Hello there,
I wrote an essay on Bitcoin and, after some thoughts, decided to publish it here
anyway.
I will just let the fingerprint of my public GPG key below, so that I can claim
authorship of the article if needed later:
ABEBEAC52D20AE40729A9DBCA9F9954FF10DEFA9
Enjoy the article :)
Bitcoin follows the Tao
In this essay, we will discuss how Bitcoin follows the Tao. We will not discuss
the Tao itself, but focus on which ways Bitcoin abides to it.
It is complicated to explain the Tao to people who are not familiar with it.
Indeed, one of the main points to understand Taoism -- the philosophy of those
who seek to live according to the Tao -- is that it is not possible to clearly
define it, to explain it, to try to name it, to fully understand it, to
comprehend it.
This is explicitly said in chapter 32 of Tao Te Ching:
The eternal Tao has no name. Although simple and subtle, no one in the world can master it.
Tao Te Ching is the most well know book on the Taoist philosophy, and probably
the oldest too, written about 2500 years ago by Lao Tzu. We will use excerpts
from this book to illustrate how Bitcoin is in harmony with the Tao.
So, if you like Bitcoin but are not familiar with the Tao, you will be able to
have a little grasp of what it is about and learn from it. If you are a taoist
but do not understand Bitcoin, this is a great place to get started and
understand how it is aligned with the taoist philosophy.
Not seeking credit, fame, or reward
According to the Tao philosophy, to live in harmony with the Way, we must not
seek credit, fame or reward; to really accomplish anything, we must do it
genuinely, sincerely.
We can see it in many passages of Tao Te Ching, such as this one from chapter 2:
The sage can act without effort and teach without words. Nurturing things without possessing them, he works, but not for rewards; he competes, but not for results. When the work is done, it is forgotten. That is why it lasts forever.
And this one from chapter 17:
The great leader speaks little. He never speaks carelessly. He works without self interest and leaves no trace. When all is finished, the people say, "We did it ourselves."
And this one from chapter 34:
The Tao accomplishes its purpose, but makes no claim for itself. It covers all creatures like the sky, but does not dominate them. All things return to it as to their home, but it does not lord over them; Thus, it may be called "great." The sage imitates this conduct: By not claiming greatness, the sage achieves greatness.
Bitcoin follows this conduct since its beginning. The creator of Bitcoin is
unknown up to this today, and probably will remain unknown. He or she created
bitcoin anonymously using the pseudonym Satoshi Nakamoto, but nobody knows his
or her real name, age, appearance, and so on; we don't even know if Satoshi was
a single person or group of people. For the purposes of brevity, let's just
suppose Satoshi was indeed a man.
Satoshi disappeared in December 2010, around 2 years after creating Bitcoin,
leaving no trace thanks to careful measures he took to stay anonymous. He left
the project and handed it to other developers he trusted at the time. He gave
away his great accomplishment, creating the revolutionary Bitcoin software. He
left an enormous legacy by not claiming ownership of the project, by not
possessing it, by not trying to control it.
Indeed, Satoshi released the software under the MIT license, which means the
source code is open, public, and anyone can copy it, redistribute it, modify
it, sell it, do anything. It is a permissive license, as opposed to copyright
and similar intelectual property material.
Since Satoshi was the creator of Bitcoin, it is no surprise that he was the
first user of it, bringing life to the network and testing it to see if it
really worked. This was in 2009, when Bitcoin had very few users. Consequently,
a notorious portion of Bitcoin was mined by Satoshi, which wasn't worth even a
few pennies at the time. It is estimated that Satoshi owned/owns 1 million
Bitcoin, which would make him a billionaire today if he were to sell it.
However, Satoshi never sold his Bitcoin up to this day. Since the Bitcoin
blockchain is public, we can verify that none of the Bitcoin that Satoshi
supposedly mined have been spent. It means Satoshi has never sent his Bitcoins
to anyone, has never tried to make a profit out of it.
