions transitions into a public event. Banking crisis comes as close to capturing the fulcrum of political-economic interchange as any conceptually-isolable event can. The deep tendency of modernity to encapsulate the empirical plays out into economic institutions.

§5.57 — Political recognition that a banking crisis cannot be permitted to happen finds its institutional manifestation in a central bank.[10] A central bank is the authoritative model of a trusted financial institution. Trust conservation is its principle responsibility. In one direction, it guarantees the credibility of government paper. In the other, as ‘lender of last resort’[11] and provider of deposit insurance it delegates trust to subsidiary banks, in exchange for submission to regulatory oversight. The buck stops here, metaphorically applied to the desk of America’s Commander-in-Chief, is more appropriately conceived as a functional definition of the central bank. While embedded, in principle, within administrative and judicial hierarchies supporting super-ordinate authorities, in practice the central bank’s concentration of competence (and information) immunizes it against further transcendence. It is, in effect, a final court of appeal, or last ditch. In the sphere of economic trust, which is also that of modern economic virtual catastrophes, anything the central bank cannot stop, cannot and will not be stopped. The peculiar status of the central banker appears, to skeptical observers, near-Messianic. This is an impression that reaches far beyond trivial coincidence. In the end, which it incarnates, financial trust – ‘confidence’ – is the central bank’s sole specialism. All of its functions converge upon this, as upon a compact telos. Implicitly, savers trust their local bank because they trust the central bank, and they trust the central bank despite their distrust of the national government. Notably, it is a structural component of modern political ecology that governments expect their national central banks to be trusted more than they are trusted themselves. They in fact come to depend upon this, as the first convincing modern substitute for divine sanction. Government deference to the central bank serves as a credogenic ritual. Through the pseudo-transcendence of the central bank, administrative politics is able to gesticulate beyond itself, to a superior source of credibility. Practical metaphysics is thereby exemplified.

§5.571 — Central banks do not (of course) monopolize the status of the trusted third party, but they provide its most concentrated and perhaps also most self-conscious example. The function of transcendence in socio-economic systems has no superior illustration. The central bank is a part of the financial process that is at the same time deemed above and outside the process. Integral to its identity and operation is the presumption that it transcends the constraints and incentives generally characterizing the financial sphere. Central bank profitability, for instance, is remarkably discreet. The public profile of the institution is incompatible with a commanding drive to make money. Something like radical altruism is tacitly insinuated, as if in pre-emptive repudiation of Public Choice cynicism. Reciprocally, resource limitations on central bank discretion are strategically de-emphasized. While not positively pretending to infinitude, or an unlimited capability for monetary intervention, some rough functional facsimile of such is not strenuously discouraged. Because the central bank is effectively a final institution, those wastes of potential financial catastrophe lying beyond its scope can only be populated by dragons, and are therefore rendered in certain respects unthinkable. The end of the world is re-articulated. There is a theatrical and ceremonial dimension to all of this, which has not gone unnoticed, or unmentioned.[12] Central bankers are – in the strictest possible sense – modern magicians.

§5.572 — Every central bank is an amphibian, or a Janus-faced being. Operational pseudo-transcendence requires this. The central bank mediates between the public and private aspects of the economy – and even defines the distinction between the two – drawing upon the institutional axiom that aggregate confidence in private commerce is a legitimate, and inevitable, target of public policy concern. Trust, in its distributed economic manifestation, is taken as the object of a mass social technology. The great macroeconomic conception occurs, pre-programming much of what then follows. The critical point is the recognition that money issuance is a policy tool, precisely insofar as it is a channel of public communications. It is no longer that money merely bears a message, in the manner of a minted coin adorned with various politically significant inscriptions. A Federal Reserve note still carries such signs, but their seriousness is entirely eroded. Money-making, as such, is now the message. Aggregate liquidity management is no sooner adopted as an administrative responsibility than it flattens upon its own public enunciations. Signal and substance are one. A teleological transition occurs here, that might easily be missed. ‘Public’ (i.e. state) revenue maximization, an obvious goal from at least one perspective, yet one that has been evidently instrumental in regards to the obscure practicalities of historical installation, is absorbed into a more complex structure of purposes. It becomes the opportunity for a public demonstration – for publicity. Hence the distinctive emphasis placed upon the central bank statement, an address not only about, but to the market, spectacularly totalized from above. This is already to say that irrespective of its intentions, or self-comprehension, the central bank inherits responsibilities that are strictly magical.[13] Vivid ‘materialization’ of the impossible – i.e. of free risk relief – is its central obligation. It is not only illusionism that is at work here, then, but medicine, or therapy, in accordance with the archaic role of the witch-doctor. The public utterances of the central bank are a mass psychological talking cure, but inverted from an exercise of attention into an incantation, and thus a spell, or placebo. We hear in these words the technical ideal of the confidence trick, in its super-legal and pseudo-metaphysical configuration. Practical efficacy is tacit. Like credit money itself, the truth of the central bank statement is created – ab nihilo – in being believed. The reality is ideally exhausted by the phenomenon. It is what it is thought to be, and no more. Confidence, in the end, has no ulterior derivation. It is miraculous.[14] Half a millennium of demystification has led to this, clearing the stage for business-suited new magicians. The performance is underway. A tranquillized collective economic sphere is to be conjured into existence. As it entered its advanced maturity, The Great Moderation named it well. The Great Moderator – Mighty Macro – is a more valuable name still, for the One at the End who Looks Both Ways to Make Peace. That’s the Magician-God in the Bitcoin cross-hairs.

