Money presents an important lesson - the larger and more valuable a social institution gets, the more it incentivizes others to seek control over it
Hence, the institution needs protection, historically provided by the most powerful entity – the state.
Over time, protection turns into control and then into abuse.
When the institution loses its benefits, the social contract is violated - people lose trust (TODO: link to a most peaceful revolution), and breaks down.
Satoshi fixed this dynamic by inventing:
1. decentralized security - instead of a central party - security is derived from a decentralized hypercompetitive market
2. a way for the users and the competing security providers (miners) to come to a consensus over who owns what at any given time
Bitcoin introduced an innovative system where all of the participants [collectively own and decide](https://www.2minutebitcoin.org/blog/unpacking-bitcoins-social-contract-2018) what happens to the protocol. This naturally makes the project recycle who the decision-makers are as new people enter and old people leave.
Contrastly - companies today have the same owner for decades.
Decentralized organisms like Bitcoin are superior precisely because of this rotation.
- these are excerpts taken from the 2-minute versions of Unpacking Bitcoin's Social Contract (2018), originally posted in https://www.2minutebitcoin.org/blog/unpacking-bitcoins-social-contract-2018 and Saylor Series: The Rise of Man Through the Stone and Iron Ages Episode 1 (2020), originally posted in https://www.2minutebitcoin.org/blog/saylor-series-the-rise-of-man-through-the-stone-and-iron-ages-episode-1-2020
Nothing is guaranteed - missing a key insight can have you waste 1,000 years!
The Native Americans had sophisticated pottery - they knew how to mold clay via a pottery wheel. But for 5,000 years, nobody in the entire continent thought to take the wheel and roll it. They never invented the wagon!
You miss one key insight and that changes the entire course.
Worse, things can be forgotten.
- average life expectancy in Rome around 100 A.D was 72 years! (civilization, sanitation, aqueducts, roads). Then Dark Age happens and it plunges down to 30 years. It only recovers to 70+ years in mid 1900s in the U.S.
- The way Romans created concrete was [lost up until 2017](https://www.nature.com/articles/nature.2017.22231)! It is stronger than the concrete used today
- The Chinese invented the printing press 2,000 years ago. Gutenberg got it just in 1453.
- 100 A.D. the Romans knew the world was round, then 1,400 years later Europe pre-Columbus thinks it’s flat
As powerful as these ideas are - they can be missed!
There is always the possibility of significant civilizational regression if we ignore learnings we’ve accumulated over time.
We can hurt ourselves by not paying attention at the civilizational and individual level.
This is a sobering reminder that Bitcoin is not in any way guaranteed for success. All the benefits that are so evidently obvious to us can be missed by the greater public if we don't do our part in helping it succeed.
-- parts of this are an excerpt from the Saylor Series Episode 2 - the Rise of Man through the Dark and Steel Ages, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/saylor-series-episode-2-the-rise-of-man-through-the-dark-and-steel-ages-robert-breedlove
When the money supply is manipulated, it distorts global pricing mechanisms which then communicates inaccurate information throughout the world economy.
Massive imbalances are created when this is sustained for over 30-40 years.
Because Bitcoin's supply is fixed and cannot be manipulated, it will eventually become the most reliable pricing mechanism in the world.
- an excerpt from the 2-minute version of Gradually, Then Suddenly (2019) https://www.2minutebitcoin.org/blog/gradually-then-suddenly-bitcoin
“The network is robust in its unstructured simplicity.” – Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System”, October 31, 2008
At the start of an industry, there is usually lack of standardization and an attempt of legal monopolization. Such legal monopolization can have short-term benefits as it mutes volatility and leads to forced-standardization - effectively pulling-forward the efficiency from standardization.
This allows one to build an industry extremely fast.
In the long run, though, it has negative effects as it just extracts wealth.
-- an excerpt from the Saylor Series Episode 2 - the Rise of Man through the Dark and Steel Ages, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/saylor-series-episode-2-the-rise-of-man-through-the-dark-and-steel-ages-robert-breedlove
If you believe the deterioration of local currencies in Turkey, Argentina, or Venezuela could never happen to the U.S. dollar or your local economy, you haven't studied history.
- an excerpt from the 2-minute version of Gradually, Then Suddenly (2019) https://www.2minutebitcoin.org/blog/gradually-then-suddenly-bitcoin
The Bitcoin world is full of people who know very little about economics or cryptography; they only know that they could have made millions if they had not sold at the bottom. These people tell themselves that they are redeemable, that Bitcoin is just the MySpace of cryptocurrencies, that they will have another opportunity to get in early on some other revolution.
When people say “blockchain technology” to you, you can often replace it with “mana”, or “chakras”, or “quantum” and it makes sense the same
way.
“Blockchain technology” has evolved into a sound scammers use to extract money from venture capitalists and one another, similar to the way that male birds use a song to attract females. It's a phrase for people who know there is a lot of money around, but don't exactly know where it's coming from.
-- an excerpt from It's Not About The Technology, It's About The Money (2016), its 2-minute version can be found here: https://2minutebitcoin.org/blog/bitcoin-is-about-the-money-not-the-blockchain-technology
As adoption of #Bitcoin grows, expect price discovery, bubbles, leverage, and manipulation. But eventually, it could become the world's most reliable pricing mechanism.
