Imagine you are walking in a lush forest. The sights, sounds and smells are intoxicating in a most pleasant way. There is so much to take in you find it hard to focus on a single detail, your mind starts to wander. It is alright, enjoy the moment, the refreshing experience clear the stress and energizes.
Suddenly, right in front of you there is a tiger staring you in the face. Time slows to a halt and all those sights, sounds and smells vanish; now your mind has a single focus – survive.
The higher cognitive capacity of your brain vanishes along with distractions, it requires too much effort and it takes too much work, as they have no place in this situation.
Threats elicit physiological responses that have been evolving for millions of years. The stress caused by them, either the immediate tiger-in-your-face type or those of medium and long term nature, will suppress higher cognitive thinking.
The ability to think rationally about the abstract future is probably the defining characteristic of mankind. What do you do when this ability is hijacked by fear?
Frame Of Mind Control
Every piece of information you receive has to be filtered by countless processes in the brain; most of the time they work well to ensure survival. Sometimes distortions are created such as optical illusions, auditory illusions, and cognitive biases. No one is free from those “brain failures”, including me even as I write this. The best we can do is to be aware of them to reduce the damage, which is usually harmless but it can be devastating sometimes.
Fear will inhibit the rational and slower processes of the brain to ensure survival when facing an immediate threat. The degree of this inhibition will vary but it still happens for threats more distant in time, the exact point when the slower rational brain functions can be superior.
While the quick visceral response caused by fear is there to ensure survival, brain failures present excellent opportunities for those willing to take advantage of others, and the greatest manipulators of cognitive biases are generally the greatest creators of misery and oppression in human history.
Fear has been used as the “mass remote control”, since at least the beginning of civilization. It is perfect for those who want to suppress rational thinking. Throughout history, priests and rulers tended to master manipulations using fear and other biases to gain massive power and spread dogma.
Dogma is the death of reason.
Our minds naturally tend to exaggerate the present moment to the detriment of the future. Economists call this hyperbolic discounting. Combine this with fear’s capacity to blind reason and the desire for power over others by a few tyrants, and you get a perfect recipe for a downward spiral of increasing disasters. When people are afraid and can’t think straight, it becomes easy to ask central powers for solutions. These central powers, however, have insufficient knowledge and end up causing more problems, leading to more fear, and a dwindling disaster spiral ensues!
The most absurd notions have always a chance with people who are suffering
― Frédéric Bastiat
Fortunately there are plenty of solutions today which avoid the disaster spiral, we just need to cover a few essential concepts first.
Beyond Zero-Sum
In game theory zero-sum refers to interactions where one player has to lose for the other to win. It’s a closed system of benefits. Positive-sum, on the other hand, represents interactions whereby everyone can win. It’s an open system where benefits and new wealth are created, not just transferred.
Voluntary trade can only happen because it’s beneficial to both participants, otherwise, if the trade were neutral for each one, why would anyone do it? There has to be at least a small benefit for each party; this is the essence of wealth creation – a positive-sum interaction.
At first glance it would make sense for everyone to pursue positive-sum interactions and avoid zero-sum altogether. However, when low productivity is combined with scarce resources (high demand), zero-sum has too many advantages in the short-term and the long-term becomes too uncertain. This gradually changes as productivity increases.
I’ll be making big generalizations here in order to focus on the essentials. Just keep in mind zero-sum is essential to business related to positional scarcity.
To get a clear understanding, let’s keep it simple, and make distinctions between physical and temporal scale.
In the physical scale:
The smallest interaction happens between two individuals.
In the temporal:
The smallest interaction is just a single (punctual) action.
In every interaction where someone initiates force against another, the result is always zero-sum. On the other hand, when the interaction between both parties is voluntary the result is always positive-sum (or at least has a strong tendency towards it). Repeating interactions create incentives to honesty and reputation systems, but it takes some time. Voluntary exchanges and production, mediated by demand (measured in price) create wealth.
Zero-sum by itself is not necessarily bad as it’s the basis of social status. Status has its functions, and is related to reputation, the problem only begins with coercion: The initiation of force, or credible threats thereof.