§5.573 — On the empirical plane, a trusted third party functions as an intermediary between a pair of agents. It is the mutual relation to a common intermediary that formally determines the agents concerned as peers. Virtual lines of evasion (route-arounds) cross the plane, linking the mediated agents in innumerable alternative ways. When plotted upon this flat expanse, the trusted third party appears as an interception – something like a successful hunt, an act of capture, or captivation. On the plane, every overseer is exposed as avoidable, if not in actuality avoided. There is always another way. Excessive impositions prove repulsive. Every moment of mediation has therefore to strike a bargain. No hint of the universal is found here. It is not upon the plane, but upon the pseudo-distinct, pseudo-orthogonal, and pseudo-metaphysical axis transecting it that the exorbitant authority of the overseer is ‘for the first time’ expressed. The horizon of supervision extends into the infinite. If not explicit in its claims to omniscience, omnipotence, and omnibenevolence, it makes no effort to dispel such theological encrustations. An implicit invocation of God-like powers follows from the conspicuous assumption of God-like responsibilities. In wherever the buck stops we trust. The aura of infinitude is essential. No limit can be drawn. Whatever lay beyond the outer boundary of central banking power would be the lair of crisis, by definition. A formal delimitation of the supreme third-party powers is indistinguishable from a program for financial catastrophe.[15] Agreeing not to go there closely coincides with the new social contract, drafted in the 1930s. Critique of authority henceforth meant Great Depression. To the titles of Macro can then be added: The Unscrutinized Scrutinizer. That which sees all should not be excessively challenged by inspection.[16] This is how asymmetry has been put to public work. Apparently exempted from immanence, the overseer is fed by the impression of exceptional rules, and sublime incentives. It seems to hover above the fray, as if released from mere empirical difference into a superior milieu. Amphibious by essence, it is at once an efficient, individualized, economic agent among others and simultaneously nothing at all of the kind. The effect works best when no one looks too closely.  

[1] A ‘standing social illusion’ or “consensual hallucination” – to draw upon William Gibson’s anticipatory description of Cyberspace – can, under certain very definite circumstances, attain robust virtual reality in the epoch of the Internet. It can, in other words, be effectively installed. Any residual associations with mere mass delusion, of a kind vulnerable to destructive reality testing, then become systematically misleading, as the index of a misapplied empiricism. The protocol is not an error awaiting correction, but rather a structure of transcendental subjectivity. Its relation to objects is not representational, but productive. The fatal emergence of time as synthetic being, in particular, manifests the techno-historical restoration of transcendental philosophy. The order of things has to be produced. In this vein it has to be argued that the artificiality of time is – finally – time’s most time-like quality. Its nature is to be unnatural, at least in the sense that it eludes all prospect of objectification. Only thus does it secure itself against the geometrical reduction that would collapse it into space. Of course, if not obviously, nature itself does this first. To repeat what can never be repeated sufficiently, Φύσις κρύπτεσθαι φιλεῖ (“Nature inclines to crypto.”).

[2] The blockchain is thus something like an anti-structure, occupied only by positive terms.

[3] If double spending were a practical option which as a matter of discretion was not executed, then a promise would have been kept. In this case, a credit relation would have been supported. In respect to Bitcoin the example is, of course, entirely counter-factual, and actually logically unconstructible. A double spending tolerant ledger could not be a blockchain, by elementary definition. As Pierre Rochard notes in his short essay on ‘The Bitcoin Central Bank’s Perfect Monetary Policy’, Bitcoin precludes the re-emergence of fractional reserve banking within its medium by automatically necessitating “full reserves for all accounts”. The protocol interprets any process of money multiplication as double spending, and edits it out of the economy. Because bitcoin are not credits, “money is not destroyed when bank debts are repaid”. The ‘money supply’ – in the Bitcoin epoch – is constituted by a reservoir of positive abstract assets. Rochard predicts that “The Bitcoin Central Bank [i.e. the decentralized Bitcoin Network] will be the longest lasting institution of its kind thanks to the anti-fragile independent monetary policy it has set in stone.”

[4] Conceived in Marxian terms, this history seems to tell of the death of the liberal economic order through its own excesses. Such a narrative is very far from straightforwardly misconceived. The very idea of a liberal regime suggests extreme paradox, precisely because it corresponds to an exemplary coordination problem. The overall order presupposes a suppression of defection which it is itself seemingly unable to guarantee. The ‘itself’ here – as in all cases of spontaneous order – is the crux of the conundrum. The system of competition itself, or as such, has no obvious allies. Many, if not all, of Marx’s classic capital contradictions are rooted in this dilemma (and thus describe a variety of fundamental liberal coordination problems, socio-historically expressed at varying degrees of elaboration). ‘The market’ – to thus name society’s most fundamental spontaneous institution – is susceptible to the ravages of an agent-principal problem without comparison. The attempt to operationalize the state as the relevant agent in this situation, tasked with responsibility for managing general commercial conditions, broadly coincides with the tragedy of modernity, as distilled into ‘neoliberalism’. Public Choice theory arose as its more-or-less explicit rejoinder.

[5] See §3.06.

[6] There is no one who can be sued for the destruction of the US Dollar (by more than 95% of its value) over the course of the 20th Century, for instance. Still more extreme – hyperinflationary – depredations enjoy sovereign immunity against legal redress. To decry this situation as itself manifestly criminal is merely to court intensified marginalization. Such has been the libertarian road.

