§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. 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. 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. 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. 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’ 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’.
 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?
 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.” http://financialcryptography.com/mt/archives/001522.html
 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: https://en.bitcoin.it/wiki/Mining
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.
 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.”
 The quote is extracted from this video record: https://www.youtube.com/watch?v=UVGq0zaZsNg&feature=youtu.be