Why crypto is a paradigm shift.
And why you probably don’t know why yet.
When Charles Darwin proposed his theory of evolution, he focused a lot on competition in his research. The struggle for survival. In his time, the beginning of the industrial age, this was a very compelling narrative to the industrialists. They needed a lot of cheap labor to work in their factories. So it served them well that the poor believed that it was each man for himself.
https://www.stargaze.zone/m/cosmowalkers/227
The idea to divide and conquer is of course much older, most famously associated with Caesar.
Divida et Impera
https://www.stargaze.zone/m/cosmowalkers/62
Neo-darwinism is still the dominant underlying narrative in our society today. It’s generally believed that competition is good and one of the forces that drives growth and evolution. However in 1967, a woman called Lyn Margulies proposed in a groundbreaking paper that random mutation and natural selection are less important than previously thought, and that the big leaps forward in evolution stemmed from the merger between different kind of organisms, what she called symbiogenesis.
If you want to draw an important cultural general conclusion from this it could be this:
darwinism: competition is the driver of progress
symbiogenesis: cooperation is the driver of progress
Of course truth is probably somewhere in the middle. (I’m not a scientist so I’m not going to draw definitive conclusions.)
My point here is, that historically, competition is probably overrated, and it’s deeply entrenched in human (belief) systems. And often, at the cost of the majority.
So how is this connected to Bitcoin you might ask?
Our current financial system, our system to manage property, is enforced, with violence. Or in other words, your property is protected, because there is a force that protects it. This is always a centralized force.
The government, the bank, the police, the military. All these organizations protect property. They all need energy and they all need to be able to exercise violence to enforce the rules they set or protect.
Violence is in other words inevitable in such a system. You always need the threat of violence to protect property.
Now here is how Bitcoin introduces a whole new way to protect property. Property on the (Bitcoin) blockchain is protected by consensus (cooperation remember), aligned incentives (the nodes, operators of the network are rewarded for good behaviour), and mathematics (encryption).
Now in a world where crypto interacts with the fiat system, you could argue; but you’re still exposed to violence. What if someone comes to steal your crypto at gunpoint. And this is true, and it’s probably the reason why we need to add a very important part to the blockchain ecosystem: privacy.
When value stored on a blockchain is protected by privacy, it’s no longer exposed to the threat of violence. And in this setting, we have the first opportunity -ever — to store property away from the threat of violence.
This is a paradigm shift, because it did not exist before and it opens up new possibilities. For the first time ever its possible to store (a great amount of) value that transcends nations or borders and third parties. And that is extremely portable. Try storing 1 billion $ of gold. You’re going to need a lot of place, and security to protect it.
https://www.stargaze.zone/m/cosmowalkers/182
One of the most heard arguments against crypto is that it holds no intrinsic value. But neither does fiat money. It is the argument that people make that proves that they do not even understand the current system they participate in. And by the way, if Bitcoin held no value, it would mean that you could create it without a problem out of thin air. And that’s not possible. Fiat money on the other hand can be created out of thin air by a central bank. (of course that’s not free either — it just sends the bill to the majority through inflation).
An important thing to note about this is that you can’t create a community, or a communities’ belief out of thin air either. While it might be technically possible to clone the bitcoin network because it’s open source, history has thought us that it’s not possible to clone the community around it. And let this community be a large part of the reason why the network is deemed valuable. This (the BCH fork for example) kinda proves that value, ultimately, is a social construct.
All in all fiat money only holds value because other people believe it holds value. The reason they believe it holds value is because they know that big centralized forces can enforce its value with the use (or the threat) of violence.
In other words it’s a belief system where people believe that he who holds the most potential to violence to enforce order, gets to dictate the order of the world.
(This is basically Darwin’s struggle for survival, survival of the fittest, the law of the jungle.)
In the system of blockchains the belief is that it is the consensus among equals enforced by mathematics, that determines who can dictate the order (of value) and consequentially the world. (Cooperation in other words, dictated by the choice to cooperate as opposed to the Darwinian rule that supposedly would be a law of nature — which it isn’t — it’s also a social construct, chosen by an industrialist elite, and before that, by other elites.)
This is something that is still little understood, even by participants in crypto. Most people believe that the threat of the centralized force is inevitable to organize human society. This is, when you really think about it, a very pessimistic view. A very condescending view too. It’s a cultural choice that can be changed.
What are you going to choose? Will you choose to contribute to a system built around equality and inclusion, justice and transparency and cooperation? Or will you choose to contribute to violence? Will you choose violence?
Let me know in the comments.
The fact that the blockchain economy has been on an albeit volatile, but yet systematically ascending path for the past ~ 15 years, paints a different picture. It proves that humans can choose to organize society on different grounds.
The brutal volatility does indeed illustrate that competition exists and it is a force to reckon with. (but never forget that this volatility (also often) takes place in relation to the fiat system — where competition is the dominant belief system. In other words there is a spill-over effect.)
At the same time, we see cooperation in the crypto space that systematically overcomes the division created by competition.
