“My sickness is that I'm fascinated by human behaviour, by what's underneath the surface, by the worlds inside people.” - Johnny Depp
Bitcoins Principles
I’ll start this article with the punch line before I go in and justify these. Through my exploration, the way I have defined Bitcoins’ principles are
Principle 1: Minimise adverse human behaviour
Principle 2: Simplicity
Principle 3: Meritocracy
What helped in this was how I approached my Bitcoin definition in my previous article, where I used an exercise called the Why/How ladder, which you can read below.
As an opening statement before diving into this, if you read the above 3 principles and didn’t know they were about Bitcoin, there’s a good chance you would never be able to make the connection. And that’s why I find this so powerful.
The principles are not tied to a technology or a brand like Bitcoin but are based on fundamental transferable principles beyond Bitcoin. When I introduce Bitcoin as the context for the above, it becomes clearer that Bitcoin and Satoshi Nakamoto were the first modern successful implementations of these principles. They should be used as the benchmark for this across other industries.
Another way to frame this is that Bitcoin is the result of these principles when looking to solve the problem of money. I hope there will be many more Bitcoin-like projects in other industries where we return to proper fundamentals that serve humanity as a whole rather than a select, powerful few.
Principle 1: Minimise adverse human behaviour
If you haven’t already, I highly recommend last week's article below, which provides the train of thought that led to this specific principle.
In the above, I described the thought process that led me to seek religious wisdom and use the Seven Deadly Sins framework to understand adverse human behaviours. I’ll now explain how this is done with Bitcoin.
First, we need to start with what Bitcoin is the solution for, and that is money.
The problem statement I stumbled upon that articulates it well is.
“To flourish, humanity needs to go back to free market money (not issued by central banks or governments, but arising from the market) that can't be manipulated by central banks and/or governments, nor eradicated.”1
And one last note before we dive into the sins. I won't touch on the digital element of Bitcoin as I’ve concluded that it’s essential to the eradication of every sin. I reason that digital, unlike physical solutions, allow for true ubiquity worldwide with radical transparency, inclusion and access that has never been available to humanity. The closest solution to Bitcoin was gold, which has failed, and it is because of its large, heavy physical nature and slow transport across the world that it allowed for many of the perversions in our current financial system.
With that, let’s dive in.
Lust
Lust is often associated with intense or unbridled sexual desire.2 But you could easily substitute sexual with any other vice, and that definition would hold. For this analysis of money, lust would be
“The intense or unbridled desire for money”
I started getting torn between Lust and Greed when I approached this one. As these sins both drive us to want and attain money, but for lust, I’ve classified this as people who currently don’t have sufficient money that have a lust for it. This distinction will become important later as I pull all of these together.
Lust in our current fiat monetary system will afflict the vast majority as most do not have enough money for the goals or dreams we may hold. Therefore, while this sin may not be the most ‘deadly’ of the 7 34, it will be the one that is the most widely held. There is a broader adoption challenge that this will play into (which will be covered in my next pillar being technology adoption) so for the mean time i will leave it here.
Bitcoin Impact: I don’t see Bitcoin intervening in lust. While that may seem like a short coming, upon reflection i don’t think so. Lust to attain more when in a position of not having enough is a strong motivator to put in the work to achieve it. Bitcoin provides a path to pursue your lust without succumbing to other sins.
Gluttony
“Gluttony is the overindulgence and overconsumption of anything to the point of waste”5
The only time I can think of anyone overconsuming to the point of waste is when they have more than they need, and the downside of losing that resource won't impact that individual at all. This one is tied to greed (which we will see next), but beyond that sin, why would anyone accumulate to the point that waste is realised?
Through greed, the individual accumulates more than they need and therefore can waste.
Point 1 is amplified through a system where what is being consumed can be created easily and thus further lowers the barriers to overconsumption.
Point 2 in money is the challenge of the fiat and reserve banking system, which allows a central authority to issue new money through debt (monetary printing), providing a get-out-of-jail-free card for gluttonous spending without any consequence of waste.
I’ll highlight this with something we are largely all aware of yet gloss over. There is rarely a time that a public entity (government or government-funded entity) can deliver a product or service that is better, faster or cheaper than the private sector. And yet, we continue to let them do it because they can always print more money to cover up their waste, making the consequence of that poor spending insignificant in the short term.
So what is the solution? Scarcity.