This conduct was essential to the success of Bitcoin. By following the Tao,
Satoshi did not only prompt Bitcoin early success after his disappearance,
but also served as an example, a role model, for future bitcoinners who have
worked on enhancing Bitcoin.
Not trying to control, centralize power; being impartial
Another aspect of the Tao philosophy is not trying to control others, not try
to dictate their lives.
From chapter 10:
Can you love your people and govern your domain without self importance? Giving birth and nourishing; having, yet not possessing; working, yet not taking credit; leading without controlling or dominating. One who heeds this power brings the Tao to this very earth. This is the primal virtue.
From chapter 29:
Do you think you can take over the universe and improve it? I do not believe it can be done. Everything under heaven is a sacred vessel and cannot be controlled. Trying to control leads to ruin. Trying to grasp, we lose. Allow your life to unfold naturally. Know that it too is a vessel of perfection.
From chapter 57:
If you want to be a great leader, you must learn to follow the Tao. Stop trying to control. Let go of fixed plans and concepts, and the world will govern itself. How do I know this is so? Because in this world, the greater the restrictions and prohibitions, the more people are impoverished; the more advanced the weapons of state, the darker the nation; the more artful and crafty the plan, the stranger the outcome; the more laws are posted, the more thieves appear. Therefore the sage says: I take no action and people are reformed. I enjoy peace and people become honest. I do nothing and people become rich. If I keep from imposing on people, they become themselves.
In chapter 58:
the master is content to serve as an example and not to impose his will. He is pointed but does not pierce; he straightens but does not disrupt; he illuminates but does not dazzle.
Bitcoin follows this because no one controls Bitcoin due to its
decentralization. Bitcoin is designed to be decentralized by nature;. As
Bitcoin became more well known among cypherpunks, computer hobbyists, geeks,
etc; more users started participating in the Bitcoin network. More and more
people started running the software, mining Bitcoin and validating the blocks.
After some time, Bitcoin became large enough such that no single person or
group of people can control, no matter how wealthy or influential they may be.
A person or wealthy group may be able to convince a couple dozen or few hundred
of people to change the software code they are running in order to benefit
themselves or apply some political agenda. However, it is nearly impossible to
make all participants of the network agree on the change: some of them do not
have the incentive to do so; the participants are dispersed across the globe,
so reaching most of them to communicate is extremely hard; coordinating a
consensus of what exactly needs to be change is impractical.
Those who want to make changes in the Bitcoin software are completely free to
do so; but they are unable to enforce others to follow the changes they desire.
This is not just speculation, but indeed happened in 2017, when large
corporations tried to use their wealth to promote an agenda to change Bitcoin's
code. This would have disrupted the network and destroyed Bitcoin in the long
term. Thankfully, they did not succeed; they and their copy of Bitcoin failed
miserably.
Due to its decentralized nature, Bitcoin follows the Tao in another aspect:
impartiality. One of the greatest virtues is to be impartial:
From chapter 5:
Heaven and earth are impartial; they see the 10,000 things as straw dogs. The sage is not sentimental; he treats all his people as straw dogs. The sage is like heaven and earth: To him none are especially dear, nor is there anyone he disfavors. He gives and gives, without condition, offering his treasures to everyone.
From chapter 16:
This perspective is impartial. Impartiality is the highest nobility; the highest nobility is Divine. Being Divine, you will be at one with the Tao. Being at one with the Tao is eternal. This way is everlasting, not endangered by physical death.
Since no one can control Bitcoin, no one can decide which people can use it and
for what purposes. Anyone can use Bitcoin to transfer value for whatever
reason. There are no restrictions, no one to ask for permission, no
registration procedure that can't prevent you from using the system. People you
like can use Bitcoin; people you dislike can also use Bitcoin; even people you
hate can also use Bitcoin. The Bitcoin was designed to not impose anything on
its users; they are free to spend their Bitcoin however they wish; the Bitcoin
scripting system gives the users flexibility to specify rules and conditions
that must be met to spend the coins, giving them full control over their money.
Bitcoin truly treats everyone equally, being perfectly impartial.
