April 15, 2022 - 13 min read
A quote often attributed to Aristotle goes as follows: “It is not enough to win a war; it is more important to organize the peace.” Whether these were actually Aristotle’s words or not matters little, but what’s paramount is that peace be carefully cultivated so as to promote human flourishing. It is not entirely surprising he would arrive at such a conclusion being that he spent much of his adult life in the notoriously cosmopolitan Athenian city-state. One can only imagine the pithy one-liner a Spartan would give to Aristotle in retort.
Nevertheless, it is worth asking if “peace” can actually be achieved, whatever that actually means, at a global scale? Even the most optimistic interpretation of the world around us reveals that it is based upon the harmony between cooperation and competition. It is fair to suspect that Aristotle must have been using a Greek word with more nuanced implications than something so temporary and fleeting as “peace.”
In the animal kingdom, there are predators and prey, but there are also species which live in symbiosis in such a way that their interactions benefit one another synergistically. This is called mutualism. Considering these two examples as opposite points on a spectrum, it can be argued that nation-states opting into mining and storing Bitcoin as part of their treasury reserves tips the scale away from our current position towards a more mutually beneficial competitive playing field where allies and their adversaries may compete with ferocity without risking utter annihilation.
Bitcoin’s decentralized network is the ultimate line in the sand for humanity, leading to a new monetary paradigm in which no one country has the ability to employ a ‘denial of service attack’ against other participants in the financial network. Maybe this is the next chapter in our collective development so that human civilization can begin allocating resources more productively through healthy competition.
For example, the intense competition to successfully mine Bitcoins could drive down energy costs as entrepreneurs and sovereignties alike research and develop more efficient hardware and software solutions. This could essentially subsidize our transition towards renewable sources of energy and make it profitable to do so. With a healthy ‘game’ in which to compete, our efforts may be doubled without any increased risk of catastrophe.
We can collectively compete in ways that drive technological progress and foster trust in a common denominator for world trade that cannot have its rules manipulated or deny service, whether arbitrarily or justifiably. Disputes cannot be settled by force quite so easily, meaning negotiations and cooperation become more attractive options for all parties considered.
An interesting concept has been brewing amongst Bitcoiners of late, likening Bitcoin and its proof of work consensus protocol to a surrogate for kinetic warfare. Jason Lowery, US National Defense Fellow and Space Force engineer, studies Bitcoin at MIT and sees the cryptocurrency and its network of miners as critical national security issues, and fundamental to the establishment of non-lethal competition, which could also simply be called cooperation, amongst nations.
Starting from first principles, it seems to reason that Bitcoin and related decentralized technologies are actually essential to national security and global, non-lethal competition amongst rivals. That is, that when two entities compete in lethal ways, there can be devastating losses on both sides, often regardless of whether on the winning or losing sides. When competition becomes lethal, there is death and destruction, wasted productivity, malinvestment, hoarding, and pessimism.
Cooperation ceases to exist except to gain leverage and extract future concessions from adversaries or to gain as much share of the war spoils as possible. This barbarism scars humanity’s history, and cannot be sustained lest we are to witness continuous boom and bust cycles of human civilization until the bust destroys us altogether. Bitcoin, according to Lowery, is an evolution in human warfare in which we may transition from a lethal, physical power projection competition to a non-lethal, electrical power projection game.
Since (essentially) the Cold War, we have witnessed world powers stuck in a kinetic power projection stalemate in the form of nuclear weapons. The work required to set the “state and chain of custody of resources” is no longer a fair game unless countries are armed with frightening amounts of nuclear arms and the hope that such deterrence will maintain the status quo.
As we have seen on several occasions, even financial instruments can be used as weapons between sovereignties. In particular, sanctions levied by the US against others are damaging to the economic productivity of a nation, which is on some level the whole point of warfare in the first place, excluding any darker motivations on which we can only speculate. Bitcoin guards nation-states against these sorts of financial deplatformings, and eliminates any one entity from using force, that is engaging in 51% attacks against their rivals, rather than meeting at the negotiating table peacefully.