[7] The armchair mode of estimation is, of course, wholly pedagogical, or dramatic, and insofar as it suggests harmonious concordance of contemporary financial norms with timeless human intuition, it is positively misleading. From the perspective of trans-historical anthropology, the only natural money is metallic. It was necessary for bank-money to build a new financial ‘common sense’ for itself. The success of this project has been so remarkable that it is has eclipsed acknowledgment of its radical historical contingency. It nevertheless has to be recalled that the adoption of this monetary regime has been late and rare (even singular). … The reconfiguration of money through institutional credit creation found its concrete historical ratchet not in the parlors of policy deliberation, but on the battlefield. In other words, it effectively financed the geopolitical occasions for its own entrenchment. To a considerable extent, British military history since the beginning of the 18th Century has been its testing ground (a claim that is smoothly extendable back to the independence struggle of the Dutch Republic from the end of the 16th Century). By providing the logistical sinews for the rise of Anglophone global power, modern credit finance created the real conditions for its teleological self-validation. It organized payment for the world order in which it would be at home. The circuit of auto-production, in all its groundlessness, is evident at every scale. We return, then, to the process of nihilism and its machinery. Occidental religious crisis and modern economic history are aspects of one thing. The erosion of transcendent foundation provides the time gradient of both.  

[8] According to Wikiquote, the common attribution of this phrase to Josef Stalin is unreliable. If we still hear an echo of the materialist dialectic within it, the allusion is not altogether confining.

[9] The contribution of John Law’s Mississippi Bubble to the collapse of Europe’s Ancien Régime has to count as the supreme example of inverse political risk (i.e. risk to a political order from economic calamity).

[10] The lucid administrative identification of systematic financial hazard as an object coincides with the exact moment at which classical liberalism dies in principle. Such identification cannot be made without a corresponding delimitation of private commercial prudence, within boundaries too constrictive for the persistence of an autonomous economic sphere. The independent economy cannot be trusted. It requires a trust supplement, incarnated in some para-political institution. Trust is recognized as the highest economic ‘commanding height’ and nationalized. This is, unmistakably, a process of domestication. The state (and its parastatals) no longer solicits trust, but rather claims to produce, manage, and dispense it. This provides one thread for the argument, formalized most rigorously by Murray Rothbard, that central banking is essentially incompatible with a libertarian social order. The usurpation of trust is a centralization of contractual confidence, and a conversion into an implicitly political relation. The Statist Left, in its analysis of monetary property as politics, merely discovers the Easter egg that central banking hides. The super-abundance of the central bank’s de facto power relative to its de jure authority is a predictable staple of conspiracy theorizing. The United States Federal Reserve System is an especially target-rich environment in this respect. It is an institution that might have been designed for the stimulation of occultism. The pursuit of public purposes through private institutions reliably does this. At the most basic level of analysis, the Fed is simply not well hidden. It cannot but show its work. The deliberate conversion of distributed commercial-industrial capability into concentrated national power happens comparatively recently, and in public. It is almost impossible to miss the Siren call of the imperial project, which cements the problem of trust into geopolitics. As a pseudo-transcendental being, the central bank simulates the intrinsic obscurity that is the signature of the thing-in-itself. Supposedly located beyond the ravages of crime and politics, it invokes a higher realm. Between an object of reverence, and one of paranoid anxiety, the distinction is slight. The dominating, common element is a strategic impression of abnormality. The central banker, properly understood, is a figure more at home in horror fiction than social history.

[11] The formula ‘lender of last resort’ was originally minted (in 1797) to define the financial-institutional role of the Bank of England. Its first appearance is found in Sir Francis Baring’s Observations on the Establishment of the Bank of England, published that year. Its wide circulation, however, owes more to the later usage by The Economist editor Walter Bagehot, in his book Lombard Street (1873), which explicitly ties the therapeutic power of the general guarantor to its currency issuance authority. Some non-trivial measure of Victorian economic-moral continence can be seen in Bagehot’s insistence that the exceptional relief from risk offered by the central bank should be tightly bound to explicit penalties (just as the preservation of incentives within the poor relief system required an overt punitive element). Strategic laxity requires a compensatory super-addition of discipline. This is not an equation post-Victorian society has been able to sustain. Varieties of relief disorder become, instead, the normal condition. The asymmetric “Greenspan put” – which protects investors against losses without any reciprocal constraint upon gains – exemplifies the syndrome. 

[12] Alan Greenspan provides an especially dramatic example of central banking as public performance. No one has more clearly articulated the explicit duty of the central bank to make its decisions ineffable. As he famously remarked: “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” Ironically, the critical invocation of abstraction is entirely undisguised. It is not confidence in anything particular that the central bank is properly concerned with, but rather pure confidence, as manifested in monetary intensity, or liquidity. Concrete policy presentation is thus conceived as a new species of idolatry, to be jealously avoided. When John McCain later joked that in the event of Greenspan’s death he would prop up his corpse in dark glasses and hope that nobody noticed, the same magic theater was being referenced. Between the appearance of financial authority and its reality lies no difference that matters. Trust is practically aligned with the paradox of a supernatural phenomenon – of the ‘phenomenon’ in its colloquial rather than philosophical sense. One sees only that what one sees could not possibly be enough. A ‘leap of faith’ is therefore modeled, from the other side. To be catapulted into credence is the desired effect. That is the entire point of the show, and everyone knows it. The audience is to be healed of its skepticism, in something like the Reformed Christianity revivalist style. Belief is the essence. Expressed within the suitable Protestant idiom, financial salvation is earned by faith alone. That Macro has come to sound like a Stephen King plot is only by shallow estimation a coincidence.  