Serving others, living beyond oneself
Tao emphasizes we should live beyond ourselves and by serving others we can
reach our full potential, truly fulfilling our mission. This is not an appeal
to collectivism, neither a submission of the individual to the crowd; this is
an assertion that we thrive and flourish better if we collaborate and seek
something greater than ourselves.
From chapter 7 of Tao Te Ching:
Heaven is eternal---the earth endures. Why do heaven and earth last forever? They do not live for themselves only. This is the secret of their durability. For this reason the sage puts himself last and so ends up ahead.
From chapter 49:
The sage has no fixed mind; he is aware of the needs of others. Those who are good he treats with goodness. Those who are bad he also treats with goodness because the nature of his being is good. He is kind to the kind. He is also kind to the unkind because the nature of his being is kindness.
Probably, Satoshi's greatest well know feat was to create Bitcoin; the second
greatest was to give it away to others. The ultimate goal of Bitcoin is to be a
decentralized financial system able to serve humankind, allowing people to
exchange and preserve value across time and space. The goal of Bitcoin is not
to enrich its creators, developers, or insiders, as opposed to nearly all
altcoins.
Bitcoin will triumph because it does not live for itself; it is here to serve
others, to serve whoever one wants to use it. Bitcoin is permissionless; anyone
can use it without asking someone else for permission. For that reason, Bitcoin
treats everyone the same, with the same goodness and same kindness, thus
following the Tao.
Keeping things simple
To follow the Tao, we must appreciate simplicity, avoid excesses, and
extravagances. Living this way, we can get closer to the Tao; trying to make
things too more complicated is a sign of wanting too much, of deviating from
the Great Path.
From chapter 65:
The simplest pattern is the clearest. Content with an ordinary life, you can show all people the way back to their own true nature.
From chapter 37:
If men could center themselves in it [the Tao], the whole world would be transformed by itself, in its natural rhythms. When life is simple, pretenses fall away; our essential nature shines through.
From chapter 29:
To the sage, all of life is a movement toward perfection, so what need has he for the excessive, the extravagant, or the extreme?
Bitcoin keeps things simple but not trying to accomplish fancy features such as
smart contracts, complex privacy schemes, fast transactions. This is not to say
that those features are not desirable; they do are desirable in many
circumstances. Nonetheless, Bitcoin focus on decentralization, security, and
immutability.
Due to its very nature, Bitcoin is and needs to be simple in order to
accomplish its purpose. Trying to overengineer the base layer, the Bitcoin
network, would only put at risk the security and immutability of the network by
overwhelming it by adding too many features. Moreover, the goal of the Bitcoin
is to be a digital payment system; thus, some extra functionality, such as
smart contracts, just deviates from this goal.
Bitcoin may sound complicated, but it is much simpler than other
cryptocurrency. Its design is also simpler to understand than how the current
financial system and its many institutions operate. Indeed, a computer science
undergrad with 1 or 2 years of studies can easily understand the Bitcoin
whitepaper, the article published by Satoshi detailing the technical aspects of
Bitcoin. On the other hand, some whitepapers of other cryptocurrencies require
much more technical knowledge and have many more pages due to their
overengineering; so is the legacy financial system and its operations.
In essence, Bitcoin is designed to allow transfers of value among the
participants of the Bitcoin network, which they can do by specifying conditions
that must be met to spend the coins (in other words, one must prove
authorization to spend them). That's just it. There is nothing else besides.
Everything you can do in Bitcoin is just it: specify conditions to spend coins
you own, and spend coins by providing ownership proof.
The essence of Bitcoin is something many people question. Bitcoin was created
to be money, nothing else. It has no other use whatsoever. While gold, which
had been used as hard money for centuries, has many other uses, Bitcoin hasn't.
This make people think that Bitcoin is useless. What they do not understand is
that money is a medium of exchange, not a medium of consumption; the goal of
money is not to consume it, but to facilitate exchanges across time and space;
otherwise it would be just like any other regular commodity consumed in the
market. By focusing only on being money, Bitcoin can be the best money. Trying
do something else other than money, Bitcoin would be a worse money. The utility
of what is depends on what is not, from chapter 11:
Thirty spokes converge upon a single hub; it is on the hole in the center that the use of the cart hinges. Shape clay into a vessel; it is the space within that makes it useful. Carve fine doors and windows, but the room is useful in its emptiness. The usefulness of what is depends on what is not.
