Bitcoin Brings Clarity Through Sound Money – Bitcoin Magazine
This is an opinion editorial by James Collins, a financial professional with experience in various asset classes.
As I sit here writing this piece, I search for the words that best describe my thoughts on the current state of the world. I couldn’t find the words to express my vantage point until I landed on Clockwork Orange. Stanley Kubrick’s dystopian crime thriller from 1971, “A Clockwork Orange”, presents different views of individualism and free will to authoritarianism and power. The parallels between some people’s idea that we are headed for a global totalitarian state known as the “Great Reset” and the intense level of response to the state’s and power’s overt use of force in numbers expressed in the counterforce of the “Great Awakening” “fit well into the script of “A Clockwork Orange.” We have a heightened global awareness of these buzz words like Great Reset and Great Awakening, but what I think is the best description of these interconnected yet conflicting ideas of global magnitude is “the great confusion.”
The great confusion stems from an underlying absence of its opposite, which is clarity. I believe that if we as humans want to grow as a species, we need to synchronize to a global base level of objective truth or 100% clarity.
“Bitcoin, Clockwork Orange” is my musing on how clarity through money removes us from the “great confusion.”
To find clarity we must synchronize to a global baseline of objective truth. What can we use as a starting point? It must be something everyone can agree on, regardless of spoken language and geographical location, such as mathematics and physics. Whether in the United States or El Salvador, two plus two will always equal four, and there is no place on earth where people can jump off a building and fly; gravity will win. These objective truths are the perfect baseline for people to build upon as a strong foundation.
“Mathematics is the foundational layer of language” — @FossGregFoss
On January 3, 2009, Satoshi Nakamoto released a decentralized system of peer-to-peer electronic cash in the form of Bitcoin, and it has changed our world forever, giving humanity clarity in the form of money. The Bitcoin network and its unit of account, the bitcoin, are turning everything we once knew about finance upside down. The time value of money is the core principle of finance – that money today is worth more than money tomorrow. The current time value of money exists only because a central authority can change the volume of currency within an economic system at any time. Because of the central control of money creation, the saying goes that governments can always print more money to deal with their debt so they have a risk-free interest rate. This risk-free interest rate is the base interest rate that is added when stratifying other risk factors when analyzing an investment in other bonds or shares. The ability of a central government to change the underlying money supply and influence these prices means that they can affect everything in an economy and completely distort price signals. Viewed through its most sinister lens, controlled money supply in traditional finance is how central governments keep the population on the road to serfdom; people work exponentially harder for a currency that becomes exponentially weaker, and thus are robbed of theirs time expressed through destroyed purchasing power.
“Finance is the time value of money. Bitcoin is the money value of time.” — @Lisa_Hough_
Satoshi Nakamoto solved the woes of time theft through currency debasement by discovering absolute scarcity using technologies that harness the objective truth of mathematics and physics to support a natural digital supply of time itself, the only absolutely scarce resource we have. Paraphrasing the work outlined in Chapter 2, Bitcoin is Time in Gigi’s “21 Lessons,” the Bitcoin Network is a decentralized time-stamping server that uses asymmetric cryptography to create causality in cyberspace. These causal events (known data needed to create a hash of the known data connected to the next block) are connected by giving them meaning through entropy or randomness, in the sense that no one in a decentralized system knows who will win it the next block reward and which transaction is hashed into a block to create the special Merkel root that defines a point in time that resembles an absolute now in the digital realm. Discovering a method to determine the “now” or “time” in a decentralized adversarial system is what allowed Satoshi Nakamoto to solve the centralization of timekeeping of the ledger to prevent double spending, as well as definable “time” in cyberspace, which is necessary to determine “when” transactions occurred.
(Bitcoin is simply a transaction-based ledger where the transactions are the dispersion of ownership of the units of time encapsulated in bits called satoshis by signing continuous digital signatures to this append-only distributed timestamp server). The entropy of asymmetric cryptography creates an irreversible arrow of this “now” time, creating a legitimate past, present, and unknown future. As mentioned, the objective truth of physics also enters through the unpredictability expressed through the same asymmetric cryptography in mathematics applied to physical exertion of energy within the proof-of-work consensus to solve the cryptographic puzzle, therefore sending more bitcoin into circulation. Proof-of-work is essential to the underlying value of bitcoin because it runs physical computation, the only native form of energy transfer in the digital realm without the possibility of cheating it. Through an asymmetric cryptographic function, proof-of-work creates a scenario where the time it takes to brute force the answer over the almost non-existent time to verify the findings is expressed via computationally time-derived bits.
Finally, Nakamoto used the block-height difficulty adjustment or Bitcoin’s native clock to connect this time-effort computational effort back to our physical world using a cryptoanalytically stable problem, which allows a speed limit on the time expressed between our physical world (an average 10-minute block time) and the Digital World (a difficulty adjustment every 2016 block). The finitude of this time-derived speed limit connecting our physical world to the digital world allows the absolute scarce hard-cap of 21 million bitcoin expressed in the Bitcoin Core source code to be maintained.
No matter how much energy or computation you throw at the network, you cannot speed up the emission schedule, and more energy does not mean more bitcoin; Bitcoin’s underlying value is not computation through energy intensity, but computation through energy effort that measures the time asymmetry made possible through one-way cryptography.
“When you have a scarcity of money, you have an abundance of everything else.” — @JeffBooth
In conclusion, humanity is in the midst of great confusion – some people think we are headed for a great reset while others think we are in a great awakening – and some people don’t care. This lack of focus and attention is due to overwhelming noise and misdirection.
The signal we are looking for is found in the depths of our oldest social structure, money, which has now been transformed through objective truth in mathematics and physics into the perfect signal. Bitcoin leverages that perfection to turn everything we know about finance and money on its head. Satoshi Nakamoto used objective truth in mathematics and physics to bridge a synthetic digital time and space to our physical time and space in a decentralized manner, enabling the coordination of when an absolute volume of precious unforgettable chunks of digital time interlock with our physical computational effort.
The discovery of absolute mathematical scarcity with an inherent value of unavoidable costliness in the real physical world associated with the heartbeat of a block-height synthetic time controlled by the cryptanalytic stability of the difficulty adjustment, a time-based adjustment of the physical world, is the most crucial discovery in monetary application throughout the ages. Bitcoin is the unstoppable march of time-derived money wrapped in mathematics and physics, which defines a pure price signal. Tick the next block.
This is a guest post by James Collins. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