21,000,000 is powerful in this scenario as it creates a significant barrier to overconsumption and waste because you can’t magically make more of it once you lose it. Instead, you will need to put in the work to earn those losses back. Even in the example where someone does have a significant amount of Bitcoin, they may not feel the pain of overconsumption in the short term, but eventually, they will hit the point of pain. This is because the traditional exit ramp of debt and money creation has been closed off, forcing a behaviour change at that tipping point.
Bitcoin Impact: By instituting scarcity in supply, it builds a deterrent for overconsumption and overindulgence given its finite nature
Greed
One of the easiest sins to understand in the context of money is greed which is an inordinate desire to acquire or possess more than one needs.
This one doesn’t just touch the money itself but the broader system of money and how it currently works. The core problem I see is that money eventually finds its way back into the hands of the wealthy.
The system as it stands today means that regardless of what money you have today as an individual, through your use of it in everyday life, it will eventually move out of your hands into those who already have more than they need; it centralises at the top.
You may be asking, how?
Let's look at the excessive borrowing of nations to fund the COVID-19 interventions. All those funds in the form of stimulus went from people spending in the short term for groceries and other supplies, and it went straight into the hands of the owners of those businesses. In addition, as a result of an increase in spending on a relatively static supply of goods, these businesses were able to raise prices leading to inflation. Not only did you lose the money you received, you were no better off than before the intervention, the rich got richer and what you had remaining was debased.
The same can be said for the money injected into the healthcare system for vaccines. Pfizer pocketed $37B in vaccine revenues in 2022, making it one of the most lucrative products in history6. This was with minimal effort when compared to other drug releases that often take upward of 10 years to pass through the various gates in the clinical trial process. And their pricing behaviour globally showed that they charged high prices in jurisdictions they knew could pay more7. The ROI on this drug was far greater than any other drug in history, so we know that this organisation (amongst many) showed huge signs of greed. They took advantage of people by extracting monetary value that was far more than needed to deliver something that was thought to be in humanity’s best interests. The very definition of greed.
In the end, this all comes back to money. Bitcoin's decentralised nature means that the effects of greed cannot manifest through enforcing a monetary system that prioritises those in power. Having a hard cap in supply means that greed-driven money printing is no longer available.
If the pandemic occurred while we were on a Bitcoin standard, it would have forced the drug manufacturers to price the vaccine at a price point that the system could afford rather than what we saw, which was it priced against how much money the government was willing to print.
Bitcoin Impact: Being decentralised removes the ability for the powerful few to control the system to the detriment of the many. Being scarce forces pricing to reflect actual value vs. the distorted and inflated value post-money printing.
Sloth
“habitual disinclination to exertion”8
My first pass at this had me framing the sin of sloth more on the mass’s lack of knowledge of the problem without the drive to learn about it. Secondly, if that knowledge was obtained, they would not want to ‘fight the system’ given the size of this problem, making those efforts seem in vain. Both require a level of effort that is getting increasingly harder to inspire in our society, which is dominated by a culture of convenience.
On my second pass, I realised that I looked through the victim's eyes and not that of the villain of the fiat story. Sloth can also be the disinclination to do the hard work. In this case of the powerful, given the ease with which money can be printed, there is no incentive to do the hard work to create value, as there is an easy way out.
Both scneraios highlight that where effort doesn’t need to be expended then it’s human nature to take the easy route. This inherent sloth nature afflicts both the powerful and the weak. Unless it is broken I can only see the effects of this compound over time which has ultimately created the increasing gap between the wealthy and the rest of the world. I would say that the incentive built into our current fiat system is preying on our inner aversion to work (or sloth) with the easy path being money printing.
This is where one of Bitcoin's critical elements aligns perfectly to combat this sin and its Proof of Work. It forces the expenditure of effort to receive the return.
Not only that, this proof of work mantra has formed an integral part of the ethos of Bitcoin that all Bitcoiners will echo. Beyond the technical solution, it's built into our language, which may further shift people from a culture of convenience to a culture of work. We sorely need this shift as this culture of convenience comfort trap will continue to worsen otherwise. And I can't see how a society can function when no one is willing to put in the work.
Bitcoin Impact: Forcing the education of the opaque money system and simplifying it removes the hurdle that inspires the sin of sloth. Putting in place a set of trusted and enforced rules removes the hurdle of helplessness. Further, proof of work forces the work to be done rather than taking an easy way out.