Ironically, Bitcoin might just be able to disincentivize this sort of power projection, since it is not a physical property which can be stolen or manipulated by brute force. Instead, there are only peaceful methods by which to acquire Bitcoins, either by projecting electrical power via the mining network, or else buying Bitcoin at market value from willing sellers. If, for instance, someone were to try and steal my hardware wallet from me and leave me with empty pockets, the thief could not access my Bitcoins without knowing my private keys.
After all, blockchain technology itself is based on a distributed network of nodes coming to a consensus in one way or another. Attacking the Bitcoin network wouldn’t exclusively harm the victim, but the aggressors themselves would stand to lose, since they would not gain the wealth of the victim, even upon using lethal power projection. It is hard to imagine expending the resources and political capital for such an attack with such a low ROI.
Bitcoin therefore disincentivizes violence without allowing any one party to affect the network aside from creating selling pressure on the market, which is only diminished as the market cap grows. Thus, the economic incentives for peace may be restored via Bitcoin’s property of unseizable, true ownership.
Human civilization is in desperate need of a new competition that is both fair in that hard work and ingenuity can generate more of the cryptocurrency while also helping secure the network via added hash power. Bitcoin is therefore the scalability upgrade that civilization needs to advance human cooperation to the point where we drive our electricity costs to zero in our efforts to mine Bitcoin more efficiently.
By shifting the new Schelling point of civilizational competition, or warfare, to the Bitcoin network, we essentially mimic the real world in that there is a fixed, neutral rule set for participation, and a scarce resource over which to compete. Thus, Bitcoin mining and network participation won’t be limited by having to trust the network other than trusting its utter neutrality and rigidity with regards to the rules of engagement. In other words, it can be considered fair competition even amongst fierce rivals.
Though this viewpoint is changing more recently, human civilizations have so far placed great value on tangible property, particularly so when something has the property of being rare or hard to make. For instance, holding gold or highly-desirable real estate have been consistent stores of value for thousands of years.
Though it is implicit, it seems tacitly obvious that the value placed on these properties are contingent upon one’s ability to defend the property from theft, seizure, or perhaps loss from natural disaster. Thus, we could say that property requires energy, or work. In other words, it requires physical power projection through some exertion of force, be it kinetic or electric.
Since at least the time human civilization reached the levels of agricultural cultivation and therefore stationary property which was vulnerable to attack, defense of that property has been a necessity. Of course, property in this sense might be a natural resource or desirable physical location, excess crop outputs, gold reserves, livestock, and so on. Even disregarding theft or disaster for a moment, any failure to keep up with property taxes or the like will result in some sort of force applied by the state, or power projection, in order to reset order and the chain of custody.
Protesting how long one has lived in the house, what sort of equity has been built up, or any other argument will be ineffective in the face of physical power projection. Perhaps the ‘proof of work’ currently being gobbled up by arming militaries in the lethal power projection competition might one day be reallocated to less dangerous arenas of competition, like Bitcoin mining, which can be measured in watts instead of boots, bullets, and bombs. This is a recipe for a breakout of peaceful competition, but first a return to historical precedent and the status quo.
Through the ‘power projection’ of governments and their law enforcement capabilities, resources are protected through litigation and peaceful negotiations according to legal precedents in their localities. This is how societies compete and cooperate peacefully domestically, but of course similar patterns can be seen in the realm of international affairs and military conflicts.
In other words, it is a scaling problem which Bitcoin might fix for us. Nations seem to be losing faith that the current global financial system manifests as a level playing field for fair competition. The rules of engagement have shifted, and without order, we risk tumbling towards chaos.
Bitcoin is already establishing itself as a neutral monetary system at roughly $2 trillion US dollars, and a fair and just economic field of competition. Therefore, it may be a matter of national defense for every sovereign entity to arm itself with the latest ASIC miners and start looking for cheap and abundant sources of renewable energy.
