Texas sues four states for violating the Electors Clause: Initial summary and comment

The State of Texas sued the states of Pennsylvania, Georgia, Michigan, and Wisconsin on 7 December 2020, filing directly with the Supreme Court of the United States (SCOTUS). Texas argues that the conduct of Defendant States elections violated the United States Constitution (USC) in multiple ways, foremost contravening the Electors Clause. I will briefly go over the filing in as simple of terms as possible based on my first reading.

SCOTUS is the only court with jurisdiction on an action between states, thus the direct filing. Texas claims that the four Defendant States violated the USC in several distinct ways in the conduct of their respective 2020 presidential elections with sufficient severity as to render their respective outcomes invalid. For each state, the details differ somewhat, but the basic alleged pattern is the same. The most significant pattern is a vastly expanded use of absentee voting combined with systematic erosion of state-enacted statutory security standards for the issuance, acceptance, and processing of such ballots.

The Electors Clause specifies that state legislatures have the exclusive power to set election rules for their respective states. In each Defendant State in 2020, however, Texas alleges that executive and judicial agents, at either state or local levels or both, violated their own state election legislation in multiple and substantial ways. In some cases, moreover, particular municipalities violated their own state election laws in ways that other such jurisdictions did not, thus violating the Equal Protection Clause in addition.

Texas argues that Defendant States conducting their elections substantially out of conformity with the Electors Clause has debased the votes of states that adhered to it. It argues that for each Defendant State, the alleged unconstitutional rule changes concern a number of potential votes that either exceeds or widely exceeds the number of votes differentiating the top two candidates. This means that this constitutional issue is far from a merely academic distinction, but rather has a potentially direct bearing on outcomes as well.

The non-legislative rule changes at issue centered around the widespread use of absentee ballots combined with the administrative relaxation of statutory security standards—such as witness and signature verification and other statutory standards and specifications for the application and acceptance of absentee ballots—in distinct violation of both the letter and spirit of prevailing election legislation in each state.

Texas asks the court to prevent these states from using the results of these allegedly unconstitutional elections in selecting electors for the electoral college. Since their state popular elections failed to conform with USC requirements, state legislatures should then either not appoint electors at all, appoint electors themselves independently of the outcomes of their unconstitutional elections, or hold new elections that do not share these defects.

The accompanying brief filed by the State of Texas in support of the suit summarizes the overall argument, including the interest of Texas and other states in bringing the action.

This case presents a question of law: Did Defendant States violate the Electors Clause by taking non-legislative actions to change the election rules that would govern the appointment of presidential electors? Each of these States flagrantly violated the statutes enacted by relevant State legislatures, thereby violating the Electors Clause of Article II, Section 1, Clause 2 of the Constitution. By these unlawful acts, Defendant States have not only tainted the integrity of their own citizens’ votes, but their actions have also debased the votes of citizens in the States that remained loyal to the Constitution.

Beyond this overview, it is fascinating to read the detailed allegations of how officials departed from and contravened state election laws state by state (pp 14–36 of original filing). This appears on first reading to be a strong argument. Although it does mention a long train of allegations of specific fraud and irregularities in these states, the suit does not depend on any of these allegations being established. Instead, it argues at a higher conceptual level that various officials in each state explicitly conducted their elections in ways that violated the USC by not adhering to their own state legislation. This remains the case regardless of any specific incidents of election fraud that may or may not be established to have taken place within these contexts.

That there may have been an unusual prevalence of fraud and irregularity would on this basis then be unsurprising. The specific elements of state election legislation alleged to have been violated had fraud prevention as their main function and intent in each instance. The alleged violations of state election laws all lean in the direction of making fraud easier to accomplish than it would have been under adherence to the respective state election laws as written. It just so happens, moreover, that these non-legislative rule changes consistently operated in practice to benefit one candidate over the others. All of this, Texas argues, undermines the integrity of the election process as such, and with it, public confidence in this process now and in the future.

The filing strikes me as making compelling and well-supported constitutional arguments. It will be interesting to see what the defendants come up with and what the court will do.

New paper: The Bitcoin Block Size Limit, Artificial Scarcity, and Code-Enhanced Public Club Governance

In my October 1 review essay on The Bitcoin Standard, I wrote, “A follow-up paper is planned to expand on some of the issues further, particularly where I have now reframed a perspective suggested in my previous writings.”

And here it is! PDF

Note: The key image for this post is public domain and depicts Jonathan’s Coffee-House, the original site of the London Stock Exchange, mentioned in the paper.

Sound Money Strikes at the Root: A Review Essay on The Bitcoin Standard

1.   The gold standard book on Bitcoin

The Bitcoin Standard: The Decentralized Alternative to Central Banking (2018) by Saifedean Ammous is the gold standard book on Bitcoin. Instead of viewing Bitcoin news in terms of days, week, or even years, it views Bitcoin in the perspective of centuries of monetary history.

In considering this book, I revisited my own economic and legal-theory analyses of Bitcoin, which for the most part cover harmonious, though distinct, territory. The result is a review essay, part book review and part in-depth discussion. A follow-up paper is planned to expand on some of the issues further, particularly where I have now reframed a perspective suggested in my previous writings.

In an unusual, but I think effective, editorial choice, the book’s first 60% is not about Bitcoin, but instead provides essential theoretical and historical background for grasping the scale of Bitcoin’s significance. It walks through the theory and history of money and proto-money collectibles, particularly informed by the Austrian school of economics. A central theme is the role of sound money versus inflationary money in the evolution of societies and cultures, and the wealth and poverty of nations.