Coercion is the essence of power over others, the result is zero-sum for the short-term, but in the long-term the results are far nastier. At both larger physical and temporal scales the results get magnified for all interactions.
Multiple individuals interacting in a voluntary manner naturally lead to specialization, no central planning required. The distributed nature of trial-and-error makes it adaptive, so wealth spreads fast and compounds over time.
The increase in wealth & production begets more wealth & production.
It is a virtuous cycle, but vulnerable to zero-sum coercion. And here lies one cruel irony of life.
The individual who initiates force (or makes a credible threat) can gain all the benefit from those interactions - a strong incentive for robbers and rulers alike. However, when you zoom way out in the time scale, the cycle of wealth creation gets massively crippled, producing a negative effect for everyone in the present and future.
In the large physical and temporal scales, coercion is negative-sum. When you assume the inter-temporal view, viewing both short and long-term, it becomes clear that no good can come from legal or illegal coercion. Compounding effects work with both negative-sum and positive-sum, but are hard to notice as they happen in times longer than the human life span. Or rather, it used to take life spans.
Thanks to compound effects and technology, effects only noticeable after several decades or centuries are now obvious in a few years. New technology is also making the architectural differences between negative-sum and positive-sum crystal clear.
Distributed Bottom-Up vs Central Top-down
When it comes to natural complex systems – systems with several interconnected parts - information is processed best by small units instead of a large central hub. This happens because the complexity can increase exponentially with more participants taking place, and there is always hidden information a large central node can’t access.
For instance, in order to mitigate a pandemic, people are forced to stay at home, but the variables in each individual’s life, who or what can determine the best course of action, how is each one willing to deal with risk, what are the individual needs, are beyond access of central nodes. And the consequences of such measures are not immediately seen.
That Which Is Seen, and That Which Is Not Seen
This is the local knowledge problem: it is impossible for a ruler, no matter how smart or well meaning, to make the best decisions for the ruled. Distributed knowledge resides only in individuals, this makes central-coercive authorities unable to come up with good solutions.
Top-down decision makers tend to view events in isolation, ignore the larger process, and what’s worse, are disconnected from the consequences of their actions, i.e. they lack skin in the game. Have you ever seen a politician or political committee paying for their mistakes with their own money? No, they just pass a law to get more funds because “this time it will work".
Centralized authorities carry:
a) Systemic risk – quickly affects everyone down the hierarchy chain.
b) Pervasive payoff – the worst consequences of their actions fall on people unrelated to the decision making.
This transfer of punishment and rewards forces everyone else to pay the price and the system gets worse due to the lack of feedback where is most needed.
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.
― William Pitt the Younger
Besides necessity another common excuse for large central powers is that most people are too stupid to take care of themselves, the ignorant masses need a shepherd to lead them into the right path. When a big problem is facing humanity; only smart leaders, with all their massive knowledge, can lead the way. All those ignorant and stupid people have to do is obey and everything will be alright. Anyone who has a different opinion is dumb and just wants to watch the world burn. We also have to wait for scientific geniuses working together with political authorities to solve the problem. They are the only ones capable of coming up with solutions, there is no other way rather than a central-coercive authority.
We have to wait for the state to solve it, and when it turns worse, don’t complain because without them there would have been no other solution. And if you have a different opinion, it is because you want everyone literally to die.
― Mrs Submissive Sheep
This means people overestimate the value of a single solution, underestimate the value of several parallel experiments, and ignore the consequences of trusting a system where the worst comes to power.
Distributed systems - combined with low cost of information - will provide much better results, fortunately the Internet have been slashing information costs for decades. This is a quick feedback mechanism working to improve the larger system.
The beauty of distributed systems is that each participant (or node) can try to find different solutions simultaneously, while most of them can fail, the success of a few can spread quickly to the network. All the while the damage of failures is localized.
Instead of the insanity of current days, when a few central-coercive governments are imposing lockdowns on everybody as the solution; we could have several people trying (and failing), very different ideas. The quick feedback, and easy sharing of information created by voluntary solutions will eventually produce excellent results. But this requires self-reliance, not self-submission.
