On The Brink with Castle Island - Craig Warmke (N. Illinois University) on what Bitcoin is, and other philosophical questions (EP.162)

Episode Date: December 28, 2020

Craig Warmke is an assistant professor of philosophy at Northern Illinois University. He has written several papers on the subject of Bitcoin, both pertaining to the question of what Bitcoin actually��is. We cover Craig's papers (linked below) and explore the role for philosophers in Bitcoin. How Craig realized there was an opportunity for philosophy in Bitcoin Other philosophers writing about Bitcoin Why philosophers don't take Bitcoin seriously The Bitcoin-related questions where philosophers can weigh in The risk of epistemic trespassing Why Satoshi may have been wrong when they defined an electronic coin as a 'chain of digital signatures' How Satoshi made a critical engineering decision which differentiated Bitcoin from prior e-cash systems Why units of Bitcoin cannot be tracked over time through the ledger – and why this matters Why Bitcoin tracks quantities of a substance, rather than discrete, individual units of Bitcoin Craig's stylized model of Bitcoin Why Craig describes Bitcoin as 'fictional substance in an ongoing and massively coauthored book' Why Bitcoin being 'fictional' does not delegitimize it at all How Craig's model extends to stablecoins Why Bitcoin's liability-freeness is so important, and distinguishes it from other monetary assets The practical significance of determining what Bitcoin is How Craig's analysis helps demystify chain splits How ETH 2.0 sheds light on the debate over Bitcoin's identity The greatest threat to Bitcoin Is Bitcoin the protocol a democratic phenomenon? Are there knowable facts about what the nature of Bitcoin is? Referenced in this episode: Craig Warmke, What is Bitcoin, forthcoming in Inquiry Craig Warmke, Electronic Coins George Selgin, Synthetic Commodity Money Martin Glazier, In Blockchain We Trust?

Hello, everyone. Welcome back to On the Brink. This is such a fun and unique episode. I really wanted to bring this guest on the show. He's done some really incredible and thought-provoking work, which is underappreciated in the Bitcoin community. So our guest today is Craig Wormke. He is an assistant professor of philosophy at Northern Illinois University. So he's an academic philosopher. And of course, as many of you know, academic philosophy is near and dear to my heart. I did my undergrad in philosophy, but Craig is a real life practicing philosopher, and he has applied his talents to Bitcoin and produced so far to pretty incredible papers, which I really, really enjoyed. They're the subject for this episode. If you find the episode interesting, I highly recommend

you read them. They are very accessible. You don't have to have training and philosophy to grasp them, and these papers arrive at some really counterintuitive conclusions regarding Bitcoin. So the first paper we discuss is called electronic coins. Craig actually takes issue with Satoshi's description of an electronic coin as a chain of digital signatures. And I'm not going to spoil it, but Craig advances an alternative conception of what a Bitcoin is and what the units of Bitcoin are. The more substantive paper is what is Bitcoin, which was just accepted to a serious journal in which Craig advances the contention that Bitcoin is a fictional substance in a massively co-authored story. That's the best way to understand Bitcoin in his view. And it's a very countertude

of conclusion. I don't expect you to believe it just from hearing me talk about it. So listen to the podcast. And then if you have the time, read the paper. And I think you'll find it convincing. Now, you might be wondering, okay, well, what's the relevance of this stuff? Is this just navel-gazing? Actually, as we talk about in the episode, it's highly relevant and very applicable to these sort of practical issues we have with Bitcoin. Because Bitcoin is leaderless, we're constantly has hashing out whether the Bitcoin of today has connections to the Bitcoin at its origin, whether competing forks have true claims to being Bitcoin itself. These are practical issues with billions of dollars at stake. And it is these rigorous philosophical discussions that

help us understand the nature of Bitcoin. This work is vital, in my opinion. As a community, we haven't really done enough to try and truly demystify what constitutes Bitcoin and how you achieve this persistence over time. This is honestly one of my favorite conversations I've had in about 150 episodes now, incredibly important stuff. And I strongly, strongly suggest you all read the papers. Let's dive into it. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened

by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of concentrated easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called the Bitcoin. Bitcoin. All right, Craig, Warm Key. Welcome to the show. This is very, very exciting for me. You're the first academic philosopher to appear on the show. So welcome. Thanks, Nick. I've listened to the podcast for a long time, and it's a bit surreal to be talking to you now. So thank you for having me on. Well, you've earned your spot. You've written some amazing papers on Bitcoin. And my homework to all of our listeners is to read the papers. That's your homework for today's episode. But in lieu of reading them, I guess we're also going to talk about them. So we'll get to that. But maybe before we do that, why don't you tell me what it's like being a philosopher that thinks about Bitcoin? What's that like? And how did you start doing that, too? Oh, good question. So I'm an assistant professor of philosophy at Northern Illinois University in DeKalb, Illinois. We have a really nice terminal master's program. I think people outside philosophy don't realize it's one of the top few terminal master's programs in the country. And I actually did my master's here. And so several of my colleagues were my teachers. And in late 2017, one of my colleagues was,

on Facebook saying, if I knew how to short Bitcoin, I would. And he was arguing for the idea that Bitcoin was a bubble. And this got me really interested in the Bitcoin and the question of what Bitcoin could offer, such that we could see whether or not the valuation was more than it was, it was, you know, truly worth. And so, late 2017, early 2018, I read the white paper. I started reading other things. And I, I mean, it wasn't like this like instant conversion, like that many people talk about. But within a couple weeks, I thought, well, this is definitely worth something devoting a substantial portion of my research time to. Even though, you know, as far as like philosophy in the United States goes,

there's really almost nothing written by philosophers in any of the top philosophy journals about Bitcoin. And so I saw this vast, vast terrain of untilled soil. And, you know, the harvest is plenty. The laborers are a few. And so I started writing these papers because what I said, saw is that if you if you if personal experience if you really want to know how bitcoin works you have to read these 300 400 page books that many of us are familiar with and they're quite technical and i thought i could try to distill bitcoin into its essence and answer some of these philosophical questions that i think people would care about but soon soon after within within a year so

I found some kindred spirits and two other philosophers especially named Andrew Bailey and Brad Rettler. Andrew is a professor of philosophy at E.L. N. U.S. in Singapore. And Brad Rettler is, he's building a citadel in Wyoming. He teaches at the University of Wyoming. And so we started this Bitcoin research collective called Resistance Money. which you can, you know, visit and see some of our papers, resistance.money. And so that has been really rewarding, collaborating with them,

even though I think much of the rest of the profession right now doesn't take Bitcoin or philosophical research on Bitcoin very seriously. And I think when I started working on Bitcoin, some of my colleagues, they're very polite. I'm probably the least nice of all my colleagues. I think they thought I was going off the deep end. I had jumped at shark because I was, you know, I did my Ph.D. at UNC Chapel Hill. And I wrote my dissertation. I published some papers in, like, technical areas of philosophical semantics, like the meanings of certain expressions,

especially with respect to different kinds of logics. You know, it's kind of mathematical. and, you know, it's respectable, even if, you know, very few non philosophers care about it. But here I am, you know, jumping into research on Bitcoin. I think that concerns some people. But I think just like anyone who works on Bitcoin in other fields, whether it's, you know, finance, investing, custody, or whatever, this is a kind of revolutionary asset, and anyone who leaves what they were doing and to start something new to support the Bitcoin ecosystem, I think you can draw some

suspicion. But I think that's going to change in the medium term. Yeah, Bitcoin, it's a glorious new. on for Bitcoin acceptability. Yes. All sorts of different institutions, whether financial or economic. I, for one, I'm grateful that you explored or you've begun to explore Bitcoin because your papers were extremely thought-provoking and changed my opinion on certain things.