Austrian school approaches, in which I had been immersed for years prior to encountering Bitcoin, were the launching point for my writings on the subject, which appeared primarily from 2013–2015 (assembled on my Bitcoin Theory page). For those who do not yet have such a perspective on money—alas, the vast majority—Ammous brings them up to speed in admirable fashion while including details and formulations likely to be useful to veterans as well.

What I immediately considered most intriguing about Bitcoin was its pre-determined monetary policy for an asymptotically declining inflation rate, eventually terminating at zero. It is just such recognition of the centrality of monetary policy to Bitcoin’s importance that Ammous conveys throughout.

I assumed that such should likewise have been apparent to others versed in the Austrian school. That it was not, and that Bitcoin was the target of attacks from hard money advocates, became the launching point for my research. Inflationists and money cranks would obviously hate Bitcoin, but what was preventing so many of those with a pro-hard-money perspective from seeing its potential to become a sound money?

I re-examined economic concepts as grounded in the theory of action in the Austrian tradition (praxeology), such as goods, commodity, scarcity, and rivalness, as well as Mises’s regression theorem and Menger’s evolutionary account of monetary emergence through relative liquidity. I argued that each concept and formulation can be applied independently of any need for a material “base” for the goods in question.

Moreover, Austrian-school accounts of the origins and functions of money could be applied to interpret the historical data on Bitcoin’s early evolution. Bitcoin’s history formed a new free-market monetary origin story, one not hidden by the mists of time, but plainly documented over the course of 2009–2011, as discussed in my late-2013 monograph, On the Origins of Bitcoin: Stages of Monetary Evolution (PDF).

It seemed that historical associations of sound money with material backing were keeping some sound-money advocates from seeing that bitcoin could be a commodity and a hard monetary commodity at that. A commodity contrasts with a more specialized good and is characterized by the full interchangeability of products from different producers. In this case, the producers in question are Bitcoin miners and the coins they produce are fungible rather than distinguished or specialized (see my “Commodity, scarcity, and monetary value theory in light of Bitcoin,” [PDF] (Prices & Markets, 20 Oct 2015)).

The economic meaning of hard is, as Ammous explains, difficult to produce more units of in response to increases in demand (5). What is it that makes a monetary unit resistant to production growth? There are many possibilities. Having a particular chemical composition is but one.

Bitcoin’s inflation-resistance rests on a novel basis, as described in my late-2014 article, “Bitcoin: Magic, fraud, or ‘sufficiently advanced technology’? Yet most Bitcoin critics were not beginning to grasp the layered technical underpinnings of this. They assumed that bitcoins, as digital objects, must be copiable and therefore unreliable. Yet what all the fuss was about was precisely that bitcoin units were the first digital objects that are not copiable in this way. Quite the contrary, they constitute a new class of scarcity, never before seen, which Ammous labels absolute scarcity (177).

Ammous emphasizes stock/flow ratio as a practical comparative measure of monetary hardness (5–6). As demand to hold a unit rises, can its production be profitably increased? And if so, by how much? It is quite difficult to expand production of gold in response to an increase in demand for it. Moreover, since gold is effectively indestructible, its stock has risen over the centuries relative to the flow of annual mine production. This explains gold’s unique superiority as a monetary asset, even to this day.

Yet Bitcoin is an entirely new development in this regard. Its unit production cannot be expanded at all in response to increased demand. Due to its difficulty-adjustment algorithm, the more processing power comes on line, the more is required to extract new coin. This keeps unit production on schedule no matter how many resources are thrown at accelerating it.

Nevertheless, this growing distributed processing po­wer is not wasted; it increases the network’s security by steadily raising the costs of attack (173). The energy and investment that might have been channeled into socially destructive inflation is channeled instead into increased network security, which feeds back into further inflation-resistance. As the unit-production schedule unfolds, bitcoin will in a few short years surpass, and then far exceed, gold at the top of the stock/flow ratio charts (198–99), making it the hardest monetary commodity ever known.

Cash, Ammous, argues, formerly meant not only a tradable bearer instrument but, during the classical gold standard era, a final means of settlement. It referred to physical metal (238). The modern sense of cash as pocket money has misled many into believing that bitcoin, in order to serve as digital “cash,” must be usable for everyday transactions on chain. Instead, Ammous argues that for both technical and economic reasons, on-chain bitcoin’s more potent natural role may well be as a means of settlement, largely, though not exclusively, to underpin far more efficient systems built on it. Such an arrangement would be in keeping with this older sense of the word cash.

Ammous breaks down Carl Menger’s concept of salability, central to the latter’s evolutionary account of monetary emergence, into three components: salability across space, time, and scale. He finds that Bitcoin excels in each area:

With its supply growth rate dropping below that of gold by the year 2025, Bitcoin has the supply restrictions that could make it have considerable demand as a store of value; in other words, it can have salability across time. Its digital nature that makes it easy to safely send worldwide makes it salable in space in a way never seen with other forms of money, while its divisibility into 100,000,000 satoshis makes it salable in scale. (181)

Ammous challenges the popular notion that “blockchain technology” is likely to be useful for much else than decentralized digital cash, that is, Bitcoin (257–72). He examines the “other use cases” advertised for altcoins (non-bitcoin cryptocurrencies) and finds that each suffers from a similar problem—centralized and conventional database methods can or could do most or all of these things more efficiently and at less cost than a block chain. A decentralized block chain is a burdensome and costly design. What it produces must be valuable and unique enough to justify its costs.