Wrath
Wrath can be defined as a strong vengeful anger or indignation that can manifest as retributory punishment for an offense or a crime divine chastisement9
Wrath seems to reveal itself in those who don’t have money against those who do. The anger in money is something that has been built up over time. It is analogous to slowly boiling the frog in a pot of water. It's warm at first and lulls you into a false sense of security, and by the time you realise that you're boiling, it’s too late to jump out. The systemic theft of wealth from everyday people in the fiat monetary system has followed a similar path. Constant money printing temporarily relieves everyday people's pain, but inflation slowly steals purchasing power over time. This was warm at first, but now that the affordability of essentials is getting out of reach for many of us, we realise we are boiling and angry at the system we trusted that led us here.
But who are we angry at? It should be to the source of all of this, being the government but they are always quick to deflect to others. They point to the rich people and that we need to “tax the rich”. They ideologically divide our communities and refocus that anger toward other injustices (DEI, global conflicts, global warming). They deflect this anger away from their actions of monetary printing to others. Thus, we see anger in the form of protests, theft and physical violence in things a few orders removed from money.
And then there are those of us who have had our eyes opened to the actual problem, the money and government, and our anger is toward the system itself and the lies we know they use to control the public. This again comes in the form of protest, the drive to build Bitcoin (Thankyou cypherpunks), and while I’m sure there is also theft and violence, it isn’t as apparent to me from this group. That is because we know what the problem is and are driven to find solutions to it. We don’t hold the same sense of helplessness.
Wrath in money comes from knowing that something is wrong, that bad actors maintain it and a need to overcome it.
Bitcoin Impact: Creating a system with clear rules and enforcement should reduce the rate at which wrath occurs. This is minimisation, not elimination.
Envy
When i think about envy it is about one person being jealous and wanting something that another has.
In this context, I struggled to see how Bitcoin had any impact beyond having a clear set of enforced rules that made it equal for all. And that envy would drive someone to work under this system to attain it. But I would now add something I read while reading about the 7 deadly sins on Wikipedia.
According to St. Thomas Aquinas, the struggle aroused by envy has three stages: during the first stage, the envious person attempts to lower another's reputation; in the middle stage, the envious person receives either "joy at another's misfortune" (if he succeeds in defaming the other person) or "grief at another's prosperity" (if he fails); and the third stage is hatred because "sorrow causes hatred".10
It gave me the realisation that envy is more synonymous with tall poppy syndrome. This jealously drives most to cut down the one that stands out so they are at the same height as themselves. The jealousy manifests as eliminating the disparity rather than wanting to attain it.
With this framing, my mind moved toward how someone would cut down others they were jealous of, and it became obvious. The government and big business do this all the time. Increased regulation influenced by big businesses results in barriers that favour the big over the small and create monopolistic outcomes. Governments institute taxes and sanctions to take what they covet and cut down those they ‘envy’.
While there are countless more examples of this, I would say that governments and big businesses' ability to control money and laws allows them to cut down those who threaten them. They are small poppies that continuously mow down the rest of us as we attain more than they like.
Bitcoin in this framework has a major impact. It is decentralised, prioritises privacy and can't be censored by any one government or business. Its censorship resistance removes this tool from the hands of government and businesses to limit their ability to cut us down.
Bitcoin Impact: Censorship resistance disarms central authorities and large businesses from the tools they use to eliminate those they envy.
Pride
Pride is considered the original and the worst of the seven deadly sins.11
“Pride has been labeled the mother of all sins and has been deemed the devil's most essential trait. C.S. Lewis writes in Mere Christianity that pride is the "anti-God" state, the position in which the ego and the self are directly opposed to God”12
When i read this and think about how this applies to money i make the realisation that its our ego and self interest that drive us to the other sins.
Greed: Because of our self-interest, we are driven to acquire more than we need
Lust: Because of our self-interest, we are driven to acquire something we don’t have
Gluttony: Because of our self-interest, we are driven to not care about our overconsumption when others don’t have enough
Sloth: Because of our self-interest, we will opt for the easy way out at the expense of others
Wrath: Because of our ego and self-interest, we will
Envy: Because of our ego and self-interest, we will desire that which another has.
The framing of self interest and ego is an effective one for me for this and its’s clear that the solution to money needs to keep these base desires in check.
But there is a second and even more meaningful one that relates to Bitcoin's absolute genius. And that is the absence of pride from its founder(s) Satoshi Nakamoto.
Satoshi could have succumb to the human short comings of pride through the admiration of being Bitcoins creator and the absolutely mind blowing riches their 1,100,000 Bitcoin his wallet holds13. They chose to vanish from our society, rising above this sin and acting in humanity's best interests to give this up willingly. It can’t be understated how important this element is, as it was the first real act of sacrifice and humility that led to the breaking of this vicious fiat system.
