Robert Breedlove: Philosophy of Bitcoin from First Principles

During the hunter-gatherer age, property was anything you could defend. Agriculture, however, allowed for economic surplus, which led to specialization & trade. For such a society to thrive property rights needs to be enforced without violence. 

States appeared as production protection enterprises for the economic surplus generated by a thriving society. 

We tend to think we are living in a market driven economy but all our institution rely on a state bank that has monopoly on money. And printing money is how a state interferes and controls its economy.

But inflation, the cause of such a practice (modernly known as quantitive easing) is a technological backdoor. Money becomes weaponised. It's cheating and it is theft.

Entropy, the second law of thermodynamics, states that every closed system tends towards greater disorder. But life, as expressed through the Logos, is the anti-entropic system: we are converting chaos into order. It is an ancient religious belief but also what entrepreneurs are doing when they are pushing the edges of the unknown. 

Our tendency is to avoid volatility, to deny change. We live in a bubble of order that has been established over millennia. But uncertainty is a more fundamental truth. We may mitigate it with capital but uncertainty is where we find the sweetness of life.

We are ideas competing with each other. We manifesting through biological vehicles, which we call bodies. 

The theory came from Richard Dawkins Meme Theory: we evolve our ideas faster than our genes pushing the boundaries of biological evolution. 

Humans have wants & needs and we express our values through our actions. As we move from a more valuable A to a less valuable B, we fall off course. Our intelligence is what allows us to error correct.

This definition presupposes purposes, which we tie to our consciousness. An AI would need a purpose to say it poses general intelligence. 

Pragmatic truth exists in addition to the absolute (scientific) one. Pragmatic truth deals with the practical subjective experience. This is what markets are good for. 

Markets generate 3 forms of pragmatic truth:

1. Price: collective subjective demand of humanity running against the objective supply of capital & resources.
2. Innovation: entrepreneurs run infinite experiments to meet the needs of sovereign consumers.
3. Virtue: through trading, we evolve behavior heuristics (like "telling the truth").

Money is a universal means of exchange. A technology that is enabled by something that has the highest proportion of trading ability to its utility (gold can be used for trade but also for jewelry & chips).

Money needs 5 characteristics. It needs to be:

1. Divisible (ex: gold can be melded in different sizes)
2. Durable (ex: gold resists degradation)
3. Recognizable (shinny is recognizable)
4. Portable
5. Scarce

Scarcity means more demand than supply, rather than the rarity of an element per se. The best money is resistant to inflation. It's why gold is more real money than the dollar.

The type of money that wins in a competition (say bitcoin vs the others) will have the deepest liquidity and most network effects. 

Bitcoin so far has the most active participants which make it the default alternative to gold. 

Long-term economic thinking is conducive to moral behavior. Low inflation helps us think long-term, allowing us to worry about the uncertain present while maintaining sanity over the future. 

ex: Think of a wine maker selling wine at $20/bottle. When a Central Bank doubles the money supply, by printing money the producer has 3 choices:

1. Keep the same price & take the loss
2. Double the price
3. Lower the quality of the wine: worse grapes, dilute the product, etc ...

It forces a choice between economic freedom & integrity. Human nature being what it is, the 3rd option makes sense short term.