With Bitcoin, the block chain arrived as the unexpected solution to a well-defined problem. Many “other use cases” are solutions looking for problems—not to mention windfalls, venture capital, research grants, or social tracking and control leverage. Some useful applications may emerge for private and centralized blockchain-like structures, such as for internal cross border transfers, as some large banks have already begun using, but this is entirely different from decentralized digital cash on a public permissionless network, suitable for use with complete stranger counterparties.

2.   From monetary policy to immutability

Parts of Chapter 10 (217–274) highlight Bitcoin’s incentives for different types of participants, such as the importance of decentralized full node operators independently choosing which software to run, the desire of developers to offer software that will be used, and the incentives for miners to stay on the dominant network. The theme here is that much of the Bitcoin network’s worth, in light of its valuable fixed monetary policy, lies in resistance to consensus-rule changes. Any change requiring a backward-incompatible hard fork to the network must attract sufficient support among relevant parties that enough of them switch in a timely way; otherwise the network could split into incompatible chains.

Cryptocurrencies created after Bitcoin, Ammous argues, suffer here from the outsized presence of founding development teams or other identifiable backers.

Without active management by a team of developers and marketers, no digital currency will attract any attention or capital in a sea of 1,000+ currencies. But with active management, development, and marketing by a team, the currency cannot credibly demonstrate that it is not controlled by these individuals. With a group of developers in control of the majority of coins, processing power, and coding expertise, the currency is practically a centralized currency where the interests of the team dictate its development path. (254)

Today, this even begins to include mega-corporations and states mulling their own initiatives to mimic some of Bitcoin’s peripheral characteristics while omitting its most significant and critical ones. Such projects see the attractions of the cryptocurrency revolution squarely in payment ease or transfer convenience and not in the prospect of a new monetary asset with unprecedented hardness.

Any group of founders and backers, whether states, corporations, or founding teams can lead or promote hard-fork alterations (254–55). For Bitcoin alone, the only corresponding founding figure was always anonymous and is now long absent, having withdrawn in 2010 and never heard from since (251–52). Bitcoin’s large number of software development contributors, node operators, and miners are organizationally and jurisdictionally independent, located worldwide.

This is a key part of Ammous’s central argument with regard to Bitcoin; its value lies in its immutability, meaning that no party is in a position to change its consensus rules (222–27).

The reason that even seemingly innocuous changes to the protocol are extremely hard to carry out is the distributed nature of the network, and the need for many disparate and adversarial parties to agree to changes whose impact they cannot fully understand, while the safety and tried-and-tested familiarity of the status quo remains fully familiar and dependable. Bitcoin’s status quo can be understood as a stable Schelling point, which provides a useful incentive for all participants to stick to it, while the move away from it will always involve a significant risk of loss. (225)

Consensus rule fixity became a bone of contention, most prominently around 2014–2017, amid debate on a series of proposals to increase Bitcoin’s 1MB block size limit. This limit restricts the amount of transaction data that can be added to the chain per block (in effect, per time period, since a new block appears on average every 10 minutes). Like the monetary policy, this is a consensus rule that can only be changed through a backward-incompatible hard fork. Each proposal failed to attract the necessary support. Disputants differed not only on opinions about the height of the limit itself, but also the wisdom and necessity of a hard fork, which is needed to change it (and speaking of Shelling points, Change it to what, exactly? There were many competing proposals).

A major argument in favor of the existing block size limit is that a significant growth in block sizes would raise the cost of operating a full node, reducing their number and making the network more vulnerable to collusion or attack. The more limited the network requirements remain, the more easily wholly independent nodes can operate in separate, unique locations. In total, an estimated 9,500 nodes—including independents along with cloud instances and institutional nodes, are reachable as of this writing. By country, the US and Germany lead, together contributing 25% and 20%, respectively.

The prevailing view in the Bitcoin community is that if the block size limit, by preserving more rather than fewer nodes, tips the balance toward added marginal catastrophe insurance for the system while still keeping it running well enough, this must be given more weight than any non-critical increase in data throughput. This is even more so when other methods exist or are in development for increasing on-chain transaction throughput via increased efficiency and transactional density. The latter refers to any method for squeezing more transactions into the same data (for current examples, see “Taproot-Schnorr Soft Fork” (17 Aug 2019) by Mike Schmidt). Such density-seeking strategies do not entail the trade-off between transaction volume and node burden that a simple increase in data capacity does. Besides increasing on-chain or “Layer 1” density, many options exist for moving transactions off-chain to various “Layer 2” venues. The old saying, “If it ain’t broke, don’t fix it” applies.

And it is here where the precise meanings attached to ‘running well enough’ or ‘ain’t’ broke’ become critical. On this, a conflict of visions came into focus between a future of using the main chain directly as a large-scale payment system (Visa and PayPal competitor) and one of using it as a sound money system (dollar and gold competitor). Each vision suggests different priorities. A transaction capacity deemed suitable to support a digital-gold vision (ain’t broke) may be deemed insufficient to support a mass-payment-system vision (is broke). And higher capacity for the mass-payment-system vision (fixed it) implies lower security for the digital-gold vision (could break it). If these visions are indeed incompatible, which ought to take priority?

