Bitcoin, Alchemy of Money: Transforming Evil Into Greater Good
Bitcoin teaches us that evil can be overcome, not with resistance or punishment, but through our willingness to understand and integrate all sides of our nature.
From resource wars to human rights abuses and economic exploitation, greed and selfishness is now out of control. This has led to the breakdown of the current systems of accountability and a deepening crisis of liberal democracy which has exposed the weakness of the foundations of our global civil society.
In the formation of Western civilization, Christianity has played a powerful influence. Moral values articulated in the Bible helped shape modern court systems and their guiding precepts in defining judicial penalties.
Swiss psychologist Carl Gustav Jung saw inadequacies in the European religious framework of morality. His critique examined ways in which Christianity has promoted an image of God endowed with absolute goodness. The portrayal of a one-sided view of the Divine, acting exclusively as a force for good, is basic to the Judeo-Christian dualistic morality. It sees a part of human nature as evil in contrast to other parts regarded as good, tearing apart the interconnectedness of life.
Jung recognized the negative implications of this radical separation between the good and the evil. Deriving inspiration from the ancient philosophy aimed at metaphorically and literally turning lead to gold, Jung created a therapeutic practice aiming to restore the totality of the psyche. To him, alchemy represented “endeavors to fill in the gaps left open by the Christian tension of opposites.”
Now, over a half a century after the death of the giant whose contributions to psychology were far ahead of his time, our world has become far more complex. Globalization has brought people together for common goals, but it has also created friction among nations. As opposing ideologies and cultural values increase conflicts, Bitcoin, a breakthrough of computer science, now rekindles alchemical imagination.
The Problem Of Evil
Bitcoin came into existence in the aftermath of the global financial crisis in 2008. The mysterious creator known by the pseudonym Satoshi Nakamoto shared the vision of peer-to-peer digital cash in a white paper. In the following year, January 3, 2009, an open-source protocol became operational as a decentralized digital currency.
The significance of this invention of technology goes beyond finance. Bitcoin, a software with a magical property, is like the philosopher’s stone. Arriving in cyberspace, it solved the weakness inherent in our current financial system that requires trust in central authority.
The key feature behind the current trust-based model is a moral maxim that is shaped by the dualistic view of opposition, establishing the antinomy of good and evil. The fiat monetary system is a closed system controlled by the few. Through levers of control, it maintains its integrity by carefully vetting participants for access and excluding “bad actors” who are engaged in behaviors that are considered negative.
Jung recognized a pitfall of moral duality that could lead to “the problem of evil.” He noted how our denial and condemnation of parts of ourselves become a “shadow” — the psychic forces that grow in the unconscious mind, and, over time, it gains its own autonomy and becomes extremely destructive.
Morality Turned Upside Down
When society judges and denies aspects of ourselves that are deemed unfavorable, they do not disappear. They are simply pushed out of our sight and kept hidden. Once having escaped from our consciousness, these forces become unchecked and can gain the upper hand.
Efforts through law enforcement to punish selfish actors can just make them more cunning, deceitful and hostile. Events such as HSBC money laundering and their involvement in arms trade along with the giant banking industry’s currency rigging have shown the use of traditional legal and regulatory tools to be completely ineffective.
In the end (or perhaps even from the outset), the fiat system was taken over and corrupted by power-hungry individuals. Now, central banks set rules for the entire global economy that can be changed at will — anytime and in whatever way they wish. With their monopolized printing press, elite economists, anointed by political leaders, create money out of thin air. This system, operating in secret without public accountability, acts as a moral authority dictating what is right and proper behavior. It creates hypocrisy and a double standard.
Under the banner of fighting against terrorism, banking and payment systems working on behalf of the U.S. Empire impose sanctions on countries that challenge their petrodollar hegemony. They suppress free speech via economic censorship, as was seen in the case of the financial blockade against WikiLeaks. On the pretext of stopping money laundering or protecting public safety, they shut down and freeze accounts of anyone who is suspected of conducting wrong or dangerous activities, acting themselves as arbiters of those terms.
Proof Of Work
As a patronage network of private banks increasingly creates chaos and destruction in the world, Bitcoin now provides a creative approach for us to tackle the riddle of evil. Its core invention, a proof-of-work consensus algorithm, has begun to accelerate the demise of the fiat monetary system.
Satoshi, using strong cryptography, has created an unbreakable container that can unite the principles of good and evil. What facilitates Bitcoin’s alchemical transformation is the mining — a process that is involved in the creation of bitcoin and clearing of transactions.
In an open network where rules are applied to everyone equally, computers around the world (called miners) engage in a broadcast math competition. Rules of the game are fixed and made clear at the outset. They include the total quantity of bitcoin that can ever be created (math caps the monetary base at 21 million BTC), a predictable issuance rate and automatic adjustment of difficulty of the mining.
Solving math problems requires miners to spend energy, in this case electricity in the form of computational power. Every 10 minutes, problems are solved and whoever solves the problem first wins a fixed number of bitcoins. In order to earn bitcoin, everyone has to follow the rules of the game and do the work — use precious resources that are necessary to solve problems.
