This is an opinion piece by James Collins, a finance professional with experience in various asset classes.
As I sit here writing this article, I am searching for the words to best describe my thoughts on the current state of the world. I couldn’t find the words to express my point of view until I landed on A Clockwork Orange. Stanley Kubrick’s 1971 dystopian crime thriller “A Clockwork Orange” features views ranging from individualism and free will to authoritarianism and force. The parallels between some people’s idea that we are heading towards a global totalitarian state known as the “Great Reset” and the intense level of response to the state’s blatant use of force and power in numbers voiced in the counterforce of “The Great Awakening” fits perfectly into the storyline of “A Clockwork Orange”. We have a heightened global awareness of such buzzwords as Great Reset and Great Awakening, but what I believe is best descriptive of these connected, yet contradictory, global-scale ideas is the “Great Confusion.”
The Great Confusion arises from an underlying absence of the inverse, which is clarity. I believe that if we as humans desire to grow as a species, we must synchronize with a global baseline of objective truth or 100% clarity.
“Bitcoin, Clockwork Orange” is my reflection on how clarity through money takes us away from the “Great Confusion”.
To find clarity, we must synchronize with an overarching base of objective truth. What can we use as a reference? It should be something everyone can agree on, regardless of spoken language and geographic location, such as math and physics. Whether in the United States or El Salvador, two plus two will always make four, and there is no place on earth where humans can jump off a building and fly; gravity will win. These objective truths are the perfect baseline upon which humans can build as a solid base layer.
“Mathematics is the basic layer of language” — @FossGregFoss
On January 3, 2009, Satoshi Nakamoto launched a decentralized peer-to-peer electronic money system in the form of Bitcoin, and it changed our world forever, giving humanity clarity in the form of money. The Bitcoin network and its unit of account, bitcoin, are shaking up everything we once knew about finance. The time value of money is the fundamental principle of finance: today’s money is worth more than tomorrow’s money. The current time value of money only exists because a central authority can change the volume of money within an economic system at any time. Due to the central control of money creation, the saying goes that governments can always print more money to manage their debts, so they have a risk-free rate. This risk-free rate is the base rate added when superimposing other risk factors when analyzing an investment in other bonds or stocks. The ability of a central authority to alter the underlying money supply and affect these rates means that it can affect everything in an economy and completely distort price signals. Looked at from its most sinister angle, the controlled issuance of money supply in mainstream finance is how central authorities keep their people on the path to serfdom; people work exponentially more expensive for a currency that is weakening exponentially, thus depriving themselves of their time expressed by the destruction of purchasing power.
“Finance is the time value of money. Bitcoin is the monetary value of time.” — @Lisa_Hough_
Satoshi Nakamoto has solved the ills associated with time theft through currency depreciation by discovering absolute scarcity using technologies that harness the objective truth of mathematics and physics to support a natively digital supply of time itself. even, the only absolutely rare asset we have. Paraphrasing the work described in Chapter 2, Bitcoin is Time in Gigi’s “21 Lessons”, the Bitcoin Network is a decentralized timestamp server that uses asymmetric cryptography to create causality in cyberspace. These causal events (known data needed to create a hash of that known data that relates to the next block) bind together giving them meaning through entropy or chance, in the form that no one in a decentralized system knows who will earning the next block reward and what transaction will be hashed into a block to create the particular Merkel root defining a point in time that resembles an absolute now in the digital realm. Discovering a method to determine “now” or “time” in a decentralized adversarial system is what allowed Satoshi Nakamoto to solve the centralization of ledger time management to avoid double spending, as well as the definable “time” in cyberspace, which is necessary to determine “when” the transactions took place.
(Bitcoin is simply a transaction-based ledger where transactions are the propagation of ownership of units of time encapsulated in bits called satoshis by signing continuous digital signatures on this append-only distributed timestamp server). The entropy of asymmetric cryptography creates an irreversible arrow of this “now”, creating a legitimate past, a present and an unknown future. As mentioned, the objective truth of physics also comes into play through the unpredictability expressed by the same asymmetric cryptography in mathematics applied to the physical effort of energy in the proof-of-work consensus to solve the cryptographic puzzle, thus emitting more bitcoins in circulation. Proof of work is essential to bitcoin’s underlying value because it performs physical computation, the only native form of energy transfer in the digital realm without any means of deceiving it. Through an asymmetric cryptographic function, proof of work creates a scenario where the time taken to brute force the response to the almost non-existent time to verify the results is expressed via bits derived from the computation time.
Finally, Nakamoto used bitcoin’s native clock or block height difficulty adjustment to relate this temporal effort computational work to our physical world using a cryptanalytically stable problem, allowing for a speed limit on the time expressed between our physical world (an average block time of 10 minutes) and the digital domain (a difficulty adjustment every 2016 blocks). The purpose of this time-derived speed limit linking our physical world to the digital world maintains the absolutely rare hard-cap of 21 million bitcoins expressed in the Bitcoin Core source code.
No matter how much energy or compute you throw on the network, you can’t speed up the issuance schedule, and more energy doesn’t mean more bitcoin; The underlying value of bitcoins is not computation by energy intensity, but computation by energy effort measuring the time asymmetry made possible by one-way cryptography.
“When you have little money, you have plenty of everything else.” —@Jeff Booth
In conclusion, humanity is in the midst of the Great Confusion – some people think we are heading into a Great Reset while others think we are in a Great Awakening – and some don’t care. This lack of concentration and attention is due to overwhelming noise and poor direction.
The signal we seek lies deep within our oldest social structure, money, which has now been transformed by the objective truth of mathematics and physics into a perfect signal. Bitcoin harnesses this perfection to reverse everything we know about finance and money. Satoshi Nakamoto used objective truth in mathematics and physics to relate a synthetic digital time and space to our physical time and space in a decentralized way, enabling the coordination of when an absolute volume of expensive and tamper-proof digital time bits overlap with our physical calculation efforts.
The discovery of absolute mathematical scarcity with an intrinsic cost inescapable cost in the real physical world tied to the heartbeat of a block-height synthetic time controlled by the cryptanalytic stability of the difficulty adjustment, an adjustment based on the time of the physical world, is the most crucial discovery in monetary application of all time. Bitcoin is the unstoppable march of time-derived money wrapped in math and physics, defining a pure price signal. Check the next block.
This is a guest post by James Collins. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.