Ammous offers compelling arguments for the digital-gold vision and against the mass payments vision. Among these:

Current state-of-the-art technology in payment settlements has already introduced a wide array of options for settling small-scale payments with very little cost. It is likely that Bitcoin’s advantage lies not in competing with these payments for small amounts and over short distances; Bitcoin’s advantage, rather, is that by bringing the finality of cash settlement to the digital world, it has created the fastest method of final settlement of large payments across long distances and national borders. It is when compared to these payments that Bitcoin’s advantages appear most significant. (207)

The invention of Bitcoin has created, from the ground up, a new independent alternative mechanism for international settlement that does not rely on any intermediary and can operate entirely separate from the existing financial infrastructure. (205)

Ammous argues that Bitcoin’s status quo of economic policies, block size limit included, is ideal because it helps protect the most important value for bitcoin as digital gold, the change-resistance of its monetary policy. The functions of higher-volume transacting can be covered through other means. Even if cryptographic substitutes did not gain widespread traction, more traditional banking models could fill the gap.

Bitcoin can be seen as the new emerging reserve currency for online transactions, where the online equivalent of banks will issue Bitcoin-backed tokens to users while keeping their hoard of Bitcoins in cold storage, with each individual being able to audit in real time the holdings of the intermediary, and with online verification and reputation systems able to verify that no inflation is taking place. (206)

The block size limit and the bitcoin unit production schedule must nevertheless still be viewed as distinct phenomena in monetary-theory terms. Placing them together under an argument for the immutability of all of Bitcoin’s consensus rules does not remove this distinction.

Ammous correctly explains that the production of new bitcoin units, as an example of the production of money units, is quite unlike the production of consumer and producer goods and services. Any number of money units, provided sufficiently divisible, will do equally well for a society of money users. That pumping out ever more money units is not better, and is indeed far worse, for a society of money users as a whole is a central insight of the Austrian approach to money.

However, regarding the height of the block size limit, the immediate issue is not the number of money units produced, but the number of transactions that miners can elect to include in a candidate block. Unlike producing more money units, this is a productive service performed in exchange for specific payment. I have described this as the market for on-chain transaction-inclusion services. This exists in concert with a non-market for verification & relay services, which are only compensated indirectly, having no direct pricing mechanism.

In sum, monetary theory, for its part, hands Bitcoin a single-case special justification for having an arbitrary economic limit fixed in code, and this applies to its monetary policy only. This justification derives from a unique peculiarity of money as an economic good, and does not extend, at least not directly, to any other arbitrary economic limit, such as the block size limit.

One can conclude that the block size limit may be defensible on other grounds, but it is not as unmistakably defensible as the unit-supply schedule itself. Ammous spends the bulk of the book setting up his defense of Bitcoin’s supply schedule in particular (arguably the first 70% (Chaps 1–8)), and then in the latter part shifts to a supportive explanation of the all-inclusive inalterability of all of Bitcoin’s consensus rules (222–30), not just that of its money supply rules.

This could be tempered with a finer-grained recognition that other consensus rules do not enjoy the same degree of air-tight justifiability (from a pro-hard-money standpoint, at least) as the money supply rules in particular. This does not make these other rules indefensible, but it does show that that supporting them stands on looser, more derivative ground.

3.   The primacy of sound money over permissionless transacting

Besides Bitcoin’s monetary policy, another of its main attractions is disintermediation, or in the famous phrase from the Bitcoin white paper, the elimination of “trusted third parties.” Bitcoin can be used to transfer value over arbitrary distance without contracting with an intermediary service. It is cash-over-internet.

Some early enthusiasts and promoters seemed to view Bitcoin’s leading contribution as freeing the people for permissionless transacting. A trusted third party is in a position to refuse service based on identity or purpose, reflecting internal corporate policies or jurisdictional prohibitions. Early in Bitcoin’s history, the promise of permissionless transacting fueled the rise of Silk Road and later other Bitcoin-mediated prohibition-resistance marketplaces.

One critique of the digital gold vision for Bitcoin is that increased reliance on off-chain Layer 2 services could recapitulate old-school intermediation, bringing back trusted third parties in new hats, and standing between most ordinary users and Bitcoin’s promise of disintermediation. Instead of end users holding bitcoin (historically, gold coins), they will be limited to using bitcoin substitutes for the most part (historically, paper notes and deposit entries), which could then be inflated far more freely.

However, intermediation in Bitcoin is not of the “standing between” type since nothing forbids end users from employing Layer 1 themselves, either directly or as a means of auditing Layer 2 services, the latter completely unprecedented in the gold case. Moreover, unlike historical gold-based currencies, Bitcoin has no favored legal status. Layer 2 options can only attract users if they provide some service that these users prefer. For example, certain Layer 2 bitcoin substitutes could come to offer privacy, speed, cost, and other advantages over Layer 1 bitcoin. Layer 2 units could overcome their own drawbacks (principally, that of not being on-chain bitcoin) by offering counterbalancing values that give them a net advantage for various applications. In the case of cryptographic substitutes, they can form a direct link to specific on-chain bitcoin units, making their “backing” specific rather than pooled, and therefore easier to audit.

Intermediation as such can be a natural outcome of the hierarchical structure of economic specialization and the division of labor. It is most likely unobjectionable provided that it occurs within a voluntary context, which can make it a benefit rather than uninvited meddling. The natural, emergent hierarchies and structures of the voluntary sector must be carefully distinguished from the compulsory-sector hierarchies that the state nurtures and sustains through force and threats.

Using on-chain bitcoin directly remains permissionless in that the network is open to any node running compatible software. The significance of eliminating trusted third parties persists in that any party can join Layer 1 and interact directly with any other party on it without permission. All that is required—from the standpoint of Bitcoin itself—is suitable hardware, consensus-compatible software, and network connectivity, no permission slips.