Failure to do so will only allow others to begin the race first, developing the technical and manufacturing capacity to produce the hardware components, and a robust market and supply chain to meet the demand for mining equipment. Major technology companies like Intel have already announced their intentions to design their own ASIC mining chips and compete for market share in the industry.
Refusing to participate in the new competition won’t stop others from figuring out the game. History has taught us this lesson time and time again. Iron founder and engineer Orban took his ideas to Byzantine Emperor Constantine XI, but was told that the Byzantines were either unable or unwilling to pay Orban’s high salary to develop siege and cannon weaponry for their fighting forces.
Orban instead took his ideas to the Ottoman sultan Mehmed II, who promptly funded Orban’s new innovations. In a matter of months, the Ottomans were hauling their superior weaponry to the doorsteps of Constantinople before successfully sacking the city and laying waste to it. Clearly, a refusal to compete did not end well for the Byzantine Emperor, his assets, or his people; better to remain vigilant to new opportunities as they present themselves.
While the points previously expressed in this article and by Lowery are valid and provide a path forward for non-lethal cooperation, there is a large chasm between the present day and these grand visions of the future. That is to say, that the transition is not at all certain, and perhaps it is not Bitcoin’s role tol be the next Schelling Point of global competition.
Perhaps another asset class will rise to meet the needs of the global financial system for a fair and agreeable system in a decentralized manner. After all, advocates for the adoption of blockchain technologies often recognize the need for decentralized money on a personal level, but struggle to make the leap when it comes to higher level banking institutions. Furthermore, calls for returning to a gold standard have been loud and consistent, potentially resulting from the simplicity of looking to the past for answers when no clear one makes itself available in the present.
One question which begs answers is what would happen to a nation which directed its resources towards mining Bitcoins if no others join? This is an extreme example, but a global reserve asset needs to be agreed upon via consensus, does it not? To be fair, it’s difficult to imagine a more difficult asset to confiscate by using force, coupled with the lack of payoff without possession of a wallet’s private keys.
Another nagging question goes something like: What happens when the country that possesses the largest pool of resources for renewable energy creation and materials to create ASIC miners starts dominating the others? If mining Bitcoins required specific resources and know-how, wouldn’t nations still go to war with one another over scarce commodities as they do now? It seems to reason that it would be so.
Finally, taking custody of and maintaining the security of a nation’s treasury would take on new forms that we are unfamiliar with today. How could any individual or even a group of individuals be trusted to keep the private keys of a nation safe? The OPSEC required to protect such critical information would be a truly dizzying arrangement to conceptualize.
Though there are multiple ways to look at this issue, one thing that’s undeniable is that Bitcoin represents massive progress that has built upon everything that came before it. It’s opening up all new ways to create value and improve the human condition. It is also important to remember that accomplishing seemingly impossible feats is a distinguishing characteristic of the human condition.
Former U.S. President John F. Kennedy expressed the following sentiment about space exploration back in the 1962 which applies analogously to the global challenges we face in our financial system today: “We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.”
We will not have the option to use a baseless fiat currency system forever. In the US alone, the national debt has ballooned to over $30 trillion dollars. Pretty soon, there will be a reversion to another instrument by which to price goods, services, and commodities around in global markets.
Perhaps the reserve currency will be based on gold once again, as it once was prior to the end of the Bretton Woods System in the 1970’s. That seems like looking at charts from the past and expecting history to repeat itself. It also requires nations, and more importantly rivals, to trust one another to report gold reserves accurately, and not use physical force to confiscate or sanction each other’s property in any way.
Since Bitcoin removes this trust, we can assume that once education has spread far and wide enough, game theory will prove to us that opting out of the power projection competition will only leave one weak, technologically backwards, and defenseless against those who take up arms and compete for Bitcoins.
Defense of one’s property has never been the most efficient use of resources, but it has always been a necessary condition, as we have covered. Perhaps now we can enrich ourselves and each other while we build up our defenses. Does that mean world peace, or something approaching it? It certainly seems that way.
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