[13] The systematic taxonomy of magical effects remains an under-developed and controversial subject. No general consensus exists as to whether a full categorization is possible, still less is there any agreement as to its final architecture. The most disciplined attempts to complete such a project, however, tend to concur on the prominence of production and vanishing as elementary magical effects. Creation (ex nihilo) and annihilation are the theo-cosmic archetypes. Stage magic dramatizes ontological modality. Monetary conjuration complies neatly with this scheme. In the era of financialization, credit expansion and contraction attest to an absolute process of money production, ‘backed’ by nothing beyond itself. At the limit, money demonstrates radical insubordination relative to the question of being. With all material constraint on minting lifted, monetary production submits only to magical will. In this context, Bitcoin looks like a spell cast during a magical war. Its restriction upon money creation is characterized by unprecedented severity, from one regard. From another, however, the entire crypto-currency is an ex nihilo creation, bringing a virtual BTC 21,000,000 into existence spontaneously, out of nothing. Money creation switches phase. It is no longer amplification, but sheer innovation. Reciprocally, an updated model for monetary annihilation can be expected, no longer based on credit contraction, but rather on crypto-currency extinction events. Proliferation and culling of new currencies begins to increasingly regulate the money supply. Cryptic sorcery contests financial magic.  

[14] It is the sacred calling of skepticism to doubt the existence of things whose reality inheres in nothing beyond their being believed – but not to the point of dogmatism.

[15] “Only a god could save us,” Heidegger remarked in a 1966 Der Spiegel interview. The mature world credit-financial order was not the primary context for these words, but it might aptly have been. An overseer who is definitely less than a god is nothing. Where deity is slow to unambiguously manifest, ceremonial magic is required to make up the difference.

[16] Is not the illusion of vision among our most consistent themes here? The Federal Reserve Note includes the picture of an eye. It is not meant even to be noticed. To feel oneself perceived suffices for childish comfort. Claims to see rarely tolerate close examination. Intense scrutiny ruins the effect. This is now what we are seeing.

Crypto-Current (046)

§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.[1] 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.[2] 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.[3] 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.[4] Even economics has fallen prey to it.

[1] Decentralization remains drastically under-conceptualized. The rigorous quantification of decentralization is more than a reflective supplement to an underlying socio-historical process. It can be expected to play an increasingly indispensable functional role. Balaji S. Srinivasan and Leland Lee take a crucial initial step in correcting the prevailing neglect.

[2] A long historical learning process lies behind the contemporary configuration of this controversy. It has involved the gradual emergence of the culture of capitalism as an explicit product, rather than merely (and implicitly) a resource. Daniel Bell’s The Cultural Contradictions of Capitalism (1976) is a milestone reference. Does the capitalistic process in motion reproduce, or erode, its cultural conditions of perpetuation? Does it, in other words, attain cybernetic closure? When this question is hardened into an objection, it conforms structurally to a species of ecological criticism. A non-renewable resource is inadequately accounted. Capitalism burns through its cultural preconditions, in the same way industrialism burns through fossil fuel deposits (without any capacity to manufacture them).  

[3] Any social entity is functional (or competitive) insofar as its private and public aspects cooperate, or work together. To place cooperation on the public side of the division, through contrast to private competition, cannot therefore be conceptually coherent. Any such articulation illustrates the socialist confusion – typically more earnest than cynical – of the public with the collective or gregarious, and then subsequently, as also more malignantly, with the state. There is no ‘public sector’ outside ideological myth, but only a public sphere, which is entirely distinct from the state agencies that strategically misidentify themselves as such. The public cannot be institutionally instantiated. To imagine otherwise is a stark example of pre-critical or metaphysical error. It is rare for a theoretical temptation to be so seductive, or so luridly erroneous.

[4] The cultural homology with a religious myth of incarnation is unmistakable. When conceived as a positive philosophical project of social theology, the outcome is Hegelianism, which is to say speculative metaphysics without regret.

Crypto-Current (045)

§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.[1] 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.[2] 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,[3] 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.[4] 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.[5] 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.[6] It represents a deal. No one is employed to be themselves.

[1] The impossibility of consistently willing an end without also willing the means to that end is an early conclusion of the Kantian practical philosophy. The germ for its ‘immoralist’ Nietzschean exacerbation is already implicit. Given any sufficiently advanced X, the final answer to any question of the type ‘What does X want?’ can only be ‘more of the capability to get what it wants.’ This is the transcendental conduit to the formulation of will-to-power. Capability is the inescapable presupposition, and it scales. Growth potential subsumes all specific imperatives. Thus, determinable goals dissolve automatically into an intensive-quantitative factor. The absence of any justification for the cycle outside the cycle is a consummation of immanence, or critique, in what might be considered a cybernetic nihilism. It finds cosmic confirmation in the figure of eternal recurrence. No abstract schema could be more applicable to modern techno-economic dynamism.

[2] Any substantial contribution to the problem of algorithmic governance has to be an advance into nihilism of this kind. Elimination of transcendence already amounts to it, at least implicitly. Systematic insensitivity to extraneous purposes simply is the design imperative. Openness to an ulterior “Why?” is therefore an engineering failure. Nihilism is finally cybernetic closure, and nothing else. That nihilism is therefore a regulative idea, in the Kantian sense, follows directly as a supplementary conclusion. Consummate nihilism is, or would be, the (inaccessible) pinnacle of engineering perfection – the absolute automaton.