However, this in no way implies a certain costlessness of joining the network, and it does not mean that Layer 1 must remain suited to any imagined use at any wished-for cost level.­­ If eventually the typical Layer 1 user were a Layer 2 intermediary or financial institution, this would have been the outcome of a voluntary-sector evolution toward improved performance at global scale. Bitcoin would still be providing a non-inflationary monetary base open to direct access by anyone who valued it sufficiently to join the network. Open entry is not the same as costless entry. And from a market-oriented perspective, it is openness of entry that is critical to competitive health.

This contrasts with the current money and banking system built on nationally and internationally managed fiat money, created and maintained to facilitate the inflation- and debt-financing of the interventionist state and its long follower-train of profiting cronies. Unlike Bitcoin, which is open to all entrants, direct participation in key roles in the conventional money and banking system is restricted to vetted cartel members and well-trained, paid sympathizers.

But a closed system built from the ground up to run on rotten money cannot be fundamentally reformed. An open system built on sound money is capable of reforming itself through continuous improvement in the context of free competition.

Bitcoin could represent a “decentralized alternative to central banking” in that any individual or institution can join without a cartel membership and begin to interact with any other party on the network regardless of geographic location or political jurisdiction. The size and composition of such parties and the uses to which they put Layer 1, for direct use or service provision, would naturally evolve with time and social progress. However, bitcoin’s monetary hardness and direct auditability makes it an unsuitable base for the inflation-pyramiding schemes of conventional banking as we know it.

It is important to recall that banking as such is not inherently corrupt; instead, it is corrupt in that it is operated as a state-orchestrated cartel running on unsound money. Key services that banking offers are something that people want to use.

In the midst of the very common anti-bank rhetoric that is popular these days, particularly in Bitcoin circles, it is easy to forget that deposit banking is a legitimate business which people have demanded for hundreds of years around the world. People have happily paid to have their money stored safely so they only need to carry a small amount on them and face little risk of loss. (237)

Between Bitcoin’s two features of providing sound money and permissionless transacting, the first is of far greater significance, the second more a functional support. Engagement in mutually consensual commercial association in the face of unjust restrictions offers an annoyance to the existing system of rule, but one that is addressable through forensic procedures and totalitarian justice, as several pioneers of bitcoin-mediated prohibition-resistance marketplaces have discovered to their detriment.

Bitcoin has also been touted more generally for its always-on service and borderless convenience for payments and transfers. However, conventional financial systems and services, awakened from incumbent slumber by upstart cryptocurrency competition, can readily improve the speed, availability, and pricing of their own online payment and transfer offerings, and have been doing so.

In contrast, Bitcoin’s unique and durable competitive advantage lies elsewhere—in its unprecedented monetary hardness. A paradigm shift away from fiat-money mediated, politically controlled central banking is of wider-reaching potential impact than either individual permissionless transacting or added convenience. It is a path beyond major systemic drawbacks of the modern nation-state system. The steady heat of a hard money alternative could gradually evaporate the conventional system’s corrupt lifeblood—its ever-depreciating fiat money—the shadowy chief financier of its socially destructive inflation- and debt-ridden practices.

As a bonus, over the longer-term, such a monetary revolution could also aid in getting beyond the conventional system’s primitive meddling in mutually consensual matters, a major driver of interest in permissionless transacting to begin with. In Thoreau’s formulation, “there are a thousand hacking at the branches of evil to one who is striking at the root.” Individual-level permissionless transacting can ultimately only hack at the branches of the modern state’s evils whereas the mere existence of a sound money alternative strikes at their root.

4.   As Bitcoin gradually eats the world of monetary assets…

The Bitcoin Standard makes the case that Bitcoin is not only analogous to the classical gold standard, but in important respects has at least the theoretical potential to be superior to it. For those already versed in hard-money-oriented Austrian-school approaches, as well as those brought up to speed by reading this book, the enormity of this potential contribution to society will stand out. Bitcoin could in the longer term come to fill the most neglected niche of all, sound base money, the production rate of which cannot be increased by any party—private or public, individual or institutional.

Bitcoin can be understood as a sovereign piece of code, because there is no authority outside of it that can control its behavior. Only Bitcoin’s rules control Bitcoin, and the possibility of changing these rules in any substantive way has become extremely impractical as the status-quo bias continues to shape the incentives of everyone involved in the project. (253)

In light of common warnings about how risky Bitcoin is, that it is unproven, that its market price is volatile, that managing it requires specialized knowledge and practice and that access to its units can be lost, there could also be risks to shunning it altogether. What if it succeeds?

Ammous recounts episodes when a money with a superior stock/flow ratio has driven out a money with a lesser one. This includes gold driving out silver (31–33), as well as several more obscure historical cases (16). Each time, those left holding the demonetizing assets—in some cases specific central banks and residents of the corresponding countries—have suffered steady, serious, and permanent wealth losses.

Ammous estimates that, “around the year 2022, Bitcoin’s stock-to-flow ratio will overtake that of gold, and by 2025, it will be around double that of gold and continue to increase quickly into the future while that of gold stays roughly the same (199).” The very strongest of the fiat currencies, the Japanese yen and the Swiss franc, equaled Bitcoin’s stock/flow ratio back in 2017 (198), but Bitcoin has by now surpassed them.

If Bitcoin’s relative stock/flow ratio does indeed help enable it to eat the world of monetary assets, it can take its time enjoying the meal. Major transitions would take time, with twists and turns along the way, and catastrophic risks can never be wholly eliminated. Since this is an all-voluntary system, however, transitions can only proceed along opt-in paths, in which each individual and institution decides at the margins that its next step is likely to be in its own interests.