Bitcoin Impact: Those who use Bitcoin will not eliminate pride, but all the solutions to subsequent sins keep this in check. Most importantly, Satoshi’s act of true humility (the opposite of pride) lays the foundation for Bitcoin’s success.
The Sins in Totality
When we look at the above in totality, what is see is:
We all are inherently prideful, and that combination of ego and self-interest drives all of us toward other sins. As money is so pervasive that all people use it in some way, shape, or form, these sins manifest themselves across the globe.
To those who have money, it comes in the form of greed, gluttony, and envy; for those who don’t, it comes in the form of envy, lust, and wrath.
A key element that keeps us all in this state of inertia (the tendency to remain unchanged) when it comes to money is our aversion to doing the work (Sloth). For those with money, the aversion to work manifests in easy way-outs presented to them through money printing and monopolistic behaviours. For those without, it comes in the form of a lack of knowledge and understanding of what money is and a sense of helplessness where any effort seems in vain.
So how did Bitcoin solve this?
I’ll start with my definition of Bitcoin
“Bitcoin is a Scare, Secure and Decentralised Digital Asset”
Noting that the technical elements that make up Bitcoin sit behind the definition which I described in this article, this is how it tackles the sins
For each sin I took a step back when I saw this and asked myself “Has Bitcoin done enough to address each sin”? For what I know today it has because I can’t steelman a probable scenario where human nature and sin overpower it. Don’t get me wrong; there are plenty of ideas, but none of them have a probable chance of being successful. A few examples include
A group of bad actors having enough resources to overwhelm the network through a 51% compute attack for a sustained period
Central authorities rehypothecating and papering over bitcoin to re-introduce monetary printing and double spending
A social engineering attack that has the majority of people opt for Bitcoin hard fork that works to the detriment of the majority
That's to name a few, and I’m open to debate and discussion to go through them all if needed.
Time will tell whether this technological tool will ultimately solve our inherent human desire for sin. But as it stands, it is the best we have ever seen, and that’s a start.
Principle 2: Simplicity
“The definition of genius is taking the complex and making it simple.” - Albert Einstein
Simplicity for Bitcoin comes in a few forms.
Code
When Bitcoin was first launched, it consisted of 14,000 lines of code. Today, that has been expanded through continuous improvement to roughly 77,000. In stark contrast to this Ethereum has almost 600,000 lines of code14. That can be explained because Ethereum is trying to do a lot more than Bitcoin, allowing for smart contracts, amongst other features. But the tradeoff of trying to be more than money is that it introduces complexity and, in that complexity, the need for a centralised entity to control the protocol. If you look above, you see a theme of needing to minimise centralisation as it is a tool to express adverse human behaviour.
In Ethereum complexity comes the incentive for adverse human behaviour to take hold, and thus, under this framework and this principle specifically, it fails.
Whitepaper
The Bitcoin whitepaper is a whopping 9 pages (8 if you don’t include the page with his references)15. In this 9 pages Satoshi Nakamoto was able to convey both the technical solution as well as the problem it is looking to solve. It is simple enough for most people to understand (except the code elements), it is concise and carries all the detail you need to know. Looking back at Einsteins quote above, Sataoshi’s genius shines through in his writing.
In contrast the ethereum whitepaper is 36 pages (34 not including the references)16. To be fair this paper is in response to the perceived short comings of Bitcoin and describes how ethereum would improve upon this. Additionally it comes with a lot more features that need to be explained. But the writing is no where as concise as it could be.
In a similar fashion to the code base, the white paper shows that adding features beyond sound money introduces unnecessary complexity to solve the problem of money.
Economics
The final piece of simplicity I’ll take you through is the economic model that Bitcoin largely aligns with Austrian economics. I took you through this in my first article and contrasted this with Keynesian economics which you can read here.
The takeaway from me between these two schools of thought is one advocates minimal intervention (Austrian) and one seeks maximal intervention (Keynes). Articulated in another way, Austrian looks to allow the free market to function autonomously, ensuring that market signals are properly heard by all so that the system as a whole can react to bring it back into balance. Keynes advocates for government (or central body) intervention when perceived problems are observed to control it.
When I look at this I compare it to the human body. Our physiology is an incredibly complex system that works in near-perfect harmony that has allowed us to be who we are today. As much as we would like to think that we are incredibly smart and, therefore, can start meddling with our biology, the reality is this often leads to unintended consequences. Yes we have drugs that have been miracles to our prosperity, but for every one drug that succeed, 9 others fail17. It highlights that even though we may have an idea of what might work, we more often than not fail once we implement it.
