Saturday, May 28, 2011

The Infostate And The Colour Of Money

In my post last year The State Is Dead, Roll On the Global Free Democracy I laid out a view of how I saw the end of the state and how states of the future are really simply social networks, each with their own 'local currency' or digital currency (dc).

I'll call these future 'Information States' infostates. The total value any infostate is instantly measurable as the value of its total dc in circulation.

In my other post The Media Continuum I also think about software based social networks as multi user online games.

Hence one way of thinking about infostates is as online games defined by a set of game rules or 'constitution' of interaction. The minimum constitution an open (one anyone can join and augment) infostate could have, would be defined simply by the operational protocol of the dc in use.

I realised one of these infostates already exists in the form of the bitcoin community itself. What is particularly exciting to me is that as i had thought, a state defined and operated in this way is highly evolutionary i.e. it is setup as a community or game system that encourages development and adaptation in a massive way, it makes traditional states look retarded in comparison.

Traditional states get their value in a combination of three basic ways:

1. Steal it from others through the use of warfare (or financial warfare eg international banking) Kleptocratic State
2. Sell natural resources found within their borders, that others value. Self Destructive State (as it is not replenish able, its gone for ever)
3. Create new value through 'entrepreneurship'. ie come up with something useful that others value. Creative State

1 and 2 are the stone age ways to go about things. 3. is where its at for any state to build a lasting future on. Though traditionally the problem with 3 is that when any state gets ahead with it, the other stone age states use some formulation of 1. to take it. And so goes the argument for armies.

So the bitcoin infostate has got 3. in spades, the community itself is setup on a more enlightened evolutionary game system by virtue of the constitution passed on to the community through the consensual use of the bitcoin system of value trade. (All i mean by evolutionary is a game system that sponsors and sets the stage for creation of functional new value. Or in more traditional speak encourages entrepreneurial spirit.)

It is exciting to watch the bitcoin community dynamically work, people who in effect, like the constitution (the game rules) just get on board (join the state) and start to put their skills to into it and get on and build cool things. All this then builds the value of the infostate as reflected in the dc value. I watched the bitcoin economy exchange value to dollars go from $1 Million to over $50 Million in a short time.

Enlightened rules bring enlightened players. Its a good model for a an infostate that wants to create.

The system is hot because it runs a virtuous cycle of positive creativity feedback, or what i like to call a positive equilibrium evolutionary system model. (I use 'positive equilibrium thermodynamics' as an understanding basis what life is, and life without evolution is mostly dead, or will be soon ;)

I like bitcoin because it reflects an enlightened mind-set around interaction within a social group of people. It represents a great opportunity for more enlightened/evolved society.

The real question is weather society is ready for the freedom offered by it.

So what is money ?



Money is a rule system for value exchange. In more game design language, it is the fundamental interaction model for the game. In society, the money system is a reflection of how people treat each other at a core level (interaction model) and hence how they see themselves (you can only ever really reference an external entity against yourself, hence what you do to others you do to your internal self image/self.)

In short the financial system is the primary reflection of a society interaction model. As money is exchanged for human time or life force, analysis of the operational systems around money of any society will tell you how primitive the state is and show you where the social pathologies lie. The systems that govern money current or 'currency' are literally the core energy systems that breath the life of that society.

People like to say gold is real money. Why ?

Gold has no serious industrial uses, its a good conductor but silver is even better. Gold has no real value in its use for anything other than as money. Unless you can exchange gold for something else, it will do nothing for you at all (other than cosmetic value).

So gold works as money because, a) it is scarce (there is not much of it about and you cant make it. You have to spend time finding it and digging it up b) It is distinctive. Its easy to know what it is and it can be easily identified for what it is. c) it does not corrode easily and deteriorate

Gold is simply an accounting system, price is set by demand for its use as a system of storing and exchanging value. Gold is the accounting system from the stone age that we use on Earth.

OK so gold is the real money, on top of gold we have created these things called FIAT money systems that are basically tools for how you steal assets (like gold and physical resources) en mass. Its why I like the term 'willing kleptocracy' for main stream society. FIAT money and warfare are pretty synonymous but that's another article. (War in various forms is what you would expect of a kleptocracy as a kleptocratic state would be value based on my 1. option. War is the way of the stone age state, especially one that has exhausted option 2. of self destruction.)

All the accounting features of gold are matched by bitcoins, (its scarce, hard to create out of thin air, easy to know what it is). Added to that you can send bitcoins to anyone over a wire and you can manage them easily in ways that you cant do with gold, eg break them into smaller pieces and not need to get out some scales to agree with someone else how much you have.

As an accounting system bitcoin is way better than gold. If gold is real money bitcoin is better real money. And if gold has value simply because of its technical features as an accounting system then obviously bitcoin will simply replace gold as a store of value over time. Why keep gold around with its weight and storage cost if you can have a useful alternative. The only value remaining for gold would be its cosmetic and small scale industrial value.

But bitcoin has value based on two things. 1. As the digital currency of a new infostate (reflects the core value of that state in relation to everything else). 2. As a real money system (accounting system that is better than gold that anyone can start using to store their value in). Over time you would expect the value of the bitcoin economy to tend to at least the value of all the gold.

So with the new ship infostate bitcoin floating on Earth we are left with the ancient issue of stone age war. What to do when you have all this good stuff and someone else doesn't like that.

Bitcoin has a defensive wall of the combined crypto computing power of all bitcoin miners, it is going to be tested. If someone can build a more powerful computer than the joint efforts of all bitcoin miners they can affect and mess with bitcoins transaction trail. So there is an arms race in this cyber world but its a race of compute power.

But the bitcoin network is already the worlds fastest crypto computer and growing. Its a pretty strong wall already but its going to need to be way stronger if bitcoin is going to last. The US spends trillions on war to help keep the dollar the worlds reserve currency. Bitcoin will become a threat to that game if it continues growing at its present rate.

I'm ok with with the concept of spending energy and CPU resources on bitcoin mining, you could call miners the defenders of the evolutionary infostate. They are the replacement for an army that traditionally would defend trade routes from robbers and other enemy countries wanting to plunder the trade.

Miners form the defensive wall around all trade in bitcoin with their CPU/GPU mining power. As bitcoin transaction fees are collected by miners who encode the transactions. A bitcoin transaction fee is a tip to the army of a new global republic.

If the wall stays up, war is a stone age thing. I prefer a defensive army that I can pay voluntarily. It is certainly better than traditional war.

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Tuesday, May 24, 2011

I recently played some music for this art installation. Listening to the interview on little headphones I just played in the spaces and we got what we got in one take. It comes in about half way 4m or so through this vid of the 'making of'

Sunday, May 08, 2011