So what would you say to someone who has no knowledge of your papers, what would you say the relevance is of philosophy to Bitcoin and to Bitcoiners? Sure. There are two sets of questions that I think philosophers can really help people tease apart certain issues related to Bitcoin. The first set of questions are questions about what Bitcoin is and how it works. And that's what my first series of papers is about. But then there's another set of questions, and these are normative or ethical questions. And these are questions about whatever Bitcoin is, you know, whatever Bitcoin is, is however it works, should we use it? Should we use it as money? In what respects is it good, a good thing to have around? And these are the kinds of questions that Andrew Bailey and Brad Rettler

and I are kind of working on together. What's hard about a lot of these normative questions and also what I think of as the more metaphysical or ontological questions about what Bitcoin is or how it works, they are highly interdisciplinary. And so in order to speak responsibly to these issues, you have to know a little bit of economics, a little bit of computer science, a little bit of cryptography. And there's a risk here of being what my friend and philosopher Nathan Ballantyne calls an epistemic trespasser. So this is the kind of person who,

as an expertise in one field and then takes that as like a free pass to to like prance over to you know someone else's territory i i have some names on the on the tip of my tongue whom i could allege to be epistemic trespasser but uh will withhold them out of charity yeah right i mean i think i think especially in bitcoin this is a real a real risk and i've seen it too i'm guilty of it probably from time to time. And I think it is reasonable maybe to charge me with this kind of thing because here I am of a philosopher.

I don't have, I mean, truly, truly, I don't have expertise in computer science or economics. But I'm trying my best to integrate, you know, evidence from all these fields into a larger project. But that's, I think, I think that kind of general and overarching like birds-eye view perspective on Bitcoin is necessarily a philosophical one because, you know, philosophers, they take evidence no matter where it comes from.

and they use the evidence in the service of trying to explicate the strengths and weaknesses of certain views and arguments. And so philosophy is really kind of a strange discipline in that way, whereas if you're just an economist or just a computer scientist, like your expertise really narrows you into this kind of, within these boundaries. And so being a philosopher, there's even greater risk of being a trespasser because, you know, so much evidence is relevant to the questions that you're working on that, well, it's really tempting to issue judgments and pontificate on areas of inquiry that, you know, one hasn't been trained in. So you said that your colleagues, you know, by and large,

you know, raised eyebrows at your discovery of Bitcoin and your desire to pursue it from a philosophical perspective. Is there something about academic philosophers that makes them ill-disposed to sort of getting Bitcoin? Or is this just the same base rate as kind of the rest of the population, would you say? I think that this kind of base rate idea explains much of it. But I do think that there are two tendencies among academic philosophers that would explain further this resistance to treating Bitcoin as a legitimate area of inquiry in its own right. One tendency is a kind of conservative tendency. So yes, it's true that philosophers have spawned off whole new areas of research, like going back through the 20th century, philosophers at MIT or at UCLA were largely responsible for spawning off the new disciplines of cognitive science and linguistics.

And further back, you know, like in the 17th century, like Newton and Leibniz, you know, formulating in this new area of physics or calculus. And so while that's true, many of the questions that philosophers, work on now have been worked on philosophers for thousands of years. And so there's a kind of conservative impulse to, I think, to be suspicious of new questions because they haven't, they haven't maybe achieved this sort of kind of lindy effect, I guess, as as a, as like a legitimate question that people have worked on. The other tendency, I think,

is that many academics are left-leaning. And if we're honest with ourselves, Bitcoin has a bit of a stink on it for left-leaning people because, we'll just read some of these early articles in New York Times by Paul Krugman, where he says things like, you know, Bitcoin is,

a libertarian fantasy, like wrapped up and a get rich quick scheme, you know, things like this. And this kind of association with libertarians and criminals and nerds who are libertarians or criminals. The worst of it's, I think it's a bit off-putting. and you wouldn't know to kind of control this impulse and to deny it unless you'd spend in the time. And so you have to like kind of bootstrel

I think for left-leading philosophers and academics in order to counteract its impulse, you'd have to bootstrap yourself and say, well, I'll give it a shot. And let's see what there's going on here and see if there's anything worth looking into. And if you don't do that, I think, I mean, I think this is a kind of a legitimate impulse

and it's a way of preserving the philosophical tradition. So for this episode, we're going to talk about two papers, although you have more, but your two most recent papers on Bitcoin, electronic coins is the first, and then what is Bitcoin is the second? So I love electronic coins. I mean, I like them both, but electronic coins is, is so interesting to me because it makes me sit down and revisit these ideas that I thought were concrete in my head. And, you know, I remember reading this paper for the first time

and thinking to myself, wait, hang on. I was completely wrong about what I thought a Bitcoin, a unit of Bitcoin was. And I love that feeling. I mean, I love that feeling of having something upended. So maybe just talk about what it is you found. I guess we can start with what the mistake that Satoshi made, what that mistake was, because you allege that Satoshi makes a critical mistake, at least in the way he or she describes Bitcoin. Yeah, thanks for your kind of remarks, Nick. That means a lot to me. Let's back up one step. So I recall you being a fan of this kind of characterization of Bitcoin as a synthetic commodity. Yeah, that's George Selgin wrote that.

Yeah, Selgen, the economist. And I think that's right. I agree with you. So what's a synthetic commodity? Well, it's a commodity like corn or gold. But both corn and gold, they have non-rength. non-monetary value. That is, we are happy to pay for them beyond their uses as just a form of money.

So, for example, corn, like, we will eat. And gold has certain industrial uses and also, it serves as a status symbol and it looks pretty, you know, it's shiny and so on. Now, Bitcoin is a commodity, okay, like corn and gold, but it's a synthetic commodity in the sense that it has no non-monetary value. It's not something that we eat, and it's not something that we can hang around our necks or paint on domes or, you know, conduct electricity or so on. And so its usage would seem to lie entirely in its use as a tool of transferring and holding value. Now, how does it do that? Well, it's in an important sense, digital. It's a digital commodity, synthetic digital commodity.

Well, how does that work? well, there are several different kinds of ways in order for something to be a synthetic digital commodity. And one way that has kind of one view of Bitcoin that has gained some steam in the academic literature and is kind of suggested in the Bitcoin white paper is that Bitcoin is a digital commodity in this sense, that it is a chain. of digital signatures. And so the idea is that imagine a check, you know, C, H, E, Q, U-E, that kind of check, a check that's being passed around, you know, I sign it over to you,

you sign it over to someone else, okay? And then as soon as someone signs it over, they cross their name off. And then so the person who owns it is the one that has the most recent signature at the end of the list of signatures on the check. So the idea that Bitcoin is a chain of digital signatures is like that except dematerialized. So we have digital signatures instead of physical signatures. And then there's no physical paper, of course.

It's just kind of a digital document, a list of signatures that transfers title. Now, Satoshi in the white paper says that electronic coins. are chains of digital signatures. And because of this characterization, many, many people, when they define what a Bitcoin is, like the unit of account in the Bitcoin network, they identify each Bitcoin as a chain of digital signatures. And this is just not how Bitcoin works.

So just to interrupt you there, in the Bitcoin white paper, Satoshi literally says we define an electronic coin as a chain of digital. signatures. That's right. That's right. Could not be more sort of definitive on that point. Right. Yeah. And so there's a question about what that means. And I actually think if we interpret him charitably, he's not wrong. But in order to understand why he's not wrong, we have to understand how he's using this word electronic coin. And he's using it in a way not to refer to Bitcoins as we know them, nor is he using it in the way that his predecessors would have used these kinds of words like token or coin or note when it comes to digital commodities. I'm thinking

of people like Hal Finney, David Chom, and a few others. And so what's really going on here? Well, first, I want to say, you know, this is an initially very plausible, idea before you look into what's actually going on under the hood, that each Bitcoin is something like a string of symbols or a number that has a signature over it that you can transfer by signing it over to someone else. And even what's really funny is that yesterday Peter Wula tweeted a remark of his own from 2010 saying, I bet this is how Bitcoin works since there's Yeah. That made me think of your paper, actually.