The global economy is the same, and the less we intervene the greater the chance it has to organically/naturally be successful (or unsuccessful so those elements die out to let the successful flourish). The genius of Satoshi was to prioritise simplicity through minimising intervention.
Principle 3: Meritocracy
“In weak companies politics win, in strong companies best ideas win” - Steve Jobs
Meritocracy is all about the best ideas winning out. And Steve Jobs’ quote above is quite apt in that we see politics winning out in money today which by his standards would mean that our money today is weak. Bitcoin, which is merit driven, is the antidote to that weakness.
Grass Roots
The Bitcoin code was launched into the wild and has been at the mercy of people as to whether it is adopted or not. It started small with few miners and nodes and has now naturally become the behemoth we all know. It was based on the merit of the technology that adoption was driven which is in stark contrast to government intervention which comes with mandates to keep things going. Think healthcare, education and infrastructure programs that run over budget and continuously getting bailed out through monetary printing.
The meritocracy of this was also highlighted through the Block Size Wars. If you are curious and want to know the details about this, I would read The Blocksize War by Jonathan Bier. In short, the battle/debate between communities that wanted to increase the Bitcoin block size and those that didn’t was another grass roots movement and in the way the Bitcoin block chain was set up, it required a consensus amongst users to accept this. For the block size to increase this would have required a hard fork and if it were to be implemented all the miners, nodes and users would need to make a decision on whether they accept it or not. Because the value of Bitcoin held by these parties would be affected if the hard fork resulted in 2 versions to continue operating simultaneously it naturally forces a single victor. This writer on stack exchange describes this mechanism well.
“The risk mainly comes in when you make transactions after a chain split. For example, if you are a merchant and you accept coins on side A of the chain split, but that transaction doesn't also get included on the other chain (side B), then sometime later the network gets back to consensus that chain B is the correct chain, then your coins on chain A are worthless. So it is risky to accept payment while the network lacks consensus.” - morsecoder 18
It highlights that the Bitcoin system will find a natural equilibrium in both the ideation of new ideas and its acceptance, reinforcing the inherent meritocracy built into Bitcoin. While it was a very scary period for Bitcoiners in the 2015-2017 period, that pain and proof-of-work ultimately paid of because merit ultimately won out as Bitcoin is still going strong.
Conclusion
The three core principles I’ve presented here that underpin Bitcoin aren’t something I’ve seen written or spoken about in much detail. Most of the focus to this point is on Bitcoin's technical, financial, and economic underpinnings. My views here bring a more fundamental lens, which allows this ethos to be applied to a wider array of problems and industries, which is what this publication is all about.
I would love to hear your views on the above. Am I hitting the mark, am I way off, or am I somewhere in between? Get in touch or comment below with your thoughts, and I’ll get back to you.
Finally, before i dive into technology adoption which is the next pillar I’ll be writing on a realisation I made that i believe will be a piece that will help shift companies and governments toward a bitcoin standard. The article next week will be:
Fiat and Modern Slavery
See you in the next one.
https://bitcoinmagazine.com/culture/the-problem-with-money-explained
https://www.merriam-webster.com/dictionary/lust
Dorothy L. Sayers, Purgatory, Introduction, pp. 65–67 (Penguin, 1955).
Pyle, Eric (31 December 2014). William Blake's Illustrations for Dante's Divine Comedy: A Study of the Engravings, Pencil Sketches and Watercolors. McFarland. ISBN 9781476617022.
https://en.wikipedia.org/wiki/Seven_deadly_sins
https://www.theguardian.com/business/2022/feb/08/pfizer-covid-vaccine-pill-profits-sales
https://www.pharmaceutical-technology.com/features/covid-19-vaccine-pricing-varies-country-company/?cf-view
https://www.dictionary.com/browse/sloth?s=t
https://www.merriam-webster.com/dictionary/wrath
https://en.wikipedia.org/wiki/Seven_deadly_sins
Climacas, John. The Ladder of Divine Ascent, Translation by Colm Luibheid and Norman Russell. pp. 62–63.
https://en.wikipedia.org/wiki/Seven_deadly_sins
https://www.binance.com/en/square/post/5384878261601
https://openhub.net/p/ethereum
https://bitcoin.org/bitcoin.pdf
https://ethereum.org/content/whitepaper/whitepaper-pdf/Ethereum_Whitepaper_-_Buterin_2014.pdf
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9293739/
https://bitcoin.stackexchange.com/questions/56661/what-happens-to-my-bitcoins-if-a-hard-fork-occurs