Peter Wolfendale is a philosopher based at the University of Newcastle in the UK. His interests range from metaethics to artificial intelligence. He was a founding voice in one of the truly original branches of thought that found expression on the internet, left-wing accelerationism, as well as a pioneer figure in the blogosphere. Suffice it to say, if it’s cutting edge, Wolfendale has some thoughts on it.
CoinDesk reached out to Wolfendale for an interview on Bitcoin to ask why it is an emancipation tool, how it replicates existing forms of prejudice, and what this might mean for the future of capitalism. Here is what he had to say:
How does your interest in philosophy intersect with Bitcoin?
For most of the past decade, my work has been driven by the idea that the philosophy of mind and the philosophy of artificial intelligence are essentially the same thing: understanding what it would be like to create generally intelligent systems. and practically autonomous in the world. path we are essentially about understanding what we ourselves are.
This intellectual journey convinced me that the philosophy of computing is not a niche subdomain, but a lens through which others are to be understood. Not only are individual human beings already computational, but so are the social, political, and economic systems we have built for and outside of ourselves.
It’s impossible not to be impressed by the ambition of the cryptocurrency community: to reinvent money for the era of globally distributed computing. It is also impossible to deny that he has made a lot of concrete progress in a short period of time. But my job is to see if they are guided by the right abstract questions about money and similar social institutions, and to suggest better ones.
What are the most exciting things happening in crypto?
Some people are excited about crypto as a source of return on investment (return on investment). Others are enthusiastic about designing and implementing new forms of social organization. They are not mutually exclusive and a lot of people are motivated by both. But there’s an understandable tendency to overestimate their compatibility, and the resulting hype can push the ecosystem in questionable directions.
The obvious example here is NFTs (non-fungible tokens), which are really cool from a technological standpoint, but get caught in the wrong kind of excitement. They directly demonstrate that scarcity is a precarious substitute for use value. The really interesting things are better ways to handle anonymity, decentralization, and coordination. From a functionality perspective, this means unconscious evidence delivery, optimized systems for dapps and multi-chain interoperability, and mature proof-of-stake protocols with on-chain governance.
You said in the past that Bitcoin more or less recreates the existing monetary phenomena – from banks to bank fraud. Is there a way to develop an alternative monetary framework that doesn’t repeat mistakes or make matters worse?
People often say that money has three tasks: a medium of exchange, a store of value and a unit of account. Bitcoin started out as a decentralized medium of exchange, but it’s not really that good for it. Instead, it became popular as a store of value: not so much digital gold as a distributed Fort Knox.
This is based on the belief that at some point it will become sufficiently stable relative to other assets to function as a unit of account. The problem here is that bitcoin is less good at this job than a self-fulfilling prophecy driven by network effects.
Money also quantifies privilege. This gives you access to a certain share of the output of the entire production system, a share that you earn by having a stake in that system. These are not the only types of privileges that can be quantified. If you buy stock in a company, you don’t just get dividends, you get votes.
In liberal and democratic states, political control and economic activity are nominally separate, but your participation in the system as a whole gives you a non-transferable token that you can spend in elections to rebalance its overhead (e.g. , taxes and expenses). One of the main reasons why this model is deteriorating is that monetary sovereignty is less and less able to manage this balance.
See also: Opinion – Why Bitcoin Needs Philosophy
How and why are matters of extreme controversy. But it is clear to me that any improved social contract, liberal or post-liberal, will have to rethink the relationship between money, geography and accounting. Precious metals, printing presses and TBTF banks (too big to fail) not going to cut it.
You said that “scarcity is a brutal instrument with which to build financial infrastructure”. Given the current macroeconomic landscape of easy money and low interest rates, what is the alternative?
The scarcity that should interest us is not in the money supply, but in the production of the economy: the goods and services that we consume. Are we more interested in keeping our share of that production than in the quantity, quality and sustainability of that production as a whole?
The banking ecosystem is responsible for securing the value of the physical and social infrastructure that enables us to live our lives. It’s pretty obvious to many of us that it doesn’t do this job well anymore. It is gradually oriented towards the creation of annuity extraction opportunities and the minimization of risks for the protected classes of investors. There is no real trust in these institutions, although we have no choice but to rely on them.
Money is power and power has a bad tendency to click
If DeFi (decentralized finance) is to be better, it needs to do more than ensure that our piece of the pie stays stable as the pie slowly rots over time.
There is no easy way to do this. But here are two avenues of reflection that are interwoven with existing organizational forms:
We need to encourage non-middleman negotiation between supply and demand in which consumers invest directly in products / services (i.e. crowdfunding).
Where this needs to be negotiated by institutions that generate lines of credit by minting tokens, we should develop more specific ways to verify their lending decisions than splitting or divesting (such as moving from a bank to a cooperative). credit).
Tokens are more versatile than old units of account and we should use them to create more decentralized and transparent successors for the fractional reserve model.
Is bitcoin really a tool for reducing inequalities?
Not as far as I can see. Any monetary system optimized to fight inflation and serve as a store of value will preserve and worsen inequalities in the long run. And this before talking about the relative energy costs and the associated environmental externalities.
At the end of the day, money is power, and power has a bad tendency to kick in unless it is somehow controlled. Decentralization alone is not enough.
You have criticized certain aspects of the bitcoin worldview, which requires a high degree of individual responsibility. It is perhaps best illustrated by the expression “be your own bank”. What are the problems with transferring responsibility for personal wealth from banks to individuals or minimizing trust on the web?
The problem is, most people can’t be their own bank. One aspect of this is technical competence, which can be mitigated through better software and cultural change. The other is physical protection and insurance. While cryptography and software verification can seriously reduce the range of possible attack vectors on your assets, it cannot completely eliminate them. Anonymity helps, but only so much. We are social creatures, after all.
The old adage that crypto is a playground for market-driven libertarians has been called into question by the recent struggle of conservative companies (like insurers) and Wall Street giants buying bitcoin. How will this trend play out? Will there be room for cypherpunks in 10 years?
Honestly, it’s hard to say. But the two types of excitement I talked about earlier are going to separate more and more, and that will fuel a much larger debate about cypher-policy. The current arguments are divided between three camps: 1) the market is good and large companies can trust your data (capitalist ciphers); 2) Big companies can’t be trusted with your data, but big government can be trusted (cypher-liberals and cypher-tankies); and 3) none of them can trust your data, and it’s up to you to find the tools to protect your own privacy (cypherpunks).
I think what maybe missing is a model of government that, rather than protecting your privacy by monopolizing your data, protects your privacy by providing you with the tools and infrastructure for you to do it yourself. – even (quantified socialism). For example, keeping track of your own purchase history and media selections and running recommendation algorithms yourself, rather than depending on Amazon or Spotify.