Yeah, thanks. Yeah. That since there are or there will only ever be $21 million, that each Bitcoin is assigned a number. So like the first Bitcoin would be number one. And the second Bitcoin would be number two and so on. And then to transfer them over while you take the one token and you sign it and you pass it on. And then the person who has that when they want to transfer it,

they sign the signature, they sign their signature over your signature, over the one token. And so these signatures build on top of these initial numbers like Digital Amber as things get passed along. And so you can see the transfer of title from person in person. And I think that's a very initially plausible view. And it made me happy to see that because I think, you know, this is a natural idea. And it is, in fact, how some digital commodities were built early on. So like how finny. Would you say the digache was like this with kind of the units having serial numbers and being exchangeable?

Very similar. Ditchikash is different. And so David Chom, and I think this is in the 80s. he had an e-cash system and there was a central issuer just like there was a central issuer for Halfenny's Arpao system and what the central issuer would do is he would have a digital note so think of your check

again like a physical check which has a like a serial number on it for that check but imagine in instead of each person's checkbook having overlapping numbers. So like, I have a checkbook, I have a check number one, you have a checkbook, you have a check number one. Imagine the bank itself has a checkbook. And so there's only ever one check number one or one check number 736. So what gets passed along in Choms system are these check numbers.

So how do we know how much they're worth. Well, in the e-cash system, each check has a special signature. And that signature specifies the value for that check, how much the bank will treat it. And so, you know, there's a special private key that the bank holds that it will use for digital signatures for all $10 checks. There's another one for all $20. And so you can quickly see how this is kind of an maybe unsustainable practice if you want a highly divisible e-cash system because you're going to need a private key to issue signatures for each cent, you know, if you want it to be that divisible.

And so this is kind of unsustainable. It would really clog up things, at least on the bank side of things. And with Fini's ARPOW tokens, the value is encoded in the string of symbols, depending on how many leading zeros there are. So these are like hash-cash tokens with a leading number of zeros, but those leading number of zeros actually tell you how valuable it is because the more zeros you have, the harder it is for the harder it is for the computer to find. that's the idea. And so you have these different kinds of digital commodities, but they're built very differently. And at least with Finney's version, you get these signatures over tokens, where what a token is, is a string of symbols. And with Bitcoin, you don't have tokens like this that serve as identification.

numbers in the ledger. And so what's very interesting, and I think this is a very smart engineering decision on Satoshi's behalf, is that he or they eschewed this kind of system where each token would have an identity on the ledger. Instead, the entries on the ledger just say

how much someone has. and there's there's no way to track you know individual bitcoins or individual Satoshi's all the way through the system right yeah so there's no there's no persistence of identity of a given unit of Bitcoin through through the passage of time through the ledger that's right and so if you look at some of the early papers on digital cash so i'm I'm thinking of there's a Japanese cryptographer named Akamoto. He has whole papers devoted to this issue about the divisibility of digital cash. And these systems are very complicated.

There's another paper by the NSA around the same time called How to Make a Mint. And they discussed this issue too. Wasn't this kind of an issue with Chomsy? cash where you had bills in specific denominations, you'd just sort of combine them to arrive at the right amount you wanted to spend? That's right. That's right. So, I mean, this is, this is a, this was a real problem. And Satoshi solved it very simply just by foregoing the identities of the individual

things and having just a ledger that says how much, what quantity of a thing that that you have. And, uh, you can imagine the, you can imagine the, you know, the kinds of difficulties that would result if Bitcoin were to remain as highly divisible as it is, but we had to sign over every single Satoshi. I mean, it would really clog the network. We'd need bigger block sizes for sure. And because there's quadrillions of Satoshes, right? Yeah, but every time. Yeah. We've had about 500 million transactions or 600 million transactions total, if I'm not wrong. So you need that many.

signatures that many bills basically the product of those two things yeah so imagine michael sailor you know you know within this next week or so buying you know 650 million dollars with a bitcoin and then and then having to digitally sign every single satoshi that would be unbelievably complicated and and computationally expensive so this isn't just an alternative way of thinking about Bitcoin or a more accurate way of describing Bitcoin, it's actually just a better architecture for internet cash. That's right. And Satoshi talks about this issue with divisibility in the white paper.

It's kind of an underappreciated point, I think. And it's just a really nice engineering decision that makes things very simple. And he's not the first to have come up with such an idea in a very important. Way die's 1998, B-Money paper. Wei-Dai does not tout his ledger as solving this problem, but his ledger does solve that problem. So to come full circle here, you might say that it's a little bit misleading.

I say Bitcoin's a chain of digital signatures. Your contention is Bitcoin is a ledger that tracks quantities of this substance. basically. That's right. Maybe to build intuition on this as well, briefly talk about your counter example you give, which sort of directly shows that a Bitcoin is not a chain of digital signatures. In a Bitcoin transaction, you unlock Bitcoin that has been previously sent to your address. And you do that in what's called transaction inputs and your transaction input. And then you funnel all the Bitcoin you've just claimed to the next address you want or addresses you want to send the Bitcoin to.

Now, importantly, in a Bitcoin transaction, the inputs don't get paired up with the outputs within transactions. So if I claim, you know, point two Bitcoin from one UTXO, 0.3 from another UTXO, and then send them in a single transaction to someone and send that person half a Bitcoin. And then split up that half Bitcoin. And then that person splits that half Bitcoin into two more outputs. let's say of the same denomination like 0.3 or 0.2, there's just no way from the blockchain to track whether some Satoshes came from one UTXO rather than another. So this doesn't just happen in coin joins. It happens as a routine part of the network. when people claim different inputs and they funnel them into outputs,

precisely because Satoci's don't have identifiers, there's no way to track individual Sotoshes through the chain of transactions. And so imagine if everyone in the world who held Bitcoin wanted to honor Satoshi, you know. And so we had a like a single transaction party where we set up this thing where every Bitcoin in existence would, that sitting in some UTXO would get sent into one transaction in the inputs and then back out all to new addresses. They look at a worldwide coin join through one one transaction. There would be no. way to track

like who got who's Satoshi's. And so I think there's a tendency to think that especially since we talk about Bitcoin's as coins, that they have identities in the blockchain, it's just not true. The ledger's only tracking quantities. And you can

track these quantities to some extent, but only in special cases. Yeah. There's a whole industry built on trying to build linkages between the units over time and trying to build heuristics that identify entities that have consistent, you know, presences on the chain across time. So even though I think I fully agree with your characterization, there's antagonism. that are trying to re-insert this notion of kind of the persistence of units over time for sort of risk evaluation purposes. Yeah.

And what they have to do, they have to assign probabilities and say, well, we're like 0.6. We have like 0.6 confidence that this Bitcoin over here came from this address over there. And there are ways to do that. But it's not, what they're not doing is tracing individual Satoshes. Your electronic coins paper is kind of a prelude to your, I would say, more expansive paper, what is Bitcoin, which was accepted into a journal. So congratulations for that. Thank you.

I guess by the time we release this episode, that will be out at that point. or will it be? I certainly hope so. I certainly hope so. At the very least, readers will be able to read a draft, right? Yes, yeah. It's posted online. All right, so we've established what a Bitcoin is.

