This slightly older Andreas Antonopoulos talk is part of a playlist which is enormously valuable for setting the scene in our current study. Andreas was one of the first, and remains perhaps the most famous, presenter of Bitcoin and the ideas which inform it. Many of his talks and presentations have already become cultural artifacts.How does this fit into Kernel?¶
This talk provides an historical context for money and outlines why Bitcoin is important within that context. It has been chosen for Kernel, in particular, because it speaks directly to:
Money and speech, and how closely interwoven these two have always been.
Value in the broadest and most historical sense, with many pertinent examples provided.
Meaning. This is not about money for the internet: it's about the internet of money.
Briefs present the most relevant quotes from the linked resource, with small pieces of added commentary where appropriate.
"If you think of money as technology, how old is this technology? [...] It's always surprising that people will say, 'Oh, 400 years old', '1000 years old', 'a few thousand years old'. In fact, we don't know how old money is [...] We have yet to discover a civilization that didn't have money. So, we know it's at least as old as civilization.
One thing that really surprises people is that money is older than writing. The way we know this is that the first examples of writing [cuneiform and hieroglyphics] we have are writing about money - they're ledgers. Is writing older than the wheel? I don't know, but we do know that wheels were used as money. Money is an ancient technology."
It's no small thing to talk about "building better money" because what we're actually talking about is a human symbolic construction which extends back beyond recorded history. Every time there has been a significant innovation in how money is expressed and/or used, very interesting things have happened to both the ways in which, and the scale at which, humans organize.
"Primates can be taught to use money: i.e. there are studies which show that you can teach them that specific stones can be exchanged for bananas. Very quickly, they invent both armed robbery and prostitution. What does this tell you about the nature of money? The important insight is that money is a form of communication. At its very basic level, money isn't value: money represents an abstraction of value. It's a way of communicating value. Money is a language."
If money is a language, what does an innovation which makes its medium logically decentralized really mean? It may mean that no-one will control the expression of economic value in exactly the same way that no-one controls the meaning of words: they are arrived at consensually through common use. What will you choose to say in this ancient language we are revitalizing?
Prompt: Which technology is older: writing or money?
Once we add the ability to program this medium using a Turing-complete script, we may need to begin thinking of all this not in terms of a new language, but as a development of the order of language itself, but more on that later.
"Communicating value to each other is the basis of creating social bonds. Money is an important social tool."
Money as linguistic technology is (and always has been) about the scale at which you can play your co-ordination game. The scale is now planetary. Are you ready to make your move?
For the skeptics¶
"Think about how often the technology of money has been transformed. Very basically, communicating value can take place through an exchange of things of equal value. The first major technological evolution is to exchange something you can't eat: shells, beads, feathers, a string with knots etc., so that money takes a more abstract form. It moves away from the tangible consumption of intrinsic value, and becomes something which refers to value as an abstraction. Precious metals fairly quickly became the most popular way of doing this because they're scarce, transportable, divisible, and universally valued for aesthetic purposes. It took thousands of years for this invention to take root, and we see it occurring around the time of the agrarian revolution. Then nothing for a few thousand years. Then came the idea that I can deposit my gold with someone trustworthy; they can issue a paper certificate for my deposit; and I can trade that paper.
With every technological revolution in money, there comes skepticism; and this is the moment of greatest skepticism in our history. The move to paper was highly controversial. It took about 400 years for paper as money to become broadly accepted. Then, 60 years ago, we saw a new form of money in the form of plastic cards. In fact, the first cards were paper, but then Diner's Club in the US created the first recognizable credit card (which was originally a form of a traveler's cheque).
Now we have Bitcoin which represents a new form of 'doing money' and is as radical as the change from precious metals to paper, perhaps even more so. This is because our history as a species has to do with tangible expressions of wealth, and now we're dealing with a network-centric form of money which is totally abstract."
We're really looking at a phase change in the expressive power of money: i.e. it can now be programmed to do stuff dynamically in addition to being traded. Why does it matter that we now have a network-centric form of programmable money which is totally abstract?
Well, what money is, how it is created, and who gets to distribute it goes to the very heart of the ways in which we are all incentivised to act. Incentives can be thought of as the social, political and neurobiological primitives which define what kinds of behaviours we express - individually and collectively - and therefore the kinds of conscious experience we value, both personally and communally. Programming such primitives in a network-centric manner, where meaning is arrived at consensually, provides no less than the possibility to broaden the horizons of human consciousness.