[3] Spontaneity designates a critical asymmetry, on the model of the analytic-synthetic distinction. Like a trap-door function, it manifests disproportionate resistance in one direction. It thus suggests itself as a cryptographic theme. Social opacity follows from it. In other words, its work is not seen. It would be unfortunate if the intrinsic subtlety of this problem were to eclipse its dramatic irony. The crucial point being: Only spontaneity is work (when both terms in this equation are rigorously conceived). Analytically-reducible procedures cannot produce anything, by definition. The challenge of synthesis exceeds them, in principle. It follows that there is no work program. Work is that which cannot be demonstrated in any way other than its performance.

[4] In the public sphere, especially, the predictable outcome of incentive misalignment is identified as corruption. The tacit analysis conveyed by this term is systematically unhelpful. Principal-agent problems are not amenable to simple disciplinary correction, on the model of a suppression of vice, and reciprocal restoration of an altruistic norm. Unless player positions are game-theoretically coherent, perversion can be confidently anticipated. Enlightenment, especially – but not exclusively – in its Scottish sense, conforms almost exactly to this insight. When bad things happen, it is because they make sense locally, at the time. Corruption, like criminality in general, prevails for as long as it pays. Any solution involves changing the game. While this is not a lesson that awaited the emergence of Bitcoin, it has certainly been reinforced by the positive model Bitcoin provides.

[5] The British East India Company, with its signature pragmatism, accepted and institutionally formalized the divide intrinsic to agency. Its agents were explicitly authorized to trade on behalf of the company and also on their own account. Company and individual interests were aligned by common opportunities, sufficiently substantial to fully absorb available capital. The arrangement was thus conditioned by definite historical contingencies. It was, in other words, specifically adapted to a massively untapped commercial frontier.

[6] Thinking about the delicate negotiation of a corrupt deal is assisted by the theatrical prop of a uniform. It foregrounds the critical question: Who am I dealing with here? Simplicity is excluded, at the origin. No mere private individual has what you want, while the faithful corporate servant will deny access to it, precisely because it routes around ‘proper channels’. Only the employee who makes a mockery of his uniform is positioned suitably. A kind of double vision is then essential. During the early stages of such negotiations, at least, a certain stilted communicative mode reflects the situation. Two distinct conversations – one proper and one improper – are conducted simultaneously. Perhaps there is some way I could be of further assistance officer?

Crypto-Current (044)

§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.[1] 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.[2] 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)[3] 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.[4] 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.[5] 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.[6] The things Bitcoin enables are exactly the sort of things ‘secret agents’ want regularly to do.[7]

§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.”[8]

§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.[9]

§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.[10] 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.

[1] From a classical Smithean perspective, in which the optimization of production is fundamentally associated with specialization through division of labor, Bitcoin-type distributed systems might even be characterized as an anti-economics. The tension thus exposed between the conditions for secure property and those promoted by industrial efficiency has an obviously quasi-Marxian flavor. Industrialization, on what appears to be its main axis of development – in contra-distinction to its crypto-current – exhibits a totalizing tendency inconsistent with the preservation of polycentric order. Organization indicates general socialization, through erosion of all ‘cellular’ redundancy. This is why capitalism only survives in the wild. Domestication destroys it. It is only in the ‘general economy’ – where unrestricted competitive stress selects for resilience over organizational efficiency – that the trend to decentralization is regenerated. A starkly non-Marxian conclusion then follows: It is under conditions of collapse that capitalism is most reliably re-animated. The ‘crisis’ is its womb, rather than its grave. Enterprise does not breed in captivity.

[2] Concretely, an Ultra-consistent solution to the Bitcoin scaling problem looks something like the Lightning Network, and quite probably exactly like it, at least initially. Special bilateral channels (reticulating without limit) bear the burden of transaction processing, with only intermittent reference to the blockchain for episodic account updates and dispute resolution. In the words of the white paper: “Micropayment channels permit a simple deferral of a transaction state to be broadcast at a later time.” See the (January 2016) white paper  

[3] ‘The market’ is a notoriously Janus-faced concept. In its original sense, a market is a concrete exchange facility. Such a market is always, first of all, a place. Any market bearing a place-name carries some residual trace of this ancestry. The more modern, abstracted sense of markets as global clearing houses, defined primarily by asset-type rather than locality, marks a consistent drift in emphasis, rather than a clean semantic break. Even the most ‘primitive’ market tends to give spatial expression to commercial specialization, in detail. Because the market, as such, does not benefit from private stewardship, and thus falls into coordination crisis of a tragedy-of-the-commons type, it becomes belatedly targeted for redemptive political intervention under ‘neoliberal’ public direction. Only the state can save the market is the perverse conclusion that attests to liberal contradiction sublimed into governing ideology. The same problem was substantially anticipated, but turned in a very different direction, by the Rothbardian left libertarians in their rallying cry to a ‘pro-market anti-capitalism’, or agorism, promoted by strategies of black-market ‘counter-economics’. Betrayal of the market by the cyclopean businesses of the ‘white’ (state-happy) economy is the basic political theme. Much of this discourse could yet come to seem prophetic, precisely because of its drastic failure as a recognizable ideology. No party, however informal, has faithfully conserved it. Insofar as it survives it is because the process carries it forward, automatically. The market, like information, ‘wants to be free’. It has intrinsic teleology, or something indistinguishable from it, robust before every wave of fashionable cynicism that finds new ways not to see it. The alternative – crypto-anarchist – resolution of the contradiction, which secures the market against the politicized public sphere, is exemplified by Bitcoin. The model of the immanently self-secured market has never been more consistently formulated, or implemented.