In the meantime, anyone who has not read The Bitcoin Standard should do so. The highlights above can only indicate some of the key outcomes of a detailed, well-supported presentation. Beginners will be brought up to speed in an engaging fashion, while even those already well-versed in both Austrian economics and Bitcoin are likely to come away with both new details and an integrated, readable narrative that never loses sight of that which is most important and remarkable about Bitcoin, its potential to become a hard monetary unit in a soft age of inflation.

Speaking with one-year-olds and beyond: Age-appropriateness, healthy authority, and social implications

For toddlers, facts and simplicity are key. Facts contrast with judgments and opinions. Simplicity contrasts with being faced with unnecessary choices or even fake “choices” that the child is not actually being invited to make. Too many modern parents and educators, though well-intentioned, speak with very young children in ways that may be unhelpful and unsuitable. After understanding the reasons for this, more helpful communication strategies can be used.

These reasons tie into a larger picture of social difficulties that stem from a troubled relationship with the concepts of both age-appropriateness and authority. A false-choice dichotomy of unhealthy authority versus no authority at all (or authority reserved only for the state), has constricted the space available for the development and practice of healthy authority. Meanwhile, people of all ages have come to be treated in ways unsuitable to their developmental range. We begin with speaking with one-year-olds, and later derive implications for all ages.

Fact and opinion

The very young child, overflowing with curiosity and presence, is the most powerful known learning force. They want to know what they can do by trying to do it. They want to know what to call everyday objects and to know words for the actions they witness and imitate.

The most important linguistic companion to this is the identification of facts and causal relationships that are of interest to the child. What does this look like? The following examples have one-year-olds in mind, but the basic principles also apply in suitable, evolving ways to rising ages.

That’s a dog.

There’s the moon.

You have a bear. You threw the bear down. There he is on the floor.

Look, there’s a ball. You threw that ball. It’s rolling over there.

You’re giving the bear a hug!

Notice that these are statements of fact and identification. They are reassuring in that they conform to observable realities. They are not matters of contention, mystery, or adult whim. The relationship between the observable things and the language used to describe them is largely consistent from day to day. Identification helps make the world, its objects, and the effects of actions take on a consistent and comprehensible shape.

Statements of opinion, in contrast, are things like this:

Oh, you’re such a good thrower.

It’s not right to throw the bear on the ground.

You should throw the ball instead.

Don’t you love the poor bear?

Such statements introduce a layer of verbiage and confusion. What is a “good” throw? What is a good “thrower”? Will a “bad” throw likewise be noted when seen? What are the criteria for distinguishing the two types of throws? What are the ethics of toy animal treatment? How do feelings for the bear relate to the desire to throw something that happens to be in hand?

Compared to stating facts and making concrete observations, stating adult opinions and sharing adult concerns creates a shifting and unfathomable mess of complexity and arbitrariness. It creates a less predictable and comprehensible environment.

Two types of problematic questions

The second major category of linguistic pitfalls concerns asking very young children certain types of questions. There is a good place for questions. This again concerns mainly the identification of facts and relationships. It entails inviting the child to participate by contributing information that they may have or can take steps to discover:

Is there poop in the diaper? (no answer…)

Where is the bear? (search the room…there it is!)

Where is Mike? (peekaboo!)

Such questions should at very young ages be limited to concrete facts and things. Also to be avoided are questions that require more advanced forms of introspection or counterfactual comparison, as well as questions formed in the negative and questions and statements pertaining to abstractions the child could not possibly (yet) comprehend or have any real interest in.

How do you feel about the bear getting thrown down like that?

Don’t you want a clean diaper?

This toy was made in China too. Where was that one made?

Two types of questions in particular should be avoided, each for a distinct reason. The first is invitations to engage in judgments and decisions. The second is fake preference questions, the answer to which the adult is not prepared to respect.

The first type asks the child to step back from the direct experience of acting and learning. It calls on imaginative faculties that will not naturally predominate in consciousness for quite some time and introduces unnecessary decision fatigue.

Do you want to wear the blue pants or the grey ones?

Do you want a banana or an apple?

Would you like to go outside now or stay in?

On reflection, each requires evaluations of non-present alternatives. One has to imagine each alternative based on past experiences, compare the patterns, and then make a forward-looking judgment about what one might prefer in the near future.

These are the types of matters that adults should simply decide. Constantly asking small children to make decisions and judgments places upon them an unnecessary stress and burden to which they are not equipped to easily respond.

Moreover, adults themselves can consider simplifying their own daily decision-making loads by setting themselves up to face fewer such inconsequential choices. For example, Steve Jobs bought a hundred copies of exactly the same sweater and never again had to divert attention to deciding which sweater to wear. One does not have to go to the same extreme, but the principle can be usefully applied. Above all, do not subject small children to the kind of pointless decision fatigue that even adults might consider reducing for themselves.

Whereas a linguistic challenge mentioned earlier was adults speaking in judgments when identifying facts would be more useful; here the adult is trying to get the child to make judgments and decisions when the child is mainly interested in present facts and identifications. Instead:

We’re putting on pants. They’re blue.

Here’s a bite of banana.

Second, this brings us to the worst offender of all—the fake question. Here, even though the adult has already decided that, for example, it is time to go outside, the adult nevertheless introduces the topic this way:

Would you like to go outside now?