Just as 16 century Protestants began to question the doctrine of the Pope, so too came to wonder a bunch of nerds and cypherpunks:
- is inflation necessary?
- should central banks have the right to set the price of money?
- should the State have full discretion over one’s savings/spending?
- should savers really be forced to trust banks (and ultimately, the taxpayer) to redeem and honor their savings?
- what does an entry in a bank’s database really mean?
-- an excerpt from A Most Peaceful Revolution (2019), its 2-minute version can be found here https://www.2minutebitcoin.org/blog/bitcon-a-most-peaceful-revolution
What we mean is that the confiscation is forbidden as part of the protocol. In real life, you are always the weakest link :)
Bitcoin has 4 simple rules:
1. No confiscations
2. No censorship
3. No inflation
4. Anyone can verify rules 1-3
The bitcoin protocol automates the contract agreed upon on the social layer, while the social layer determines the rules of bitcoin based on the consensus of its users.
- an excerpt from the 2-minute version of Unpacking Bitcoin's Social Contract (2018), originally posted in https://www.2minutebitcoin.org/blog/unpacking-bitcoins-social-contract-2018
Every person new to Bitcoin thinks they have a unique understanding of Bitcoin and that everyone ought to hear about it. There's an endless flood of newbies 'concerned' about such and such 'problem' with Bitcoin.
Shitcoiners (newbies) respond to this by saying:
- Bitcoin the currency doesn't matter, it's the blockchain technology that matters
- It would be better if the blockchain technology were used by banks and governments. Bitcoin should continue to be a niche system for the bit-curious, it's just an experiment.
- Fiat and Bitcoin will live side-by-side, happily ever after .
- Bitcoin is the Myspace of 'virtual currency'.
-- an excerpt from Speculative Attack (2014), its 2-minute version can be found here: https://2minutebitcoin.org/blog/bitcoin-speculative-attack-on-the-dollar-2014
The fundamental way we increase prosperity in society is through groundbreaking innovations that allow us to deliver **1000x** more energy - they massively dwarf any political moves.
Railroad, steel, aluminum, oil, food, and medicinal advances were all 1000x advances in their own right during the Steel Age and are each key to defining life as we know it today.
-- an excerpt from the Saylor Series Episode 2 - the Rise of Man through the Dark and Steel Ages, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/saylor-series-episode-2-the-rise-of-man-through-the-dark-and-steel-ages-robert-breedlove
Standardization collapses fixed cost.
As an example - containers are the most efficient way to move anything on Earth. The principle of **standardization** is what makes them so efficient.
Put all your stuff in a container, it then goes onto a standard ship, standard loading facilities in a port, standard train cars/trucks - every piece just clicks together.
Standardization compresses confusion. It results in less optionality, so everyone knows the language and what to expect - leading to more to do elsewhere.
This creates economic surplus as it frees time/resources and they’re harnessed accordingly.
Similarly, the biggest rage in software today is containerized software via Kubernetes and Docker.
-- an excerpt from the Saylor Series Episode 2 - the Rise of Man through the Dark and Steel Ages, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/saylor-series-episode-2-the-rise-of-man-through-the-dark-and-steel-ages-robert-breedlove
“There are these two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says ‘Morning, boys. How’s the water?’ And the two young fish swim on for a bit, and then eventually one of them looks over and the other and says, ‘What’s water?’”
This parable is there to teach us that sometimes “the most obvious, most important realities are the ones that are hardest to see, hidden in plain sight.” This is the so-called “default setting.”
For Americans alive today, one of our ‘What’s water?’ questions is ‘What’s money?’.
- an excerpt from the 2-minute version of Stone Ridge 2020 Shareholder Letter https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter
Barter is inconvenient and that is one of the reasons why we moved on to money. But it's not the sole explanation.
Even if everybody agrees barter is inefficient, there is no guarantee that others would move on from it - there can be political deadlock that freezes the acceptance of money.
When money is initially adopted, there is inherent risk for the first person doing it. He exchanges something of value for the money and in the process is betting that everybody else in society will start using the money and give value to the money he has.
For almost a year, this is what it was like in Bitcoin. The price was zero despite everybody wanting to give it a price. Bitcoin did not fundamentally change as software when it developed a price - the only thing that changed was people's willingness to trade dollars for it.
In general, there is always an **individual cost** to accepting money, even when the use of money is very widespread. If I work in exchange for money, how do I know that money will still be valuable by the time work is out and I am ready to do my shopping?
If I work for something I can directly consume (barter) then at least I can get some utility out of it no matter what. But if I accept something whose main use is as a medium of exchange, then I am depending on there being people willing to accept that money in the future.
It is the ultimate 'greater fool' scheme, also called 'ponzi/pyramid' scheme used by people who don't understand the term.
In order to explain why people would use money, we need an **individual benefit** to match with the individual cost; otherwise people would never prefer to use money no matter how socially beneficial it was.
This is why people can't just will money into existence and why the inconvenience of a barter system cannot explain the existence of money. There's a risk to it. Historically, institutions like governments have derisked the initial bootstrapping check-and-egg problem by enshrining it in law.
-- an excerpt from It's Not About The Technology, It's About The Money (2016), its 2-minute version can be found here: https://2minutebitcoin.org/blog/bitcoin-is-about-the-money-not-the-blockchain-technology
yo! #plebchain