[4] The definitive theoretical statement of agorist ‘counter-economics’ is found in the main work of Samuel Konkin III, the New Libertarian Manifesto (1980). See:

[5] Daniel Krawisz has written with exceptional penetration about the game-dynamics affecting high-level administrative decision-making in respect to Bitcoin. In his short essay on ‘Bitcoin’s Shroud of Subtlety and Allure’ (2014/06/29), he argues that the crypto-currency places “government agents … in a Prisoner’s Dilemma against one another” by offering them private incentives to defect. “Nearly any government agent who begins to see bitcoin as a potential threat must also simultaneously see it as an opportunity. He, too, can invest in Bitcoin. … How can an organization that stands to lose by the adoption of Bitcoin provide its members with a better opportunity for staying loyal than Bitcoin provides for defection?”

[6] If questions directed at the positive deep state incentives for crypto-currency adoption are pushed to an extreme, they can swerve into exotic speculation. At the limit, it is suggested that shadow government involvement in Bitcoin has been fundamental from the beginning (as has been the case with so many other Dark Net soft technologies). A comment along these lines by ‘pg’ to Hacker News merits reproduction in full:

I’ve long suspected bitcoin was created by a government. Bulletproof protocols usually require peer review, yet there have been zero leaks from the reviewers. Pools of crypto guys who don’t leak stuff are usually employed by governments.

The part that puzzles me is why a government would do this. I can imagine several possibilities:

1. To finance their own black operations.

2. Because they thought digital currencies were inevitable, and they preferred bitcoin to some potentially more malevolent form. (Could bitcoin have been worse from a government’s point of view?)

3. A friend suggested this: because they felt their currency would never become the standard reserve currency, and they felt it was better that no one’s be if theirs couldn’t be.

4. A variant of the above: the US did it because it seemed inevitable that the dollar would eventually lose its place as the standard reserve currency, and better to have it replaced by bitcoin that the yuan.

I realize some of these explanations are pretty far fetched, but so is an individual cooking up bitcoin as an intellectual exercise. Whatever the explanation of bitcoin’s origin turns out to be, it will probably be pretty weird.


For more recent (excited) speculation on the possible deep state origin of Bitcoin, see:

The Crypto-Current argument is structurally-insensitive to such claims. The creation of Bitcoin by the NSA would be no more discomforting, at a philosophical level, than the catalysis of the Internet by DARPA. Clearly, some such covert ancestry would only sharpen still further the conclusion reached here. Overt conflicts between crypto-currency and the ‘public interest’ provide only very limited strategic insight into the relevant deep-political process.

The Global Intel Hub article merits attention especially for its reference to an NSA document of incontestably extraordinary interest: ‘How to Make a Mint: The Cryptography of Anonymous Electronic Cash’ (1996).

[7] It is worth comparing the seduction of Bitcoin with the attraction of illegal narcotics to covert government agencies, as a lubricant for the operations of the ‘deep state’ both domestically and internationally. It is precisely those features that make such economic media of negotiation publicly indefensible that also make them operationally indispensable. They are tinted with essential darkness. The potential scandal of disclosure is inseparable from their exceptional utility. Any agency immersed within a competitive environment pursues operational liberty. Darkness is typically its friend.

[8] The citation is from ‘Bitcoin’s Shroud of Subtlety and Allure’, an essay whose title alone would merit its reference here.

[9] Exit-pressure operates wherever the threat to leave becomes a controlling influence (to any degree). Bitcoin is its most striking non-linear manifestation. An Exit technology itself, and then one that becomes increasingly indispensable to the very targets of Exit-pressure, it marks a critical threshold in political-economic dynamics. Once any society loses the effective option to wave goodbye to the machinery of abandonment, it has been fatally sensitized to the Outside. Compliance now has a criterion ulterior to its domestic governance apparatus. This is, of course, and once again, only the same core leftist nightmare restated. Political volition is marginalized, as the system insidiously takes control. …

[10] Bitcoin dehumanizes property in principle. The consequences are as yet inestimable. Development of Digital Autonomous Organizations and Corporations (DAOs / DACs) can be confidently expected to explore the opened frontier concretely. The legal status of the corporate person provides the socket, which once married to DAO economic autonomy, completes the requirements for an illimitable escape of the firm. Consummate dehumanization of the economic agent is then realized. For the decoded ‘User’, see the discussion by Benjamin Bratton on agency positions within ‘the stack’. For more on this topic within the present volume, see Chapter Six.

Crypto-Current (043)

§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.[1]

§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.[2] 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.[3] 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.[4] 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’.[5] This was clearly exemplified by the conflict between ‘Bitcoin Unlimited’ and ‘Bitcoin Core’,[6] 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[7], 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,[8] 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.[9] 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.”[10] Larry Summers represents it well, while acknowledging the Ultras in contrast[11]:

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[12] 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.”[13] 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’.[14] They enable secure expansion beyond the bounds of traditional trust mechanisms, as constrained by human neurological capacities for social processing.

[1] If Leninist realism required the coupling of “Soviet power” to “the electrification of the whole country” it is unlikely that any position significantly less accommodating than this will remain plausible for the contemporary or near-future Left in its relation to blockchain technologies (meaning, however awkwardly, Bitcoin). See (once again): V. I. Lenin ‘Our Foreign and Domestic Position and Party Tasks’ (November 21, 1920).

