Bitcoin is Software Enforced Inter-Subjectivity

In his excellent book, Sapiens: A Brief History of Humankind, (“Sapiens”) Yuval Noah Harari lays out his theory of the human species. This is no small topic. His focus is on the idea of fictional ideas. He attributes human civilization, chiefly, to legal and religious fictions, as described in this excerpt which well summarizes the main thesis of the book:

How did Homo sapiens manage to cross this critical threshold, eventually founding cities comprising tens of thousands of inhabitants and empires ruling hundreds of millions? The secret was probably the appearance of fiction. Large numbers of strangers can cooperate successfully by believing in common myths.

Any large-scale human cooperation – whether a modern state, a medieval church, an ancient city or an archaic tribe – is rooted in common myths that exist only in people’s collective imagination. Churches are rooted in common religious myths. Two Catholics who have never met can nevertheless go together on crusade or pool funds to build a hospital because they both believe that God was incarnated in human flesh and allowed Himself to be crucified to redeem our sins. States are rooted in common national myths. Two Serbs who have never met might risk their lives to save one another because both believe in the existence of the Serbian nation, the Serbian homeland and the Serbian flag. Judicial systems are rooted in common legal myths. Two lawyers who have never met can nevertheless combine efforts to defend a complete stranger because they both believe in the existence of laws, justice, human rights – and the money paid out in fees.

Yet none of these things exists outside the stories that people invent and tell one another. There are no gods in the universe, no nations, no money, no human rights, no laws, and no justice outside the common imagination of human beings.

People easily understand that ‘primitives’ cement their social order by believing in ghosts and spirits, and gathering each full moon to dance together around the campfire. What we fail to appreciate is that our modern institutions function on exactly the same basis. Take for example the world of business corporations. Modern business-people and lawyers are, in fact, powerful sorcerers. The principal difference between them and tribal shamans is that modern lawyers tell far stranger tales.

Harari, Yuval Noah (2015-02-10). Sapiens: A Brief History of Humankind (pp. 27-28). HarperCollins. Kindle Edition.

Further, Harari discusses the concept of “inter-subjectivity” as described in this excerpt:

In order to understand this, we need to understand the difference between ‘objective’, ‘subjective’, and ‘inter-subjective’.

An objective phenomenon exists independently of human consciousness and human beliefs. Radioactivity, for example, is not a myth. Radioactive emissions occurred long before people discovered them, and they are dangerous even when people do not believe in them. Marie Curie, one of the discoverers of radioactivity, did not know, during her long years of studying radioactive materials, that they could harm her body. While she did not believe that radioactivity could kill her, she nevertheless died of aplastic anaemia, a disease caused by overexposure to radioactive materials.

The subjective is something that exists depending on the consciousness and beliefs of a single individual. It disappears or changes if that particular individual changes his or her beliefs. Many a child believes in the existence of an imaginary friend who is invisible and inaudible to the rest of the world. The imaginary friend exists solely in the child’s subjective consciousness, and when the child grows up and ceases to believe in it, the imaginary friend fades away.

The inter-subjective is something that exists within the communication network linking the subjective consciousness of many individuals. If a single individual changes his or her beliefs, or even dies, it is of little importance.

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Similarly, the dollar, human rights and the United States of America exist in the shared imagination of billions, and no single individual can threaten their existence. If I alone were to stop believing in the dollar, in human rights, or in the United States, it wouldn’t much matter.

Harari, Yuval Noah (2015-02-10). Sapiens: A Brief History of Humankind (p. 118). HarperCollins. Kindle Edition.

In Sapiens, money is discussed as a fiction. A dollar isn’t really worth anything, at least since they are no longer backed by gold. However, because everyone behaves as if they have value, they do. If everyone were to stop believing in it the value would disappear. Many fiat currencies have lost all value, usually due to hyperinflation. This is less true of gold which will, for the near-term foreseeable future, retain jewelry value. What is interesting about Bitcoin is that it on the one hand only has value to the extent that people believe it does. It could either become wildly popular or it could break due to software flaw, it could be replaced by a competitor or it could simply be forgotten. However, the software itself also solves the byzantine generals problem with a sort of software enforced inter-subjectivity. Value is where 51% of miners believe it to be. This could be accomplished in a more decentralized manner without the mining but the proof of work essentially protects the network from a Sybil attack. Intersubjective ideas have changed in the past. Do we believe in many Gods or one? Are the southern states their own country now or still part of the United States? Which money will we use? In the past bloody wars were fought over these fictions. In an increasingly dematerialized world and as Bitcoin 2.0 concepts such as smart contracts greatly expand the possibilities one could imagine a world in which a state bloodlessly forms due to a simple change in hashing power.

In Sapiens, Harari also discusses the history of writing, beginning with accounting being done by empires that needed to expand their ability to track data in a complex society that was beyond that which any human brain could remember. Harari describes the evolution from partial script, to full script, and importantly to formal mathematics. He describes modern mathematics with Arabic numerals as “… the world’s dominant language.” Harari, Yuval Noah (2015-02-10). Sapiens: A Brief History of Humankind (p. 130). HarperCollins. Kindle Edition. Harari describes the eventual development of binary and computer science as an even further development of language. Bitcoin represents both a new higher level computer science language and a new way of digitally enforcing intersubjective fictions. It truly stands to be transformational.