Mining difficulty is adjusted according to demand with a tight feedback loop every two weeks, keeping the mining always profitable. Regulated by the law of thermodynamics — principles concerning heat, temperature and their relation to energy — the dynamic market created through this global math contest provides security for the entire system.
Honest Account Of Human Nature
The creation of digital gold requires special substances. Satoshi created the magic formula by mixing game theory (the study of mathematical models of strategic interaction among decision-makers) and economic incentive structure (careful balance of risk and reward).
Jung emphasized how the psychic processes of alchemy require us to confront our own shadow and make a healthy relationship with it. The creator of Bitcoin faced and integrated the dark side of humanity with the knowledge of evolutionary psychology — a biologically informed approach to study human behavior.
The essential idea was articulated by evolutionary biologist Richard Dawkins. Dawkins, the author of the influential book, “The Selfish Gene,” renewed the theory of evolution by putting genes rather than individuals at the center. With the term “the selfish gene,” he explained how “a gene that didn’t look after its own interests would not survive” and posited selfishness as a foundation of developing altruism. This theory offered an explanation of the paradox of human nature; humans can be selfish and nasty, yet at the same time we have a capacity for empathy and can act kindly toward others.
With an honest account of ourselves as both corruptible and perfectible, Satoshi created Bitcoin’s unprecedented security model. Bitcoin’s computer scripting language does not say, “You shall not cheat, steal and attack a network.” Satoshi expects miners to act selfishly. If some miners are kind to others and hesitate to compete, he knows this kindness will be exploited. Bitcoin developers share a mindset — that Bitcoin lives in an adversarial environment — and so humanity’s fallible nature is factored into the design of the system.
The Genius Of Economic Incentive
Unlike the fiat system that acts punitively toward those acting in their self-interest (except for those who run the system), the creator of Bitcoin accepts humanity’s tendency to take advantage of the good will of others and found a way to constructively work with it. Through the method of decentralization, aligning everyone’s incentives, Satoshi uses rewards to encourage all players to act honestly in an open and transparent network.
This creative ensuring of the rule of consensus, without the use of force, introduced a new code of ethics that radically departs from the old dualistic morality. The significance of this shift into a more compassionate approach might be compared to the breakthrough of Jesus Christ’s moral teaching recorded in the New Testament.
In the Sermon on the Mount, Jesus taught his followers how to pray. The Lord’s Prayer provided his disciples with a path to repentance. The path includes petitions made to God for forgiveness of our sinful nature and those requests were granted. Similarly, Bitcoin is an inclusive network with its door kept open to whoever asks and seeks to correct their deeds through following the rules of consensus.
The Lord’s Prayer reads, “Lead us not temptation, but deliver us from evil.” Bitcoin’s innovative incentive structure responds to the wishes of bitcoiners. Robert Wolinsky, senior manager of blockchain research at Genesis Project, explains the genius of Bitcoin’s economic incentive structure noting how “Satoshi introduces a cost equation to cheating/collusion via the proof-of-work protocol,” making the cost of attacking the network clear to parties and having them pay for it upfront. Furthermore, by making the rewards for playing by the rules higher than the value of attacking the network, it can proactively protect the system.
Through incentivizing greed, Satoshi does not test miners beyond their capacity to endure, and, at the same time, by rewarding honest behavior, he ensures that even the lost souls among us who are devoid of conscience will not be led astray.
The New Testament was said to have brought a “covenant of grace.” With this, humanity is allowed to repent their transgressions, not by perfect compliance with a God’s will but by faith in his forgiveness. In this process, no priests, prophets, even Jesus himself can insert their authority and intervene in one’s relationship to the Divine.
Satoshi, with the invention of the consensus algorithm, established a new contract in which individuals can now directly connect to the source. Through simply trusting math, now each of us can claim virtues within ourselves and align our actions with truth and honesty. This is Satoshi’s grace. The Bitcoin protocol now helps us rescue ourselves from the separation within ourselves, from falling under the sway of the autocratic fiat regime.
Now, the great work has begun for the transformation of evil into a greater good. Satoshi’s love creates a spark of magic in the cryptographically ensured alchemical vessel. Man’s burning zeal for scarce money ignites the fire for the creation of the heart of gold. With the heat generated through the brutal mining competition, the flame glows ever more immensely for the redemption of our own selfishness.
By channeling energies that have been funneled into the military-industrial complex and surveillance capitalism, Bitcoin transmutes greed and aggression into a formidable defense for peace. The network, backed by the great hashing power, preserves moral values created by sovereign individuals out of their own freedom.
Bitcoin, an alchemical form of money, has begun to liberate people from the tyranny of central banks. Hyperbitcoinization could end misery and suffering and help move humanity toward our own salvation.
Acknowledgement: Special thanks goes to La Fleur Productions for her editorial help.
This is a guest post by Nozomi Hayase. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.