Bitcoin functions in ways making it hard to define: regulators are unsure to classify it as a currency, commodity, security or property.
The differing forces at play mean Bitcoin as a verb may prove more precise: language can prioritise actions rather than find static, culminative points tractable to those in proxy.
Defining a Social Contract
A social contract, like any other kind [of contract], is near impossible to unequivocally stipulate to this degree: someone would have to decide what’s included, excluded, and how it’s enforced.
It’s better to understand the social contract as a general parameter by which we all can get along.
In context of macro economics, Central Banks use this approach to rationalise and communicate a variable (inflation) to broad objectives and mandated principles of price stability, prosperity, and growth.
In the ideal form, and on a global level, such a contract would be free from interpretation problems.
Nash’s Ideal Money and Satoshi’s Bitcoin
“This index could be constructed by computing a moving average…” John Nash, Ideal Money, 2002
“…the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour.” Satoshi Nakamoto, 2008
“gold formed a very efficiently moveable medium for the transportation of a value exchangeable for other values…However, right now platinum would be even better than gold, because it has more value per unit of weight.” John Nash, Ideal Money, 2002
“As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: — boring grey in colour — not a good conductor of electricity — not particularly strong, but not ductile or easily malleable either — not useful for any practical or ornamental purpose and one special, magical property: — can be transported over a communications channel…” Satoshi Nakamoto, 2010
Games of Alignment and Hyperbolic Growth
Nash observed money bringing into existence games of transferable utility — where there is a gain, on average, for all players, irrespective of the outcome — and where a “good money” became a standard, could allow for comparison of contracts (sovereign issuance) where easily quotable prices were of value and convenience.
Interestingly, Nash also observed a money could be too good where it created a “safe deposit box singularity” and while Nash noted the history of money has not known this prior be a problem, such a problem could be avoided if this theoretical good money was given a steady and constant rate of inflation to the extent it could be used as a channel for investment.
In this regard, Satoshi described Bitcoin as a cash system and a version of cash — rather than cash per se — offering the possibility [that] Bitcoin is the better money by being figurative to a parallel [and ideal] network un-requiring of trusted principals through computational settlement — peer to peer — so mediation costs don’t cut off the small casual transaction.
Avoiding as a result problems arising from contractual translation disputes, allowing benefits of this trustlessness to form basis of convergence between major currencies as they express a taste for such a preference.
Something Satoshi didn’t have time to explain and which has yet to corral our bargaining habits.