Well, we've established what a Bitcoin is not at the very least. So you poked a hole in sort of a popular conception of what Bitcoin's are, pretty convincingly, in my opinion. And then now your task is to take on the somewhat mammoth task of deciding what Bitcoin actually is. That's right. What inspired you to do this? Well, so this is how I now think of it,

that Bitcoin is probably still subject to a kind of open exposition problem where there's not really some totally perspicuous explanation for what it is and how it works. And so what I wanted to do is at least provide the materials for someone else to provide such an explanation. I wanted to argue for a certain way of explaining what Bitcoin is and how it works. And partly inspired by my own difficulties in trying to pin it down.

And someone who comes to the Bitcoin world, I think it can be overwhelming. If you really want to know how it works, you have to read it. these 300 and 400 page books, well, what I really wanted to do is to try to distill Bitcoin the asset and how the network works in order to secure it into its essence. And so that someone could come away with the most important lessons from one of these books, but also explain it in a philosophically rigorous way. So Bitcoin is a revolutionary asset. And And I think what we need in order to have a more perspicuous explanation of it is a new mental model. And so what's a mental model?

Well, it's a model that's mental. So what's a model? Well, if you think back, so in the 1950s, there was an idea by a guy named John Reber to dam up some rivers going into the San Francisco Bay to get a more reliable water source because the Bay Area's water source was being funneled in from over 150 miles away. Well, John Reber, speaking of trespassing, he's not an engineer. He was, in fact, an amateur theater producer, but despite his trespassing, the idea really caught on to such an extent that the Army Corps of Engineers built a one-to-one-and-a-half-half-acre model, not quite to scale but close enough in order to test its idea. And they found out that

if they were to implement this dam idea from Reber, it would be disastrous. Okay, so what's happened? Well, the Army Corps of Engineers constructed a model, and they studied it rather than the Bay. And because the model was relevantly similar in important respects to the actual Bay Area, they could infer that what was true about the model would be true about the thing that they're modeling, the Bay Area. Okay. And so there are three

steps here to modeling. There's constructing the model, there's analyzing the model as as a thing unto itself. And then there's this assessment where you infer what's true about the model to what's true about the thing that you're trying to discover truths about. Now, we want a mental model, so we don't actually have to build anything.

And so my mental model is a computer network where a number of people, arbitrarily many people, co-author a simple story about bread being passed from basket to basket. And the computer network decentralizes the jobs that we normally entrust to centralized publishing institutions. So I'm thinking things like refereeing papers and publishing them. Now, the network here will be my model. We don't have to build it. we can just imagine it and from the armchair discover certain things about it.

And then once we do that, we can discover that what's true about the model is true about the Bitcoin network and Bitcoin itself. Now, the model is going to be highly simplified. And one of the things I really like about the model, other than the fact that I thought it up, is that the terms for the components on the model don't observe. obscure the jobs that they do, but instead are descriptive of their jobs within the model. And so, for example, instead of using a word like full node, we'll say, well, they're referees. Instead of saying that someone's a Bitcoin miner, we'll say, oh, they're competitive publishers.

So this is the sort of idea. And we also have descriptive words like for the various mathematical and cryptographic functions. Yeah. And so what we do is we design this model for hyper-authorship, like co-authorship on a massive scale to prevent issues. And some of these issues, you know, people are going to be very familiar with if they've ever attempted to co-author with someone. So I think there's this episode in British literary history that's, that's, very illustrative of some of the issues that people have had in co-authoring. So Wordsworth and Coleridge, they co-wrote this anthology of poems called Lyrical Ballads in like 1798.

And then two years later, they released a second edition. And on the first edition, Coleridge's poem was the first poem to appear. And neither of their names appeared on the cover. They're just on the inside. Now, by the second edition, Wordsworth had really taken over the book. He deleted some of Coleridge's poems, relegated the poem that had been first to near the end. Only his name appeared on the cover. He describes Coleridge's Coleridge in the in notes as just a friend, never mentioning him by name.

So Coleridge has poems in there and his name never appears in the second edition. And then Wordsworth even has the audacity to say that, you know, these poems that aren't his are included just for variety. And that's it. And so this is an interesting case of literary sabotage. And it illustrates, you know, the difficulty of co-authoring with people that you may not trust, especially when someone is trying to do bad things to you. And so there are three kinds of problems that we would want to solve in such a network for co-authorship, especially if you want to prevent someone like Wordsworth from taking over. So we're going to try to do this without central authorities.

So without a central authority, how are we supposed to co-author? That is, how can we agree about the story's content? Two, after we've agreed about the story's content as we write chapters, how can we make sure that they sit there and someone doesn't come in and change them, okay, to corrupt them? And then three, how do we make sure that people get the right credit? And so the model is really constructed to solve these three issues. coordination,

security against corruption, and then like this credit kind of problem. And so the model then has a story that's being written. It has various role players on the network that help the story function. On the model, so is the reason for constructing a simplified model and then inferring features that model

to reality, is it simply because it's worthwhile to substitute concepts from computer science for more sort of intelligible descriptive concepts so that we can better reason about them? Or is it also because many people reading your paper will already have some understanding of Bitcoin, you want to break that sort of linkage to their preconceptions and allow them to reason about this in a pure way? Is that kind of the reason for constructing a model? Yeah, I'd say both. And that's a nice way of putting it, Nick. So, yes, many of the technical terms that you'd find in a normal Bitcoin primer, they are obscure. And if you're not in the guild of computer science or mathematics, then it's difficult to get a grip and gain traction

on what's going on. So if you have these descriptive terms, well, then it's, you know, the terms actually explain. And then secondly, you're right. I want to distill, you know, the kind of essence. And one of the reasons why is because as the Bitcoin network matures, certain functions, certain, certain kinds of machinery will be deprecated.

I don't like that word, but I can't think of a better one, in favor of some newer, better functions in machinery. And what will have stayed the same is the role that these things have played. And so there's always going to be a digital signature algorithm. But which ones are primarily used are subject to change. And so what I want to provide is a kind of vocabulary where people can talk about the role players and the network without necessarily having to discuss the specific things that are playing those roles. So I might spoil the paper because I don't think we can recap the whole thing here.

I would suggest that listeners read it if they find the discussion interesting. But I'm going to give the TLDR, which is, I'm going to quote a passage. You say, our modeling strategy has revealed Bitcoin to be a fictional substance in an ongoing and massively co-authored book on a network that automates and decentralizes the stages leading to production. Importantly, Bitcoin isn't just a fictional substance, but a fictional substance valued as a commodity and whose ownership amounts to real-life access to cryptographically secure keys. So this was, I'm persuaded by this, but it's also striking because I don't know if anybody else

has ever described Bitcoin as a fictional substance. That's certainly not the answer you get when you ask Bitcoin is what Bitcoin is. Yeah. So maybe I would ask you to sort of defend this stance without, you know, necessarily going back through the whole paper. Yeah, absolutely. So, you know, if you think about the Bitcoin ledger, what is going on there? Well, a claim to Bitcoin on a ledger is not a claim to something in, like, Michael Saylor's basement as like bricks of Bitcoin. That's not what's happening.

And I don't think anyone thinks that. And it's not individual Bitcoins or Satoshi's aren't. like little strings of symbols. We've covered that. Right. So what's going on? Well, suppose we go back to the story that's being co-authored where people are passing crumbs of bread from basket to basket.

I think we'd be tempted to say that what we're doing in this co-authored story is is representing a kind of abstract substance. So as we pass crumbs from basket to basket, there are no crumbs of bed in the external world that we're representing being passed from real physical baskets to other real physical baskets. So what's going on? Well, that kind of bread that's being passed from basket to basket is abstract. It's a fiction in the same kind of way that butterbeer is a fiction or kryptonite is a fiction. What's interesting about these fictional entities, like take butter beer, you know, we can't just say that butterbeer is good for growing trees or something. The Harry Potter stories don't say that.