Waiting for political solutions is an incentive towards learned helplessness and a form of responsibility outsourcing. The immediate gratification of lazy thinking (or lack thereof) is a perfect match with the immediacy caused by fear. It adds up to a blindness towards long term and inter-temporal view.
It is impossible to live without risk, but the outsourcing of risk related decisions to central authorities makes people forget this fact of life and feel good with a false sense of security. False security is far worse than no security because it induces more miscalculation. How can anyone deal with reality if the decisions are based on false assumptions?
The choice of dealing with risk can only be effective when it lies within the individual, along with the responsibility and feedback.
Top-down systems are making people dumber by removing feedback, creating learned helplessness, and giving false security. It is a downward spiral towards larger problems, if we were heading down the road of serfdom before the current panic, we are now accelerating on the Autobahn of oppression.
Domesticated Minds
In order to turn bulls, horses, donkeys and camels into obedient draught animals, their natural instincts and social ties had to be broken, their aggression and sexuality contained, and their freedom of movement curtailed. Farmers developed techniques such as locking animals inside pens and cages, bridling them in harnesses and leashes, training them with whips and cattle prods, and mutilating them. The process of taming almost always involves the castration of males. This restrains male aggression and enables humans selectively to control the herd’s procreation.
― Yuval Noah Harari, Sapiens – chapter 5
Similarly, the process of taming humans can involve cruel and manipulative techniques, but they are far more nuanced. One of the most striking is the castration of free independent thinking, spearheaded by supposed experts.
Was there ever a time in humanity’s history when everyone was forced to suppress commerce and live inside the house by a tyrannical elite? Under the guise of the greater good and the whip of fear, critical thinking seems to have vanished.
Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.
― C. S. Lewis
The Latin word domus means house, hence the origin of domestication. With all the manipulation, fear mongering and coercion forcing the world to stop and to stay inside, domestication has taken an entirely new meaning.
Time, our most precious asset, is being wasted with myths of hierarchical wisdom. Free thinking and free questioning, the most fundamental principles of science, are strangled by politically correct “science”, whenever science bows down to rulers and it is then used to justify political action. The result is a disgusting dogmatic insanity, it is just a slavish imitation of the method and language of Science.
Blindness towards the future, caused by fear, is cured by switching your brain into analytical mode and questioning everything, especially authority. Political narrative and propaganda are so vulnerable to critical thinking they have developed several strategies to suppress it. When rational thinking prevails, politicians turn to the moral authority frame.
If you have a different opinion it is because you want everyone to literary die.
The moral authority frame is nothing but smoke and mirrors used to deviate attention from the real intent to create massive zero-sum gains for authoritative rulers at the expense of everyone else. Just another trick to tickle the guilt glands of clueless cretins, which only results in negative-sum for everyone in the long-term.
Disobedience is the true foundation of liberty. The obedient must be slaves.
― Henry David Thoreau
A small, and misleading, alleged good such as flattening the curve, based on weak assumptions, can turn into fatal ultimate consequences. These measures will cause harms far greater than any virus. In fact, spreading faster than any pandemic ever could are Orwellian proposals.
Strong restriction of movement, commerce, open questioning, and increased surveillance took the world by storm. A deranged mentality commonly reserved for places where the most tyrannical hierarchies rule became ordinary worldwide. Instead of reading the novel 1984 as a warning, rulers are reading it as an instruction manual.
The urge to save humanity is almost always a false-face for the urge to rule it.
― Henry Louis Mencken
To See Beyond Our Temporal Shackles
If the defining characteristic of humanity is the ability to think rationally about the abstract future, it is well past time to leave the myopic view of immediacy and look towards the long-term consequences of trusting central-coercive crooks.
Voluntary trade is the engine of prosperity and wealth creation, each participant trades due to the belief of being slightly better after it. If the trade were neutral, it would have no reason to occur. Even if there are some flaws in this process, in large scales it is positive-sum. But now a wrench is jamming this magnificent engine, forcing the world into a destructive consumption.