If the child says yes, this kind of works, but what if they say no? Since the adult was already committed to going outside, they are left in the awkward position of arguing that it would actually be better to go outside—in their esteemed and superior adult opinion. The child protests. Their desire in the matter, which they had just been asked about and therefore had to reflect on, bring to mind, commit to, and express, has been summarily ignored and disrespected anyway—even after all that work!

Far better to just make a statement in a factual form about the current phase in the established routine:

It’s time to go outside.

Simultaneously, action should be taken, such as to get shoes and coats. “Start a movement” of going outside. Preferably, this will be at the same time every day as part of a regular rhythm and sequence (on which more below). There never arises any question of going outside. It just is so, like the sun rising (exceptions for blizzards, hurricanes, etc.).

Adults should strictly avoid asking fake preference questions, even more so as ages rise. Such can be identified by whether the adult is prepared to respect whatever the answer is. If not, the adult has no business asking what they should be stating.

Present-oriented language

Announcing lists of multi-step sequences should likewise be avoided or at least minimized. The very young child is in the present.

I know you want to go outside, but we can’t yet because first we have to change your diaper and then get dressed…[blah, blah, blah]

Instead, strive to begin the process with action and identify the steps as they are taking place.

[Getting diaper, shoes, etc.]: It’s time to go outside…Now it’s time to change your diaper…We’re taking the old one off… and putting the new one on…Now its time to put on shoes. One shoe. Another shoe! Now, we are going outside [actually going outside]

Both examples speak of a sequence of events. The distinction is that in the second, the language is used while the events are unfolding, to identify them as they do. Abstracting a sequence of events that is not taking place is a separate process that the child will naturally and easily engage in later. What supports this later development now is identifying present facts and actions as they occur.

Doing so reinforces contact between language and reality. On this, later development and complexity can be built soundly. People who become accustomed to vague links between language and reality more easily buy into every sort of scam and bad idea later in life.

That said, a simple label can introduce a larger process that is about to commence, such as, “it’s time to go outside” or “we are going to grandma and grandpa’s house.” This provides a quick orientation and begins to generate images while most speaking is focused on each step as it unfolds. “Go outside” and “grandma and grandpa’s house” are quick overview labels, like titles to a book one is about to open. They are not the whole text.

Expressed preferences and daily structure

If the child expresses a preference without having been asked, this can be acknowledged, even if the preference is not acted on. If the content of the preference is fitting, it can be granted. The blue pants instead of the grey ones can indeed be selected. However, the preference in this case comes from the child’s initiative; it has not been elicited through an unnecessary preference question.

Weightier matters, such as the basic schedule of daily milestones, should not be easily changed due to such expressions. Let us say it is time to go outside and the child indicates that they want to stay in instead (typically taking the form of some inside activity in particular). The adult determines from experience that it is important to the flow of the day to go out at this time. Doing so assures, for example, that the child can take a nap easily later. The adult also realizes from experience that keeping this schedule consistent from day to day results in more reliable sleeping times. These are causal connections over extended time that the child is not yet able to apprehend. Their agent is positioned to do it for them.

The offered expression of preference should be acknowledged, but not overemphasized or dwelled on. The expression is a fact. It is real. It is not all-determining.

Insert a natural pause. In a subtle sense, they are staying inside then, if only for another moment. Then, ideally from a different position in the room and without saying “but,” add as a new thought:

It’s time to get shoes on [Moving toward coats and shoes to go outside.]

Both acknowledging the preference and noting the current phase of the daily schedule are identifications rather than judgments. In contrast to this is a retort such as:

You want to play inside, but it’s time to go outside now [perhaps spoken with a conflict-oriented attitude]

This is likely to have a quite different effect. Making these two facts into one statement and placing “but” between them carries an implication of superiority: “my determination and enforcement of the schedule stands above your mere preference.”

The suggested alternative is to identify two separate facts: 1) the child expressed that they wanted to stay in and 2) this is when we go outside and we are doing so. These are two distinct real things each allowed their own space.

The child is more likely to come around and sooner enjoy going outside if these facts are given separate recognition and suitable weight. In contrast, if their preference has been ignored or judged unimportant next to the schedule through the juxtaposition of a “but” (possibly with some attitude thrown in), it is likely to take them longer to move on.

If this whole sequence was preceded by a fake question asking if they wanted to go outside, to which they said “no,” yet the adult nevertheless insisted, having never intended to respect a no answer to begin with—well, that is just a by-invitation slow-motion train wreck.

What ties the foregoing observations together is respect for facts and reality, both of “interior” experience, preference, and meaning and “exterior” facts, actions, and communications. Assumed in the background to this discussion is the healthy authority to establish and implement a suitable daily structure, which we discuss next.

Adaptive structure, benevolent authority, and rising ages

The competent adults should establish appropriate boundaries, environments, rhythms, and rules on behalf of children who cannot yet do so themselves. These structures should be brought into practice in a consistent and comprehensible way and adapted as needed with new experience and new age ranges.

For very young children, these structures and rhythms should be treated nearly as given realities, not merely the current preferences and whims of the adults. The structure is something that has been created and exists next to both the parent and the child. It is not the current “will” of the child versus the current “will” of the parent. It is not the parent’s structure versus the child. It is the structure that has been created and exists to aid the functioning of the parent-child system. It helps both have good days. Structure should be created and then adapted as needed to assure that it continues to fit and serve. It can then function as a consistent, objective guide and signpost for all involved.