And so just because, you know, Bitcoin is abstract in the same way. And just because it's fictional in the same way doesn't mean it's fake or that we can make it say whatever we want to. What I'm trying to do here is give a kind of rigorous philosophical vocabulary for what's going on. So when the Bitcoin ledger says you have 0.3 Bitcoin, what is it saying? It's saying that you have a certain quantity of Bitcoin. And what does that mean? Well, you have a certain quantity of a thing that isn't represented out in the physical world. Right.

Yeah. So, yeah. So the similar way of apprehending the notion of a synthetic commodity. I mean, I guess we can refer to Bitcoin as in many different ways. You're just trying to get to the heart of it, effectively, which is saying the Bitcoin ledger isn't materialized anywhere. it's not externalized, doesn't have external references, really. It's only sort of aware of itself. And then the value of the units is an extrinsic phenomenon.

That's something that happens in markets, but that doesn't really happen on Bitcoin. Yeah, that's right. So nowhere in Bitcoin does it say, well, these coins are worth $17,000. Yeah. That value is totally outside of the system, but the system itself is still, you know, useful. even though it's not really connected to the world in any way. That's right. And it's, you know, this is one of the kind of neat aspects about Bitcoin is that,

even though it's abstract or fictional in the same way that Sherlock Holmes is or butterbeer is, and just as in the same way, we can't just say whatever we want and expect it to be true about these kinds of abstract objects, you know, if you said Sherlock Holmes lives on one, 2-2 Baker Street, we'll say, no, that's not true. All right? And there are, even though Sherlock Holmes is a kind of abstract object, there are still truths about him. And what's interesting about Bitcoin is that some of the truths about Bitcoin are, or

concern its supply. And who is able to write these chunks of language that we call it transactions, that the ledger will include and that we will think of as transferring certain quantities of Bitcoin. So, Craig, when you built this model, I'm kind of interested in the order of operations here. Did you have intuitions about Bitcoin that you held prior to building the model and the model was sort of justification? Or in the course of building this model, did you, about Bread World, did you find out new

things about Bitcoin, which you didn't, you hadn't apprehended beforehand? Yeah, so that's right. So, you know, as someone reads the paper, they will read it in terms of the order of explanation, you know, what follows from what. Whereas when I set out to write the paper, I wrote the paper with the order of discovery. So I think I came to the conclusion first

that Bitcoin was this abstract kind of fictional substance. And if that's right, then what people are doing when they transact, what they're doing, they're not actually passing something, like we normally think of transaction as this sort of verb. Instead, they are writing chunks of language. And so what a transaction is is like a sentence in a formal language. In the same kind of way that we look at a receipt and say, well, there's a transaction.

The linguistic chunk on the receipt is not actually the passing of the good. It's a description of the passing of the good. And in the same way, a Bitcoin transaction is not actually a physical, it is not the physical trajectory of some good that's being passed. It's a description of something being passed. And so what a Bitcoin transaction is is a chunk of language. And then I thought, well, if that's right, then what Bitcoin users are doing when they transact with each other, they are attempting to co-author a massively gigantic digital book.

Okay. Now, if that's right, then what are the other role players on the network doing? Well, what are nodes? Well, nodes are checking submissions, these sentences, for syntactic errors, to make sure that we're operating in accordance with the kind of fictional universe, you know, so like a basket of bread can't give more than it has, you know, like unlike Jesus's bread baskets. And so I thought, well, okay, so what nodes, full nodes are doing then? They're serving as referees on the network. They're judging submissions against certain criteria in very much the same way that

referees or reviewers operate for centralized publishing institutions, like for journals or book presses. And I thought, okay, well, who are the publishers then? Well, these are the minors. So, yes, minors are, they're looking, they're digging through mathematical space for a solution to a mathematical problem. But their main purpose is to produce blocks as kinds of as chapters for the Bitcoin book. So they're the publishers and they're not just regular publishers. They're competitive publishers. They're competitive publishers and they're competing because if they win this mathematical competition, then they get to insert a sentence into their own chapters, which rewards themselves. some of this abstract substance out of thin air. It's like digital mana. And so we have referees,

we have competitive publishers. And then I started to work things out from there. So some mathematical functions play roles that we would normally assign to other entities in like the physical world. So, for example, when I sign, digitally sign a transaction, you know, even though the network doesn't have my private key through this kind of magic of elliptic curve multiplication, people can check whether or not I use the private key to send Bitcoin from the address that belongs to it. And so there's a kind of verifier or a notary, in other words. And so you get this kind of isomorphism between the jobs that we would normally entrust to centralize publishing institutions and the practice of publishing and what's going on in the Bitcoin network. And I think, yes, we could have abstracted away much of the economic activity around

Bitcoin. But if we're just talking about metaphysically what Bitcoin is and how various components work inside the network, I think the comparison is apt. Once you establish this model or simplification or analogy, were there any other conclusions you were able to draw that went beyond just justifying this description of Bitcoin as a collaborative story, as a fictional substance? in a story. Was there anything else that you were able to derive from the model? Yeah. There was one conclusion, one further conclusion that surprised me. And it was press in Q&A with another philosopher asking this question, like, what's the difference between Bitcoin and a dollar? What's a dollar? And I thought, well, you know, they can't be the same, because we have dollar bills and those dollar bills are physical.

So dollars are physical, whereas Bitcoin is not. There are some digital dollars, but not dollar bills. But then, you know, as I really inspected things, I think this philosopher named Martin Peterson is correct. So you have a $1 bill and it is one thing, but it signifies $1. So in that particular case, you might think that the $1 just is the bill. However, take a $20 bill. Okay, so then you have one thing, the bill, but you have $20.

And so one thing can't be 20 things. And so what's going on? Well, you have a bill and it represents $20. Well, what are the 20 things that it's representing? Well, now it starts to look a lot like what we just said about bread or Bitcoin. There's this kind of abstract unit of account that doesn't. doesn't exist out in the world. And so my conclusion here is that dollars never were physical. They were always abstract entities signified by some sort of physical document. And now they're often

signified by blips in the screen. And so this idea that Bitcoin, is a kind of abstract substance, I think led me to the conclusion that dollars are also a kind of abstract substance. And that raises some pretty interesting issues about stable coins. So what's a stable coin? Is a stable coin an abstract substance in its own right? Or is it representing the abstract substance that the U.S. government says a dollar bill does? And these are complex issues that I'm not sure what to say about. And there are further questions inspired by this about, you know, wrapped Bitcoin. I'm not sure what to say.

I mean, you probably have more sophisticated thoughts than I do. Yeah, the stable coin question, what constitutes the stable coin is now a policy question, an important one. because we have certain antagonists coming in and trying to define stable coin in a really aggressive way. And in fact, I mean, it's a very salient question because the author, not to get too policy focused, but the authors behind this act about stable coins

called the Stable Act in all caps sort of defined any balance held on a kind of a third party app, whether it's Fintech app, or even potentially, you know, a Starbucks app where you can hold a dollar denominated balance. They sort of indirectly characterize all of these things as stable coins. So, you know, these semantic questions are incredibly salient, not just as intellectual puzzles, but as questions that matter from a policy perspective and regulation. but just more generally just about how we understand these sort of economies and what these

instruments really are. Yeah, these questions, I think on their face, they have a kind of puzzly, merely verbal facade. But you're right that there's real teeth to them. They have real consequences. I don't want to corner you or put you on the spot, but do you have a view about, you know what what a stable coin is yeah whether it's like an iOU of some sort of other abstract substance or whether it is the same abstract substance is it a real dollar yeah yeah what's a real dollar you know you know dollars are so interesting i'll start with dollars because you have

federal reserve notes which is base money and then you also have most dollars really, if you look at M2, if you look at a broader monetary aggregate. Most dollars are these liabilities produced by the commercial banking sector, not by the government, but they're produced by banks. And the banks are sort of licensed to engage in this money creation by the state, but they're not directly produced by the state itself. So you have a melange of monetary instruments. The real treat is fungible in the same thing. Like if I have commercial bank dollars in my bank account, I look at my bank balance on a screen, and I go to an ATM, I withdraw federal reserve notes corresponding, and I'm debited correspondent, you know, a number of units in my

commercial bank account. Those are totally different things, though. One of them is a commercial bank liability, and then one of them is base money created by the central bank itself, directly printed by the government. So I've just substituted one thing for another thing. The commercial bank dollars are guaranteed by the government, but only up to a certain threshold. It's really not the same substance. So even in just the regular old dollar economy, we have different instruments that circulate that are treated as equivalent, that they're not even equivalent, before we even get into stable coins. Oh, that's a good point. And so, I mean, I guess this inspires a distinction between different kinds of fungibility.