Getting free from the immediacy caused by fear is crucial, the decisions we make now can either lead to massive destruction or construction of wealth.
Construction only requires courage to take back your autonomy and ignore the whip of fear or the fake moral frame of authorities. The effort it demands can look like a small sacrifice in the short-term, but these short-term small sacrifices working together with voluntary interactions are the only road to massive positive-sum gains in the long-term:
A view from small to large scales of physical interactions - from only two individuals to large groups. A view from small to large scales of temporal interactions – from a single trade to millions of trades made throughout time. It creates a movie of an inter-temporal world.
“The key is to free oneself from a tyranny of first consequences, overvaluing what comes first at the expense of what inevitably comes later.”
The DAO of Capital is among those rare books worth reading multiple times, a successful investor’s view of the economy, the lessons it teaches go far beyond finance, they are useful on every aspect of life. The thinking it inspires is essential because it is a roundabout map to bypass fear and immediacy.
But you don’t have to believe a single word I have written, just please consider everything. The reason why coercion (the initiation of force) is wrong, beyond the negative-sum it produces, and other concepts glanced over, deserves more in-depth breakdowns. Those are topics for other posts. For now keep in mind:
I don’t know shit, you don’t know shit, and autocrats claiming to know what is best for the world don’t know shit!
Wait But Why - The Cook And The Chef
Now with the essential concepts covered, we can turn towards compelling action.
Permissionless Life & The Satoshi Principles
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
Satoshi never clearly stated his motivation behind the creation of Bitcoin, but the above news referenced in the genesis block and his messages are strong clues. So I’m going to make assumptions based on his written legacy, I might be wrong but these ideas already have a life of their own and can’t be owned by a single person.
Bitcoin is what Satoshi did, the combination of public-key cryptography with proof of work is how he did. Why he did is the most important of all:
To bootstrap freedom at a massive scale.
Legal tender laws coerced the world into fiat-fraud, so Bitcoin was the first step towards independence from central banks. Now we need to take the next steps towards independence from every other central-coercive hierarchy. To get there we need to follow freedom’s first principles, or the Satoshi Principles:
1 - Build Distributed Systems Where All Reliance On Centralized Hierarchies Is Eliminated By Design
This is the hardest problem to solve and no one should consider Bitcoin as the ultimate solution, much work remains to be done on distributed consensus technology.
It is the first principle for a reason, centralization has the potential to spread faster than pandemic panic, and when it takes its hold it’s hard to cut off, so a good foundational design is imperative. The Internet infrastructure was supposed to be decentralized but regulated ISP became the norm, the same can happen with Crypto if we’re not vigilant.
2 – Respect The Individual
Individual autonomy permeates the Bitcoin ethos and allows a new level of voluntary interactions, with private property and absolute ownership at its core. Freedom of choice to participate in any project, or to pursue different ideas were respected by Satoshi, this is in the integral why layer many developers forget due to tribal thinking. As long as the ideas of this base layer are respected, we should welcome different approaches to solve the problems we have.
It seemed so obvious to me. Here we are faced with the problems of loss of privacy, creeping computerization, massive databases, more centralization -and Chaum offers a completely different direction to go in, one which puts power into the hands of individuals rather than governments and corporations. The computer can be used as a tool to liberate and protect people, rather than to control them.
—Hal Finney
3 – Privacy & Anonymity
We know Bitcoin is pseudo-anonymous by default, and true anonymity is really hard to achieve. Taking into account that surveillance is the key requirement for authoritarianism, privacy and anonymity should never be compromised and need to be the default standard in every project.
Some will argue anonymity can create new problems, and this is true, but they are tiny compared to problems caused by central coercion; the benefits outweigh the harms anyway.
4 - Open & Permissionless Systems
Distributed systems are naturally open and permissionless, but no barriers to entry have to be a way of thinking. Every time a developer asks for permission to regulators, innovation is strangled and the door to creeping centralization gets permanently open. Permission to create, innovate and participate stands in the domain of bureaucrats who use poor excuses such as fear to maintain a tight control over central systems; they don’t belong in the crypto domain.