If Bitcoin had functions other than being money, it would lose some of the
qualities of money. For example, if gold was still money, its value would be
influenced by several factors, such as demand for computer microchips, jewelry,
dental equipment, etc. This would cause a disturb in economic calculation: the
variation of gold's price would disturb and lead to errors in assessing whether
an economic activity should be initiated or continued because the cost of
production and the price of the final products in monetary units (in gold) no
longer reflect their true relation; a project that may be worth it may be
canceled due to an indication that it is causing loss, when actually it is
not; a project that may be a disaster may be continued due to an indication
that it is causing profit, when actually it is consuming capital. Without a
strong pricing system, people will be mislead when planning for their economic
activities; their plans will be frustrated and they will missallocate resources.
Obtaining money itself shall not be the end goal of men; rather, it is an
instrument that facilitates exchanges among people. It help us cooperate, thrive
together, flourish. It should be used as means, not seen as goal. This
perspective on money is morally aligned with Tao; we should realize that there
are things in life more important than money, and it should be seen as a
helper. Bitcoin's simplicity in being only money, and not serving as anything
else, can shape people's perspective on what really matters in life.
Keeping the essence despite hate, mockery, sneer
To follow the Tao, one must live with virtue and in harmony with nature. Few
can in the world do it; few in the world seek to do it. Most man will want to
feel superior to it, will want control it, will not understand it, will despise
it, will regard it as joke. Nonetheless, Tao keeps its nature despite all hate,
mockery, sneers, disregard.
From chapter 41:
A great scholar hears of the Tao and begins diligent practice. A middling scholar hears of the Tao and retains some and loses some. An inferior scholar hears of the Tao and roars with ridicule. Without that laugh, it would not be the Tao.
From chapter 50
Between birth and death, three in ten are followers of life; three in ten are followers of death. And men just passing from birth to death also number three in ten. Why is this so? Because they clutch to life and cling to this passing world. But there is one out of ten, so sure of life, that tigers and wild bulls keep clear. Weapons turn from him on the battlefield, rhinoceroses have no place to horn him, tigers find no place for claws, and soldiers have no place to thrust their blades.
The same way that most man do not understand the Tao, most people will not
understand Bitcoin. The same way that Tao keeps its essence, Bitcoin will keep
its essence in the face of all hate.
Indeed, Bitcoin is constantly attacked by the mainstream media, politicians,
banks, other traditional financial institutions, altcoiners. There is even an
website (Bitcoin Obituaries) keeping track of posts declaring Bitcoin's death
by news organizations (such as NYT, Washington Post, CNN, etc), which is close
to 500 by the time of this writing.
It is no wonder why Bitcoin is being attacked: if it succeeds, it will take away
the power of creating money out of thin air from the hands of politicians and
lobbiests. They will no longer be able to commit this terrible fraud, which has
enabled them to control the financial system, consequently controlling all the
rest. Without the money printer, they won't have access to easy money; they
will have to work in order to have money; they hate this idea, the idea of
having to work, that's why they hate Bitcoin's Proof of Work algorithm. The
fiat elite club -- which is the union of government, large corporations, main
stream media, academia, and big tech -- is responsible for nearly all attacks
on Bitcoin, precisely because Bitcoin threatens destroying their power to
control others.
Bitcoin is by design an open, public, anti-corruption, anti-fraud system that
emphasizes and encourages honest work, honest behavior. Its Proof-of-Work
algorithm, mining schedule, and timechain history, together create a system
with positive incentives for honest behavior: one will get benefits by acting
honestly; by not acting honestly, the chances of winning are extremely low.
Bitcoin is attacked because it follows the Tao. In a dishonest, corrupted,
fraudulent fiat world, acting honestly is seen as an act of rebellion.