So there's fungibility insofar as the transactor is concerned. We treat them as fungible. But there's a deeper reality which distinguishes these kinds of units of account. They're not, when you pop the hood, they're not fungible. They're not completely interchangeable. They're different. That's right. And so with stable coins, I think, to answer your question,

My definition is a, I think I wrote a paper and I said the definition is something like a cryptographic token, which approximates the return of sovereign currency or, you know, alternatively is convertible for a sovereign currency. So the definition that I opted for typically on stable coins, you know, very clearly denotes the fact that it's effectively a proxy instrument. or it's a wrapper around, you know, a pool of capital, you know, held on reserve somewhere. Interesting. So a stable coin in this way would be wrapped US dollar in the very same way you have wrapped Bitcoin. Yeah, yeah, precisely. Yeah, it's a cryptographic wrapper. And whether or not you open the wrapper and inside you get a dollar or you get something else,

is very much in question, you know, so you might open your present and get a lump of coal inside. And it's not actually all the dollars you thought, which is what used to happen with banks. Of course, you have your bank liabilities. You know, you have your bank account. And then you show up at the bank, you know, maybe the year is 1929 or something. And it turns out they don't have all the dollars in there. And so then we solved this, of course, by having the government guarantee bank deposits, but that just causes sort of all sorts of other problems. So it's, in a sense, the stable coin redeemability problem is just this classic, classic banking issue of your. So it's sort of quaint in a way, though we've managed to reinvent these issues.

Yeah, that's really interesting. Yesterday, Andrew Bailey brought up another distinction with respect to this idea about stable coins that there's a difference between rappers which have been wrapped by a central party and rappers which have been wrapped by a decentralized network. So in the one case, it's an I-O-U, and in the other case, it's a Wii OU. And depending on how trustworthy the I or the we is, yeah, you can really be, you know, be disappointed when you unwrap. That's right. And my big takeaway from thinking about these issues, especially having a dialogue with

the people trying to regulate stable coins is there's a huge amount of mysticism in the process of wrapping and unwrapping and who is doing it. So if it's a private firm that's doing the wrapping, a lot of people consider that to be counterfeiting. Even if the instruments on the inside are totally legitimate. So the authors of the Stable Act consider Stable Coins to be a form of counterfeiting, even if it's commercial bank dollars on the inside. Whereas, you know, if it's the government that's creating these products for you,

they're issuing federal reserve notes against some guarantee. You know, those are liabilities of the central bank. So maybe effectively they're issuing it against gold reserves or they're issuing it against, you know, the ability of the United States to sort of wage war and defend the integrity. the petrodoll or, you know, other sort of nebulous, slightly more nebulous concepts. You know, that's a mystical process, you know, which renders the instruments legitimate. But, you know, if the private sector does it or if a smart contract does it, it's somehow deemed illegitimate.

So that's sort of where we are in the discussion right now. Yeah. These consequences seem a bit strong, you know, the idea that this is counterfeiting. Yeah, I think so too. I think it's also a historical because not to turn this into monetary history podcast or anything, we're going to be talking about ontology, but there have been so many private issuers of money in the past. Although, you know, the penalties for striking your own coins and so on historically were very severe. Like counterfeiting was one of the worst crimes, often punishable by death, because the state had so much to gain from retaining its monetary. privilege, but that didn't stop private issuers of money. And in fact, there have been many historical periods when banks freely issued their own banknotes without any oversight from the state, and it actually worked really well, and we had great monetary stability. And, you know, this is the free banking era, which I recommend that all Bitcoiners look into. There were many free

banking epics in Canada, in Scotland, and these were typically characterized by stability, monetary and financial stability. So I think it's a little bit a historical to claim that the state has to be the sole issue of money because we have seen private sector monetary issuance function pretty well in the past. So we have separated these two kinds of questions. So there's like the ontological questions about what certain digital assets are. And then there's also the normative questions about, you know, whether it's good that we have them overall, whether we should use them. So maybe I'll throw you that question about stable coins.

Do you think that on the whole and overall stable coins offer the world a net positive? I like how you've turned the table and you made me the interviewee, most of the my guests. you know, don't have the temerity to do such a thing. You've worked on these questions, you know, for longer, especially about stable coins more thoroughly than I have. And I'm very curious about what you think about this. I think so. I think the answer to your question is yes.

Oh, okay. You know, unequivocally. So although it's complex because stable coins are more, nuance than, you know, true native, native digital commodities like Bitcoin, you know, because stablecoins do reference this real world quantity and they have a liability impregnated into the system, you know, because when I own a stable coin, I'm relying on someone else to do me a favor, you know, effectively of eventually redeeming, you know, allowing me to convert that stable coin back into dollars of the underlying asset.

whereas Bitcoin has no such obligation embedded into it, Bitcoin just stands for itself. So it's a liability-free asset in the monetary parlance. There's probably a breadworld way to express that concept too, which would be interesting if you could layer that in. So with stable coins, you are ultimately reliant on the banking system, assuming you're not creating it out of crypto-native collateral, which is possible, but that's sort of more of an edge case. So you are, you still are beholden to the financial system a little bit. And I think all the goodness and the, you know, important and good traits of digital assets come when you break

that linkage for the most part. Yeah, I agree. So it's, it's not as clear cut as saying, well, unambiguously, I think Bitcoin's good for the world because it provides people with a true monetary alternative and a true sort of medium of exchange alternative, which is good if you are excluded from, you know, normal or established media of exchange. And if you want to opt out, if you're a local monetary regime, with stable coins, they can probably penetrate some more niches that aren't well served by the correspondent banking system. And they can give people monetary alternatives. Let's say if you're Argentine or you're Turkish, you know, or Venezuelan, at that

point, having digital dollars is very useful. And also, stable coins can structurally, the way they're built right now, can service a broader array of clients than regular fintech or P-to-P apps because they're more natively unencumbered than sort of established financial and transactional processes. So as currently constructed, stablecoins offer benefits that the the sort of typical dollar base system does not, but that doesn't mean that that is guaranteed to be the case in perpetuity. Yeah. And it's precisely because you say of this disconnect between the asset on the crypto network

and the thing that it's supposed to be stabilizing with respect to. Yeah. So it really, I think your discussion of the essence of the thing is really critical to the real world consequences here. Because as you say, the Bitcoin story is just about moving the fictional substance around. The stablecoin story is about claims on a real substance or sort of a substance in the world. Whereas the Bitcoin substance is in a different world. Yes. It's in the Bitcoin story.