5 – Bypass Artificial Borders
The only borders to be respected are those of private property, no central-coercive entity has any legitimate possession of such properties. Voluntary interactions, without control, across the world will lead to unprecedented economic growth. Improvements on this area are relatively easy within the web, but are challenging on the physical world. It is a fertile soil for creative entrepreneurs.
6 – Gatekeeper-proof
Today Crypto is vulnerable to central choke points mostly on the interface with the old fiat system. How new users on-board the new system is crucial, so with easy access and minimal or no interfacing with centralized systems there is no target for gatekeepers. This goes from the development stage, where devs take precautions with their identities, to the final stage where the result is a parallel world immune to coercive regulation under the guise of compliance.
7 – Trust Transfer From TTPs To Networks
Bitcoin is not trustless, it transfers trust from trusted third parties to an entire network. Vulnerability to a third party is vulnerability to gatekeepers, thus unacceptable. Elegant systems transfer trust from a single point of failure to distributed networks.
I mentioned Bitcoin a lot because it’s easy to relate, but these principles are the basic building blocks to bootstrap freedom at a massive scale. Cryptocurrency is one of many shapes these blocks can assume, and the compound positive-sum interactions they enable will lead to unparalleled progress.
The ideas behind Bitcoin have more potential than just money.
One obvious corollary worth mentioning with emphasis is:
Never work with any state!
Developers friendly with regulators will always be on the verge of neutering the most promising aspects of their projects.
Blockchain analytics companies close to governments are among the worst dangers in the Crypto sphere, second only to…
Companies working with government to create panopticon money disguised as crypto.
Central-coercive authorities build systems that can only impoverish and enslave everyone else to create gargantuan zero-sum gains in the short-term, with even more monstrous negative-sum in large time scales which they will always refuse to see.
Satoshi laid the groundwork against an Orwellian future (or present), we just have to keep the core ideas in mind and build upon them. Instead of destructive desires about overthrowing “the system”, the constructive approach of the parallel economy, made for those who love liberty and responsibility is far superior.
The beauty of Crypto and distributed tech is that it has an optional use, not an obligation. When it becomes so good it can’t be ignored by the mainstream, people will willfully abandon the fiat and central counterparts.
A Time To Build, A Time For Action
Tu ne cede malis, sed contra audentior ito
Do not give in to evil, but proceed ever more boldly against it
- Ludwig von Mises moto
The future is always uncertain, this simple fact of life is an ever present incentive towards immediacy. Combined with fear and megalomaniacs pretending to be do-gooders it forms strong chains around humanity’s neck.
Politicians love to deny reality and pretend to fix it with naive interventions: don’t like alcohol, scribble a law against it and create Al Capone as a result; don’t like drugs, start an endless war against them and create massive suffering around the wold; afraid of a virus, cripple individual liberty, the economy and create an Orwellian state because this time it will work.
Fear led to a sudden spread of totalitarianism, it hobbled freedom and made its defenders feel like an immense regress took away years of hard-gained wins, a sense of defeat is unavoidable. Large scale problems are opportunities for dictators to crush individual sovereignty, yet, in the face of authoritarianism there is only one logical response:
Good
Bailouts in the 2008 crisis fueled the creation and release of Bitcoin. Infinite quantitative easing, lockdowns and mass surveillance are the current high-energy fuel for new solutions towards independence from every other central-coercive authority. It is time to make them all obsolete.
If you are not a developer or entrepreneur with the capacity to create these exceptional permissionless distributed systems, or a big investor who can finance them, never forget that spreading these voluntary ideas also has value.
Ideas and only ideas can light the darkness. These ideas must be brought to the public in such a way that they persuade people. We must convince them that these ideas are the right ideas and not the wrong ones.
- Ludwig von Mises
Learn to appreciate individual initiatives and the invaluable competition of ideas, solutions without central planning, and the resulting convexity. The opportunities for the right ideas and action have never been so strong!
Cheers.
Special thanks to:
Marco Batalha for the invaluable help with proofreading.
Thank you very much for reading!
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