People who are very biased against crypto will often say it’s completely worthless (because they don’t believe in it) — but the fact that a small percentage who does believe in it has established a currency that has grown bigger then some of the biggest fiat currencies in less then 2 decades, basically illustrates that the joke really is on them.
This illustrates that it’s very powerful as a belief system, and it is because it has much stronger foundations than the fiat system:
- mathematics, encryption as source of trust versus humans (notoriously prone to corruption)
- decentralized design with no single point of failure
- community minded
- inclusive
- open-source
- open choice (nobody tells you you should choose Bitcoin, there’s plenty of alternative offerings)
And again, I’ll argue that runaway competition is a cultural choice. If we get our minds together, think wholistically, we can make choices as a culture that aim to benefit as much people as possible, and not just a small percentage. That’s what makes the whole crypto movement such a hopeful cultural (r)evolution.
Another reason, and this is the most known reason why crypto is a paradigm shift, is its decentralized nature.
All property that is stored in a centralized system is in essence not your property, but the property of the centralized custodian. Your property is a promise that depends on trust (in a human system).
https://www.stargaze.zone/m/cosmowalkers/216
Real estate for example is never truly yours. If a rough regime would overthrow your government and change the rule of law, they could confiscate all real estate. Whether at gunpoint or not. Jewish people experienced this risk for example starting in the early 30’s when the Nazi regime took control of Germany. But there are many examples throughout history.
The bank can at any time block you from accessing your own money.
As such, most property in the legacy financial system is an illusion. If the belief in the system breaks down — and trust me, it will (I’m kidding, don’t trust me, DYOR!) — it will collapse in a spectacular way, a lot of people are going to experience a rough awakening. Because it’s built on unsustainable, unrealistic assumptions, and illusions, and because it’s heavily centralized. And centralized systems tend to fail badly when they fail. A decentralized network can lose a percentage of nodes and still operate in the same way as before. If a centralized node crashes it’s just game over. (I have worked with centralized servers for 10 years in the past, I know what I’m talking about.)
But the implications for the future are profound.
Bitcoin was released as open source, which means that anyone could from that point on, create its own value network. What does this really mean?
It means that from that point on, choice is introduced. A choice away from the single, with violence ruled system that everyone had to use because there was no alternative. It breaks the monopoly that the state (and some other centralized forces) had on trust and value.
Now the profoundness of this doesn’t really click until you understand that the only reason that the fiat system still has/holds value, is because of its users and their belief in the system that is mostly based on the factor community (it holds value because everyone else believes it holds value).
Why is that? Because the protection that the consensus model offers, is more beneficial to the majority of people, than the centralized violent system (because the fiat system tends to cultivate competition and create more inequality which also leads to more violence). It’s also less secure, and overall less trustworthy.
Most people don’t realize this yet, because they do not understand the current system they participate in, and they certainly don’t understand the new system that Bitcoin introduced. But they will. Awareness is growing thanks to the growth of crypto. Most people who ‘get it’, are lost forever to the fiat belief system. And thus you get a trend where the user base of the fiat system shrinks, while the user base of the crypto system grows. And let this be the ultimate factor that determines how much value such a belief system holds. In other words, once this ratio surpasses a certain treshold (I would think about 40%, but this is just a guess), the fiat system will implode rapidly. In the end it’s all a matter of belief. But the structures that depend on violence to enforce the fiat system, might collapse as well, as the model of consensus, cooperation, etc is more widely understood and integrated in the broader culture and the majority stops supporting the old social structures in favor of new social structures.
Don’t forget: if the value system implodes, the ability to enforce violence by centralized actors implodes too — because they need their money — portable power — to exchange it for violence. If this portable power collapses, it’s game over for the whole model. That’s why some elites in the US especially, have been getting very nervous about the crypto revolution. And why they continue to demonize it.
But it’s inevitable. The smart elites have already embraced this new form of money. Putin figured it out too, that the west is a paper tiger, who, once it loses its financial dominance in trade, has very little other wealth or power to show. The natural resources are mostly in other parts of the world. The factory of the world is in Asia. What the west holds most is a lot of often spoiled, entitled, quixotic consumers who have no idea what the origin of their wealth really is. The reason they are this way is because heavily centralized systems (information, trade, education, finance,…) have abstracted much of ‘raw life’ away from them. They will find out the level of illusion they’ve been living in, once these systems implode (or hopefully evolve into more robust decentralized systems, that prevent a total collapse).
The irony of the fiat paradigm that pushed competition onto its users is that it did not have to fear any competition itself. Now that crypto brings in competition, the fiat system will most likely experience its end because it can’t compete with crypto. For the simple reason that it is giving its users a much less appealing value proposition.
The fastest way this non-violent revolution would materialize is if ‘the working class’ would stop accepting fiat money in exchange for their time and labour.
https://www.stargaze.zone/m/cosmowalkers/229
I am not one to argue that we should abolish capitalism, nor that we should install communism. Both systems have flaws. That’s why, above all, we have to let go of what does not serve us and we need to evolve.
For those willing to face reality, crypto illustrates symbiogenesis. It brings attributes of both capitalism and communism together and creates something new. Evolution.