There's a really neat paper by a philosopher named Martin Glazer, G-L-A-Z-I-E-R, where he discusses this difference between assets like Bitcoin who inhabit the network and don't represent anything outside the network and assets on a network which do represent or are tied with things outside the network. And that presents a risk because even though I've said that, you know, Bitcoin is a kind of fictional substance. And by that I just mean it's abstract. You know, you're having Bitcoin or you're holding Bitcoin just is for the ledger to say

that you have it. There's nothing more that the world has to do. And so when you migrate to one of these other kinds of assets, like a stable coin, the ledger's saying that you have it doesn't mean that you necessarily have it because you need the world to cooperate. You need this asset to have been represented and you need whatever counterparty is responsible for making the connection stable. You need them to honor that commitment. it. And so the ledger, for all you know, is not accurate in the sense, whereas the Bitcoin ledger

is guaranteed to be accurate. That's right. Yeah. That's right. That's absolutely correct. I mean, and a more direct way to apprehend this concept is to consider a stable cone like tether, where there's the possibility for blacklisting as well, not just a failure of convertibility, which is present. But there's the ability of the kind of, a central issuer to invalidate addresses and transactions and so on, right? So you have a ledger on the blockchain, which is merely indicative of who owns what, but it's actually not the ledger of consequence. The true ledger is this sort of great ledger in the sky maintained by tether itself, which is sometimes diverges, probably about 200 times at this point,

It has diverged from the ledger which we look at and think of as the ledger of who owns what. Yeah, that's a real risk. I mean, that's something that people need to know before they ape into tether. Yeah, well, there's a lot of risks and so on, but that's one thing people don't think about, well, maybe they do with stable coins. So it's probably a dawning awareness that there is a freezability. But yeah, I think this is basically the key important finding around Bitcoin. that's the thing that distinguishes it from so many other money-like instruments is that it has this liability freeness and there's and its value sort of solely market determined to no guarantor

behind bitcoin which is important people think it's bad feature but i think it's really the key desirable feature it's not dependent on any third party to support it or to backstop it or be the kind of reserve bank or buy of last resort. And the only other asset, which I would say is sort of remotely similar to that is gold. And gold's value is sort of the only other monetary asset, I would say, is analogous to be gold because gold's values also market determined. Although, of course, it's got a bit of a longer track record. Yeah. Yeah. Yeah, I like that. I like the comparison. And I think it's neat to see how Bitcoin compares in this way.

So Bitcoin compares very well to IOU claims on gold because you can send it faster. It's precisely because it's a synthetic commodity that its transference doesn't really depend on shipping or passing hands. So its speed is only limited by the consensus rules. Whereas, you know, if you have an IOU on gold, you want to claim it, well, first you have to trust the counterparty. But once you get it, then, you know, and you own it. It's in your custody. Then you are subject to these like thermodynamic laws where it's like it's really heavy. It's, you know, hard to kick around and so on.

The beauty, I think, of your analogy is that. that you know, we can use it to crystallize these differences between Bitcoin and gold. Because once I receive my Bitcoin, I can read the entire Bitcoin story from scratch, from chapter one through to chapter current. And in so doing, verify that it's basically the transaction is valid. It's a real true, true sort of story, true sentence in the context of the story book. whereas in gold nobody has the full book that doesn't exist we sort of trust that the gold is true and real through its atomic properties but there's no full accounting you only have a tiny little sliver you have a couple sentences of the novel you don't have the whole thing

yeah that's a good point i like that and that's um i appreciate a sympathetic reader like you are Yeah, maybe we should expand this analogy to more domains. Maybe you can encompass all these different monetary goods. One question for you. So when you've advanced this idea of Bitcoin being a fictional substance, what have been the reactions from Bitcoiners that you've sort of talked it over with? Did you notice any Bitcoiners being indignant out of a perceived slight to Bitcoin, you know, by sort of delegitimizing it by calling it fictional?

Not really. I've gotten pushback on like the quality of my writing or like or or for being pedantic. And and mostly I've encountered some confusion. But this is from academics who work on Bitcoin. I think I think Bitcoiners, especially Bitcoin developers, they know. They know what's going on. And so what I'm saying here is really not very surprising. It's the academics who I've gotten more pushback from that they, you know, and this is kind of a general feature of academic work. People have like two ways to dismiss a work. It's like, oh, well, of course that's true. Right. So why did you spend the time to write it? So to say that, you know, some work is trivial. And the other way is to just be just like outright dismissive without really giving reasons why. So I haven't encountered those kinds of issues.

But I hope as some of these ideas reach a wider audience that non-academics will give me some feedback. And I'm especially interested in the people who work close to ground zero and are actually enmeshed inside the code. Well, I had certainly puzzled over it before I'd never found the, you know, the fictional substance idea before reading your paper. So I certainly don't think it's trivial. I mean, I'm surprised that anyone could read your paper and think that's a trivial conclusion because it's so arresting. You know, there's another interesting consequence of the work here. And that's that if you think that Bitcoin is this kind of abstract fictional substance,

then what happens in a chain split? And if there's a hard fork resulting in two different cryptocurrencies, then the question about which one is the original is ultimately a question about the identity through time of abstract objects or fictional objects. And that's a difficult question. But one that maybe we can gain some traction on once we realize what Bitcoin really is. Yeah, so in that case, would you try and trace the provenance of the stories, the two now mutually exclusive stories, mutually incompatible stories, and determine which has the most valid claim in connection to the sort of origins of the novel? I think that would be part of it.

Another aspect would be that, you know, when you think about Sherlock Holmes, suppose someone wrote, you know, a new Sherlock Holmes story where it adds details that aren't in the originals. Like say that Sherlock Holmes is a master pianist or something, or he has another twin. and you might think, well, that's not true about Sherlock Holmes. What's true about Sherlock Holmes is given in the Conan Doyle stories. And so there's a kind of right that the original author has in setting down the essential properties that belong to Sherlock. And I think something like that probably holds for Bitcoin too.

And because Bitcoin is this like purely monetary. thing. It's this kind of synthetic commodity that like the max supply, the 21 million number is at least one of the few essential properties that Bitcoin has, precisely because Satoshi gave that feature to Bitcoin at the very beginning as its author, original author. Right. Right. And so because Satoshi sort of picked this particular combination of features out of a digital cash design space, the particular combination of ingredients in the stew, Satoshi dubbed it Bitcoin. And so that melange of features is itself Bitcoin as christened by Satoshi. That's right. Now, it's going to be hard to distinguish all the essential properties from all the non-essential properties. Right. And I am not prepared to do that. But I think we can specify maybe some of the properties. I think the 21 million number is probably the best candidate. I know you have thoughts on this too. Yeah. I mean, I inherited them from you, really, but I feel the same way. And I'm persuaded by this because the challenges that, you know, as with Conan Doyle, you know, Satoshi.

she is absent, so it's difficult to write another chapter, you know, lacking any guidance from the creator. Yeah, that's right. And so there are interesting parallels. I mean, so if you think about Star Wars, you know, they were like the original Star Wars movies. But I think now we tend to think that, you know, some of these later, later movies are like, they're about the same characters and that's part of the corpus and what makes that true um and and that's a difficult question and so why why couldn't since satoshi's not around why couldn't we you know change the maximum supply or insert um a new kind of inflation rule and um i mean that's a difficult question I think probably with Star Wars, the issue is that there's like a central authority that has like that had rights over the characters.

Yeah. Where in the case of Bitcoin, that's not true. Yeah. And the last time I talked to you about this, you brought up the case of Ethereum, which is really interesting because there's the Ethereum foundation. So you might ask, well, are they like George Lucas or Disney or whoever? Do they have like naming rights if the Ethereum network forked, which one gets the real asset, the original asset? And I think it's helpful to distinguish two questions. One, the identity of the asset and two, the identity of the network.