[2] For the sexual representation ‘problem’ in Bitcoin, see:

[3] The normalization of mass politics appears to be a distinctively modern phenomenon. While court intrigue appears as a constant of civilization, political decision arises only sporadically – and catastrophically – in societies other than our own. An explicitly articulated ‘social question’ is to a very considerable extent a specifically modern development, and its generalization beyond the confines of quasi-academic political economy is peculiarly susceptible to Utopian fantasy. Whether conceived within the broadest possible evolutionary matrix, or more narrowly as a specifically human social phenomenon, politics competes for time. It is in a certain respect a luxury good, all the more vividly when conditions of extreme economic stress conspire to promote its necessity – as exception. Total politics, to the extent it is not sheer idealization, presupposes – and momentarily incarnates – comprehensive social crisis. This, and only this, is what revolution in its leftist acceptation finally means.

[4] Hard forks are speciation events. Their potentialities in this regard tend to be eclipsed by the implicit ideal of integrity conservation. This orientation is an inevitable outcome of Bitcoin’s lineal generative problems and a developmental history in which forks are defined – with perfect if one-sided accuracy – as consensus failures. Bitcoin was not designed to split. It has nevertheless emerged as something that looks very much like a cladistic engine, or digital disintegration machine. Nakamoto Consensus is already a selection mechanism. It excludes anomalies (modeled as double-spending events). Entirely consistent with this function, although beyond its primary scope, is the operationalization of the fork as an origin of species. Crypto-Current predicts the mutation of certain blockchain lineages in this direction, even if the name ‘Bitcoin’ is reserved – ever more explicitly – for the mainstream tendency that refuses it.

[5] For an explicit acknowledgment of the crypto-currency protocol as a constitution, see:

[6] The list of crypto-currency terminological ironies can be augmented by the oddity that ‘Bitcoin Core’ is the party of decentralization, at least according to their own account of the stakes. The Core case rests on the proposition that decentralization is facilitated by minimizing the system resources required to run a full node. Disintegration of governance within the Bitcoin ecology has no other rigorous basis. Only those players running a full node are producing security. Their opponents are defined by their comparative (and perhaps even absolute) relaxation on the block-size question (and thus about the prospects of increasing the system resources required to operate a full node).

[7] In the world of code, the line between engagement and commentary is – finally – impossible to draw with confidence. The sense acquired by a ‘comment’ in computer science, to describe a remark attached to a program that will be ignored by the compiler, is of obvious relevance. It is between the formally executable segments of a program and those extraneous elements which have been formally determined as non-executable that the wavering line between ‘action’ and ‘reflection’ is now drawn.

[8] “Accenture’s global head of financial services, Richard Lumb, said that the development was about ‘adapting the blockchain to the corporate world’ in order to ‘make it pragmatic and useful for the financial services sector.’ […] Accenture aims to create a so-called permissioned blockchain — an invitation-only implementation of the technology, and the one currently favored by banks. That’s in contrast to permissionless blockchains, such as Bitcoin, which rely on the fact that they can’t be edited as a means of providing an immutable record of transactions. Accenture insists that the feature would be used only in ‘extraordinary circumstances,’ so that troublesome errors could be undone. […] Blockchain purists, however, seem unimpressed by the idea. …”

It would be difficult to improve upon this illustration of the appetite for fundamental compromise that characterizes Mainstreamer opinion.

[9] As the ‘Bitcoin Unlimited: Articles of Federation’ argues: “In the Bitcoin Core variant … we see a project controlled by a small group of developers employed by finance-oriented for profit startup companies, and the emergence of corporate products (Lightning network, Side-chains and permissioned ledgers) that would materially benefit from a Bitcoin network that is incapable of handling the transactional demand required for a worldwide public good.”

[10] Szabo:

[11] Source:

[12] ‘Marc Andreessen: In 20 years, we’ll talk about Bitcoin like we talk about the Internet today’:

[13] Van Wirdum’s article was described by Adam Back (on Twitter) as the “Best article yet on what Bitcoin ‘is’ & why decentralisation is necessary.”

[14] Szabo:

Crypto-Current (041)

§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.[1] 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.[2] 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.[3] 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.[4] 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’[5] 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’.

[1] A ‘transcendental-strategic landscape’ – constituted by an absence of transcendent legality – corresponds to a the concrete problem of anarchism, in the sense this term is understood by realist international relations theory (IRT), and realist strategic analyses more widely. That is to say, it poses issues of security without any possibility of appeal to superordinate authorities (or authoritative referees). Hobbesian political theory, in which “the war of all against all” is exposed by a secular ‘Death of God’, establishes itself upon a negative foundation. Leviathan begins from that which cannot be relied upon. Whether domestically, or internationally, the transcendental (i.e. ultimate) theater in which powers meet is defined by the subtraction of any original commanding unity. Security is thus theoretically constituted as a problem, corresponding to a primordial lacuna. Since it is not given, it has to be positively produced, and it is in the identification of this practical conundrum that IRT isolates its proper object of study. On the Internet, as in the international arena, it is only upon such a cleared, immanent plane, that a true game can take place. It cannot be sufficiently stressed that the conflictual field is not – as its critics have over the centuries necessarily insisted – a positive presupposition, but rather a mere default, assuming only original diversity under the conditions of an absent integral authority. Despite its manifest tendency to decay into a Utopian projection, the perpetually-regenerated credibility of anarchism is founded not upon its transcendent aspiration, but upon its transcendental problematic. Given only war, how is coordination possible?  