Open protocols and a network of value¶
"Protocols are just agreed ways to communicate. A protocol embodies an architecture of participation." - Matt Webb
"Bitcoin isn't just digital money (we already have that). Bitcoin is a fundamental transformation in the technology of money. So, let's talk about network architecture, because Bitcoin isn't happening in a vacuum; it's happening at a moment in history when we are seeing a transformation in many social institutions; i.e. the network-centric era. The internet has precipitated the change of many closed, hierarchical organizations and institutions into platforms. We've started seeing the introduction of interfaces - APIs - where information can flow in and out of the organization. Now, even more transformation is occurring with the change from platforms to protocols; the difference being that, in protocols, there is no central appeal. TCP/IP doesn't work with reference to a service provider; TCP/IP works, without context, everywhere in the world. You don't have to sign up for an account, you just have to use the language. Once you go from a platform to a language, it creates a host of new possibilities.
Bitcoin is the first, network-centric, protocol for money and what that means is that it exists without reference to an institution or platform.
Once you've understood that money is a language used since time immemorial to communicate value, and that 2009 saw a phase shift from controlled, closed platforms to open, permissionless protocols; you've got the whole thing. What matters now is the precedents we set as the first users of these new protocols.
Prompt: Bitcoin transforms the technology of money into a network-centric protocol. As such, it is not a new kind of language, but a development of the _____ of language.
"'Peer-to-peer' money refers to an architecture which describes the relationship between participants in a (distributed) system. The architecture of Bitcoin is peer-to-peer because every participant in the network speaks the Bitcoin protocol at the same level. There are no "special" Bitcoin nodes. It means that every peer treats every transaction the same; it has no context in the peer's system apart from that which it gets from the network."
Context and state are critical in distributed systems, because they are shared between all the peers who can therefore change that state according to certain rules, if they speak the agreed-upon language. This is very different to a client-server architecture like that run by Facebook, who retain total control over the state, as well as your data.
Master-slave vs peer-to-peer¶
"Money is something that we don't talk about or teach, and perhaps this is a result of the architecture. Precious metals stored in a vault against which paper is issued mean that money in this expression is a form of debt, which curtails our discussions. How many of you have money in a bank? [everyone raises their hands] None of you have money in a bank! You have loaned your money to a bank: it is not the same thing."
The bank-customer relationship is an earlier form of the same client-server architecture, and the money involved here only exists on a ledger that you do not have access to, or the ability to influence.
"Another term used for this client-server architecture where you maintain only a weak copy is a master-slave architecture. If you think about previous technologies of money as using this master-slave architecture, you have to ask an uncomfortable question: who is the slave?"
"Bitcoin is totally different, because you don't owe anyone anything, nor does anyone owe you anything. It is not a system based on debt. It is a system based on absolute ownership of an abstract token. In Bitcoin, possession is 10/10ths of the law. Bitcoin is a fundamental transformation because it changes radically the architecture of money into one where every participant is equal and where a transaction has no state or context other than that required to obey the rules of a network no-one controls. Your money is yours; no-one can censor, seize, or freeze it. No-one can tell you what to say with your money."
The point about architecture is critical to understanding the deeper intentions of this Kernel course: we want to teach you how to see the underlying patterns in things so that you can more efficiently process all the information coming at you and pick the most relevant bits, based on a firm grasp of the fundamentals, which will help you transform your knowledge and skills to those required to overhaul the web now that we have protocols for money.
"Rather than focussing on intrinsic value, we should be thinking about intrinsic utility. Bitcoin represents a moment of immense intrinsic utility: it is software-as-money, money-as-a-content-type, money-as-a-service. Programmable money provides utility which makes it much more than just money for the internet: it turns it into the internet of money.
Prompt: Bitcoin represents a shift from a master-slave architecture for money to what?
Later in the Q&A session Andreas makes the point that "Bitcoin is a choice; it's opt-in." So, the internet of money is not a given: it's what we're building now. It is our responsibility to make it transparent and eminently usable, while keeping it peer-to-peer, borderless, open, and fair.
"Interestingly enough, I think the blockchain will create a completely new kind of common good that we've never seen before. If you accept the idea that Bitcoin, or something like it, will continue to exist, we arrive at a place where - for the first time in history - we have a shared historical record which does not decay in time and cannot be changed: immutable history forever [...] This immutable history will itself become a common good with a scale in time that we have never had before, in any civilization (even those that carved their ledgers in stone).
What is your time horizon? Your life? Your children's life? Or something deeper and more durable than all these transient generations?