Being able to store value, to store virtue
Lastly, but not least, it is crucial to cultivate, grow, and store one's own
virtues in order to live in accordance with the Tao. From chapter 59:
Restraint begins with giving up one's own ideas. This depends on virtue gathered in the past. If there is a good store of virtue, then nothing is impossible. If nothing is impossible, then there are no limits. If a man knows no limits, he is fit to lead. This is the way to be deeply rooted and firmly planted in the Tao, the secret of long life and lasting vision.
To walk in the path of virtue, to follow the Tao, is not something that can be
obtained from doing one thing at a specific time; it is a process that takes
time, patience, and cultivation of virtues that strengthens a man's soul. Thus,
we depend on virtue gathered in the past to continue thriving, improving
ourselves, being aligned with the Tao. We should not think that virtue is no
longer necessary just because we were virtuous; that's not how it works.
There is a close relation with storing virtue and storing value. Bitcoin
enables people to store value; they only need to keep in secrete their private
key. It is a good store of value in the long term because its supply is
limited, so it will not have its value diluted due to tremendous increase in
supply (in other words, inflation), as is what happens in the fiat system. How
is that related to virtue? In many ways actually.
When inflation is high (weak money, weak store of value), people tend to spend
their money very quickly and consume as fast as possible before it loses its
value; they don't want to work for hours and later find out that their income
isn't able to buy anything. Inflation leads to short-term thinking and poor
decisions; people will want to consume things just to get rid of their money,
even if they don't really want those things. This just increase the mentality
of consumerism, of materialism, instead of long-term thinking in higher purposes
in life such as building virtue, building relationships, building a family.
Not being able to store values means not being able to save for one's child
future, for retirement, for vacations with family, for future challenges that
must be faced. In that situation, a man must be constantly work to survive, so
he cannot take time to spend with his wife and daughter, to read good books, to
enjoy and appreciate nature, to mediate and connect with the Tao. All of the
noble things in life are undermined because men is enslaved by the politicians'
inflationary policies that forces him to work constantly.
With no good store of value (when the money is weak, when inflation is high),
people will work constantly but only to survive in a daily basis; they cannot
save for the future; thus, they see little purpose in working more than just
enough to survive. This demoralizes labor, putting it as something bad, when
actually genuine labor is a virtue that magnifies the honor, heals the soul,
completes the man. The consequence of it is people wanting to consume but not
produce, wanting to take but not to give.
Bitcoin has the enormous potential to solve this problem in the coming years:
as it gets more adopted around the globe, its value will not just stabilize,
but also increase slowly. With fixed supply, the same amount of Bitcoin will
have greater purchasing power to reflect the fact that, over time, society as a
whole aggregates more value. This, in turn, will change's people behavior to
save more, think long term, consume less, enjoy the great moments of life.
In that sense, Bitcoin also forces people to become more responsible. To own
Bitcoin is the same as to know a secret (secret key); to truly own Bitcoin is
to self-custody it, to know the secret and keep it secure. This requires people
to take responsibility of their own lives to solve their problems instead of
letting for others to solve. This mentality of not trying to solve one's own
problems, of thinking it is the responsibility of others to solve them, this is
a childish coward mentality; grow man must take responsibility of their lives;
there is no virtue without responsibility.
Final note
Bitcoin is probably the most honest, pure technological breakthrough that
humankind has ever seen, and it is quite hard to grasp why is this so. Thus,
for anyone who is new to Bitcoin, specially an taoist who is reading this, my
advise is to study it carefully, patiently; to be open minded; to not think
Bitcoin will make you rich fast because that is not the purpose of Bitcoin; and
to stay away from all other cryptocurrencies because they do not follow the
Tao, going in the opposite direction, promising high returns, promoting
get-rich-quick fraudulent schemes, being fraud.
While Bitcoin is hard to grasp, the Tao is even more complicated to understand,
yet it is the simplest thing in the world. In my opinion, Bitcoiners should
seek to follow the Tao, and for that one must have an open mind just like the
very-early Bitcoin adopters of 2009.