[2] While the definition of Bitcoin as a solution to the Byzantine Generals’ Problem remains controversial, the principal objections to this description can reasonably be described as arcane. As Oleg Andreev notes, in a brief but valuable discussion of the proof-of-work solution, any actual production of communications integrity is compromised in its logical purity by practical limits (bounded by cryptographic intractability). In other words, precisely because it is transcendental, Nakamoto Consensus cannot be transcended even by its own proof. The limit is set by the working machine. This is a matter of extreme generality. While persistently – and even essentially – tempted by Platonism as a heuristic, mathematical procedures require instantiations which are transcended only in conceptual principle, which is to say: hypostatically, through appeal to transcendent grounds whose authority is purely ceremonial. Compelling demonstration already returns the problem to the machine, and its real potentials for effective execution. Operationalizations are not, in reality, superseded, or subordinated, but only (at most, and typically) bracketed, or abbreviated, and thus – again, in reality – assumed. The credibility of the Idea refers to potential demonstration. The keystone of proof says nothing else. Untested trust is an oxymoron. It would be a grave error – though an all-too common one – to seek an epistemological demotion of ‘credibility’ to the psychological category of ‘mere opinion’ while admitting this. Credibility is basic. Without it, no truth has been earned. This is the meaning of deduction in its critical and realistic sense. What lies beyond is metaphysics, enthroned upon arbitrary assertion. Irrespective of any extravagantly-promised protections, there is no confidence – no security – to be derived from that. However much Bitcoin has to appear as an Idea, therefore, it is irreducible to one. It cannot be expected that this stubborn factuality is susceptible to comprehensive dissolution into the form of the concept, still less that it will be fully factored into a security analysis. On the contrary, realism predicts its chronic idealization (i.e. misidentification). In this respect, philosophy is a security hole (proposing answers in place of solutions, or dispelling threats only in ideality), if not – in its institutional form – a particularly serious one. … Since insecurity has no adequate idea, it cannot be speculatively resolved. This point of elementary realism calibrates the appropriate level for confidence in philosophy (and does so in actuality, not only in principle). Philosophy is not seriously entrusted with keeping anything safe. Its invitation to live dangerously is – in this respect – a sensible concession to the inevitable. The untested or – still worse – untestable model need not be about danger to be dangerous. Armchairs are places where things can go wrong without limit. … The Byzantine Generals do not secure themselves through a speculative philosophy, but through a robust procedure. Did they have a ‘good plan’ before testing it? (It could, at most, only appear so.) … Security concerns only risk, which is never merely a conceptual possibility, but always a matter of discovery. The fact that Bitcoin appears to be a ‘sound idea’ is not finally separable from its concretely-elaborated existence as the most rigorously-tested trust mechanism in the history of the earth. …

Ian Grigg argues that the classic coordination problem has been displaced, into the far more protean quandaries of a ‘dynamic membership set’. Critical Bitcoin security challenges, most specifically that of the Sybil attack (based upon identity proliferation), entirely exceed the horizon of the BGP. “If Bitcoin solved the Byzantine Generals Problem, it did it by shifting the goal posts.”

[3] A machine with integral incentives necessarily combines formal – or formalizable – and informal elements. To a still-imperfect approximation, but with definite teleological inclination, Bitcoin is politically closed, while commercially and industrially open. In this respect it echoes – and even escalates – the ideal of the arch-liberal (capitalist) social order. The mining objective is exactly specified. The criterion for mining success, compensated automatically in bitcoins, is a hash of the current (problem) block whose nonce begins with a definite number of zeroes (a figure adjusted for difficulty). Despite this extreme formality, the mining procedure involves both chance and – more importantly – innovation. Bitcoin hashing is formally constrained to trial-and-error methods, with probabilistic outcome. In the words of the Bitcoin wiki: “The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made.” Everything beyond the product specifications (the puzzle solution) is left open. In particular, the production techniques are left undetermined, and thus open to industrial innovation. See:

Similarly, and even more markedly, the commercial opportunities opened by the protocol are uncircumscribed. The ‘value’ of the Bitcoin currency, in the broadest sense, is settled dynamically outside the blockchain, through a radically decentralized and uncomputably complex dynamic of exchange. (The exchange process – catallaxy – is the computation.) The protocol sets the total stock of bitcoins, without predetermining their distribution (between agents) or price (when denominated in any other financial medium). The value of the currency cannot be derived from the rules determining its quantity. It is synthetic. Bitcoin’s productivity lies in what it leaves open, even as its integrity is secured by what it closes.

[4] Self-binding is a classical problem, epitomized by the strategy adopted by Odysseus in his passage past the Sirens. Anticipating an irresistible seduction, he commits to a decision which he then – by crude socio-technical means – renders irreversible. Within game theory, the same problem is a central preoccupation. It is admirably summarized by Scott Alexander: “… it sounds weird to insist on a right to waive your rights. Isn’t that more of an anti-right, so to speak? But … read your Schelling. In multiplayer games, the ability to limit your options can provide a decisive advantage. If you’re playing Chicken, the winning strategy is to conspicuously break your steering wheel so your opponent knows you can’t turn even if you want to. If you’re playing global thermonuclear war, the winning strategy is to conspicuously remove your ability not to retaliate, using something like the Dead Hand system. Waiving your right to steer, waiving your right not to nuke, these are winning strategies; whoever can’t do them has been artificially handicapped.”

[5] The quote is extracted from this video record: