The Bitgenstein Serialization
Introduction and Contents
This is a serialization of my previous trilogy on Bitcoin, economics, and capital markets: Wittgenstein’s Money, The Capital Strip Mine, and, Bitcoin is Venice. Each of these are a little over half-an-hour-long reads, at around 7–8k words. Although they work as standalone essays, they are best thought of as interrelated and progressively building up a single thesis.
However, I realize 21k words and an hour and a half of reading is a bit much to ask of most, so I have here turned the whole thing into a serial of 5–10 minutes reads that readers can work through or jump in and out of with a much lower hurdle.
This post serves as a contents page with links and brief blurbs for each newly smaller part. Enjoy!
Part I: Semantics Therefore Reality
In Part I, I introduce what I satirically refer to as the “semantic theory” of money: that money can be necessarily and sufficiently captured by axiomatic definitions and therefore that monetary theory can be done from the armchair, without looking at the real world at all.
Part II: Apples, Zebras, And Knowledge
In Part II, I introduce a thought experiment in which everybody has a superpower of knowing what everybody else values, and tease out firstly the implications for the utility of money, and secondly the role of knowledge and uncertainty in economic exchange.
Part III: Time, Energy, And The Triangle Game
In Part III, I introduce a relatable toy version of a complex system to elucidate the irrelevance of static economic knowledge to action within the network and the impossibility of dynamic economic knowledge across the network.
Part IV: Money, Capital And Social Scalability
In Part IV, I tease out a reflexive link between money and capital: economic activity is inherently uncertain, money provides a compensatory certainty, which allows for the creation of capital, which increases inherent uncertainty. I use Nick Szabo’s framing of “social scalability” to argue that this link is what gives money by far its most important utility.
Part V: Farming And Capital
In Part V, I stress the importance of capital’s ability to compound via reinvestment and that, if we are to try to gauge economic health, it is desperately foolish to use measures that cannot distinguish between capital creation and capital consumption.
Part VI: Accounting For Time And Risk
In Part VI, I stress that different financial arrangements can shift around exposure to economic uncertainty but cannot remove it, and that the risks created by these differing exposures will affect the behavior of those allocating capital in the first place.
Part VII: Maximizing Consumption
In Part VII, I explore the likely consequences of failing to distinguish capital creation and capital consumption on capital allocation decisions, and link this to the fact that the contemporary money supply is literally defined as a certain type of capital.
Part VIII: Behavior And Incentives
In Part VIII, I argue that, given the mechanism of the contemporary money supply, it is perversely rational to consume capital rather than create it, which loops back around and affects the money supply once again.
Part IX: Rhapsody On A Theme By Nakamoto
In Part IX, I hark back to capital formation paving the way for Northern Italy and the Low Countries to evolve past feudalism, and argue that Bitcoin may provide a similar base.
Part X: Bitcoin Is Ariadne
In Part X, I tease out the political implications of Bitcoin being fundamentally peaceful and mobile, arguing the paradigm of organized violence will have to adapt.
Part XI: Bitcoin Is Halal
In Part XI, I argue that whatever remains of banking will likely conform to the tenets of Islamic finance.
Part XII: Bitcoin Is Gravity
In Part XII, I tease out the financial implications of Bitcoin’s fundamentals improving along with its capitalization, arguing this creates a version of the Jevons paradox, opening up a longer and longer tail of use cases, all of which increase its capitalization still.
Part XIII: Bitcoin Is Logos, Bitcoin Is Techne
In Part XIII, I argue that Bitcoin is fundamentally language, and that software simply checks the grammar, but equally that the software actually works, unlike every objection and alternative.
Part XIV: Bitcoin Is Venice, Bitcoin Is
In Part XIV, I draw a romantic link between Bitcoin’s symbolism and that of medieval and Renaissance Venice, and conclude the series.
follow me on Twitter @allenf32
Thanks to Pierre Rochard, Robert Breedlove, Nic Carter, Sacha Meyers, Yorick de Mombynes, Saifedean Ammous, Giacomo Zucco, Obaid Khan, and Robert Natzler for edits and contributions across the original trilogy.
feel free to contribute to the Allen ideas fund: bc1q8utvneuvn3hf2lm5nvt3dreqenad6hh5sda2sa