And these are two different things. The network is the thing that's decentralizing. the writing, the refereeing, and the publishing, that's the network. And the asset is the thing that they're writing about. And it might be that, like in the case of the Ethereum Fork, the Ethereum Classic Network is the same network as the original Ethereum network. But the asset jumped from one to the other because of these kinds of central authority. naming rights. Yeah, I mean, well, I think the Star Wars analogy is apt because you have a authority that has a trademark, right?

And it's a fictional universe. And you could say theorems of fictional universe where you can play sort of financial games. And if you look at ETH II, ETH is going to be a completely different network. The whole thing's ripped out, tore out the floorboards, you know, put in, you know, new marble surfaces. everything's different, but the Ethereum address space is going to have a lot in common. It'll be effectively the same database of who owns what, so the asset. But that transition is expected to be smooth because those sort of core Ethereum leadership, and Ethereum won't like me if you're saying this, but effectively the sort of half-dozen key

stakeholders will collectively agree that ETH2 is now the domicile of Ethereum, the asset. Yeah. We dubbed the Ethereum. That's right. I mean, James Prestwich has pointed out, ETH too has nothing in common with Ethereum aside from the name. Oh, yeah. And I think it really elucidates the difference between the two networks. Bitcoin doesn't have the benefit of this orchestrator, this adjudicator. and I think to me that means that the biggest threat posed to Bitcoin is not a failure of any sort,

but it's just merely semantic dilution. So a collective loss of what it is the Bitcoin actually means. I think that's right. I think that's right. So I think even if Bitcoin forked and the most powerful exchanges and the people, that you and I most respect as Bitcoiners were to say that the network that has the inflationary asset is Bitcoin that they would just be wrong.

And if there were, you know, in the non-inflationary asset, which would continue on the same network, would still be Bitcoin even if we all called it, even if we were forced to call it something else. Yeah. Yeah. And I should probably bring on someone that disagrees with us.

Haseu might be good to give the opposite case. There's definitely a case to be mean. I could steal man it right now. I mean, you could say you want Bitcoin to be a big ton. You want it to be semantically dilute so that you can accommodate as much change as possible because you can't know the future and so on. But I completely align with your views stated there. that the essence of Bitcoin, Bitcoin the name, refers to something which is endowed with these

foundational qualities, one of which is monetary predestination, you know, monetary Calvinism, you could say, you know. The schedule was ordained prior to birth, prior to birth, not at birth. Satoshi defined the schedule of Bitcoin before even launching the network, and that schedule was meant to carry it on in perpetuity. Yeah. And this kind of ontological claim about which would be the real Bitcoin, it's not a value judgment.

It's not saying that the inflationary Bitcoin would be bad or bad for the world or that it shouldn't exist. It's just a question about which is the original. And that's all. And so I wonder, yeah, I do wonder what Haseau would say. Because, I mean, of the people I really respect in the space, I mean, Hsu is way up there. I just really like his work. It's really thoughtful.

Yeah, I think he is just pragmatic about this. I mean, I don't want to speak for him. But I think, you know, his point is probably we need to steal, we need to future-proof Bitcoin. And so, you know, being dogmatic about a certain parameter. like the supply isn't worth it because there's so much of possibility space out there in the future

where Bitcoin might have to adapt. And, you know, from a, and this is also, we John Feffer on the show, I think is really his only podcast appearance. And he said something similar. He said, look, I'm going to follow, one of the great features of Bitcoin

is that as a kind of financial asset, you're always going to have exposure to the idea, of Bitcoin and whatever happens, happens. If there's forks, you know, I'll just retain the dominant fork so whatever wins in the market is what I'll call Bitcoin. So it's a very market-driven conception of what is Bitcoin. But we have enough certainty and enough foundational materials around Bitcoin to actually have a more concrete definition of what Bitcoin is, rather than just kind of a nihilistic market-driven approach. Yeah. I mean, and I probably agree with

John to some extent, I mean, if everyone were calling Bitcoin something else and the inflationary Bitcoin Bitcoin, we'd probably have to join them just out of practical necessity if that's what caught on in the market, even though, you know, ultimately it wouldn't be the original Bitcoin. Yeah. The other, I've also had pushback on this front from people making the analogy to language saying, look, language is kind of a democratic phenomenon too. And you can't really resist the flow of language.

Like, for instance, begging the question, you as a philosopher of a specific meaning for that. You know, that refers to kind of an argument that's circular. But in popular speech, begging the question basically means posing the question or raising the question, which really irritates me. To a grin to many philosophers. For sure. Yeah, including myself. But, you know, there's not a lot you can do to resist that. And then, you know, another example would be to prove something, you know, the origin of that is pro bar, which meant to sort of ascertain the truth or falsity of something.

That was sort of the archaic usage. But so you could prove something false or prove something true. But today prove sort of connotes solely proving something true. So, you know, meanings change and there's not a lot we can do about that in language, at least, unless you are France, in which case you have sort of, you know, an academy that determines the meanings of words, and that's rigid. Yeah, yeah. Like, well, there's, I'm like way out of my league right now, but there's like a centralized body that keeps track of what the official media. is. And so like a meteor is whatever they say it is. And this could be flexible. Yeah. So I guess the point is, you know, who are we to define the meaning of words? But I guess

maybe the reaction would be there's a difference between words like, you know, lowercase words and then proper nouns as well. And Bitcoin, the network is probably a proper noun. That's right. And apart from the words, you can still ask which of these resulting crypto assets was the original, if any. And that is not a merely verbal question. And I think there's probably a matter of fact about it, even if it's really difficult for us to figure it out. So even if it's a fictional substance, there is still substance there. I mean, there's still a story you can trace back into lineage and there's kind of facts of the matter.

And there's the first chapter that you can consult and see how closely it resembles, you know, chapter 600,000 too. That's right. Yeah, I agree. Well, this has been very long by the standards of all in the brink. But I think worthy of the subject matter, I think incredibly important and thought provoking. and I think really going to be new to the audience. So very excited to hear the reactions of this one. I very much hope people also read your papers. I'm going to link them.

Tell us a little, I think you might have sort of hinted at this, but tell us a little bit about your future directions, future lines of exploration. Yeah, well, I mean, I've gone down the Bitcoin rabbit hole and I'm not coming up anytime soon, so I'm going to keep writing. And the place to go to see my papers, and the papers of my collaborators is resistance.money.

And I think there's quite a bit there now for people to enjoy. But let me just say, Nick, that I'm really grateful to chat with you. So thanks for having me on. And I hope you have a nice holiday season. Maybe as a postscript, I forgot to ask you this. Aside from yourself and maybe even aside from your collaborators, who are your favorite sort of academic philosophers that have touched Bitcoin or are there any other good papers that mentioned Bitcoin that you like?

Yeah. So there's a paper by philosopher named Martin Glazer, which I mentioned several minutes ago. And it's about this issue about assets like Bitcoin and how they're different from other assets, which are digitally represented. And the title is something like, do you need a blockchain? and it's a very good paper. I'm not sure that it's online. Maybe we can find it.

But you know what? There's just not much. Not much I can recommend that I can remember. But I will say that Andrew Bailey and Brad Rettler are very good philosophers, and anything they write is worth reading. And they'll post it to the Resistance Money website. when they can. And I suppose your task is to fill in the rest of the corpus

and give us other philosophers something to read about Bitcoin. Yeah, yeah, I hope so. I hope so. I mean, one of my dreams is that because there was so little work done by philosophers on Bitcoin in particular, that I could help. make philosophical research on bitcoin respectable and inspire other philosophers to join us and and do important work and so if there are any philosophers out there who happen to be listening you know show me a message so that um we can connect and and help each other well krag

this has been absolutely fantastic thanks so much for sharing your thoughts with me and uh and for writing those papers as well. Oh, thanks, Nick. I appreciate your support, and I really enjoy our conversation.