What is behind the modern tendencies in speaking with very young children in the ways described in the previous sections? Why speak in opinions rather than describe facts? Why invite children to make decisions that are naturally better made by adults? Why “ask” fake questions to which “no” is not to be taken for an answer? Finally, what overarching concept explains both the root of these non-optimal practices and the commonalities of the practices suggested to replace them?

Making decisions for children about food and clothing, setting and sticking to a regular schedule for the day, and even making undiluted factual statements rather than merely stating opinions, each entails the exercise and embodiment of benevolent authority. The parent or caregiver is exercising authority in an agency relationship, acting on behalf of the child, substituting the (presumably) better judgment of the adult for the poorly or undeveloped judgment of the child.

Authority, however, has in modern times become heavily associated with abusive authority. In this view, the “system” serves itself and certain parties, sometimes at the expense of those in it. The enforcers of the system are exercising non-benevolent authority in forcing it upon others whom it does not necessarily serve.

There are profound senses in which this is indeed actually taking place, and it is particularly egregious with respect to children at older ages and teenagers. The modern compulsory “education” system was conceived and launched explicitly as a way to produce uniform (and ultimately uniformed), obedient citizens to serve in and support the Kaiser’s army. This approach then spread around the world as states began to impose themselves into the domain of childhood learning and training.

This “one-size-fits-all” approach (more accurately, “all must be compressed to fit one size”) supersedes and suppresses self-direction and the discovery and pursuit of unique life narratives. It is no wonder that young adults struggle with what to do with their lives when they have just finished up to two decades of intensive training in ignoring and sublimating what they want to do with their lives in the face of persistent demands and requirements imposed on them from the outside. Subjecting human children to a constant diet of rote recitation of standardized content and moving to the sounding of bells—the native domains of AI-driven robots and domesticated herd animals, respectively—undermines and suppresses the curiosity and involvement that naturally drives children to want to learn new knowledge and perfect new skills under their own motive direction and on their own timing. Many old-fashioned approaches to “discipline” have likewise often functioned to serve the interests of parties other than children themselves.

It may be argued that school-bell ringing also creates a daily structure, after all. However, the difference is that such a structure cannot be adapted when it is not working for individuals. In a parent/child and other smaller-scale context, the schedule exists as a fairly consistent milestone marker, but one subject to adjustment and refinement to make it work better for those involved. This does not translate well to a mass scale at which one can too easily end up with a daily schedule that works poorly for almost everyone!

The “conservative” (in the negative sense) and bureaucratic conceptions of authority and structure have offered some useful ordering mixed with unhealthy and unsupportive elements. The “liberal” backlash has tended toward a mistrust and rejection of authority, including legitimate and helpful natural authority.

However, wholesale rejection of natural authority results in the likewise unhealthy desire to attempt to treat children as if they are quasi-“equal” miniature adults. One mark of this is the tendency to offload choices onto small children by asking preference questions that do not match their developmental range. This enables the adult to avoid feeling that they are exercising authority, something they have come to view as inherently negative, or at least unpleasant, and probably patriarchal.

Age-appropriateness for all ages

A third way is needed and its outlines are clear. It consists of defining and practicing healthy natural authority. In this approach, parents and caregivers act on behalf of children (and themselves) to make decisions and develop, adapt, and implement appropriate daily schedules.

It should be emphasized that such structure also has to work for the adults. This is in the same sense that oxygen masks on depressurized planes are to be placed first on oneself before helping others. As benevolent agent and representative of the child, the parent or caregiver strives to provide those decisions and structures that are actually appropriate and helpful. The structure is an aid to the parent-child system, not a means of showing a dominant power position. The latter is indeed what unhealthy authority looks like.

As children age, agents must hand over the “reigns” of benevolent agency to the ones who had been represented, step-by-step, as the requisite interests and capabilities are demonstrated. If the agency authority has been benevolent and actually helpful, the self-control and responsibility the growing person gradually acquires may also take up some of that flavor.

The failure of society, including both schools and parents, to proceed with this handing-over process in a sufficiently timely and age-suitable way seems to contribute to particularly unhealthy dynamics among those in their teens. In some ways they are treated too much like premature adults, while in others they are treated too much like overgrown toddlers. Finally, the “nanny state” likewise treats adults themselves as overgrown toddlers, bribing and indoctrinating them into becoming and remaining sickly dependent fans and worshipers of the parental state. Thus, children are treated too much like premature adults, adults are treated too much like overgrown toddlers, and those poor souls, “teenagers,” are treated with a worst-case combination of both.

A different approach is urgently needed: treat each age of person in a way appropriate to the phases of development they are actually in (plural “phases” because there are different “lines” of development, each of which proceeds at different paces person by person). Appropriate contexts for the exercise of healthy natural authority and benevolent representation must be identified and practiced with respect for evolving individual development. This applies starting at the beginning of life and continues from there.

Why can't I see that Bitcoin Cash is a scam?

After posting recently that the Bitcoin Cash price was up 10x from its all-time low in dollar terms (it has since set an ATH 14.7x its all-time low), a respondent was puzzled as to why I did not know by now that Bitcoin Cash is a scam.

I replied with the question, “What is the scam?” I read the response and took the time to parse it into its several distinct claims. I addressed each, quoting from my existing publications as appropriate. Such claims are often rhetorically dense, combining multiple overlapping assertions in just a few short lines. This makes it useful to unpack all of the content and distinct issues before starting. Since these are all commonly seen, I thought this might be of wider interest.

Here are the claims as I parsed them:

1. Bitcoin Cash is a scam (and why don’t I see that?)
2. The reply claimed that it was a scam because (presumably, for example):
3. Bitcoin.com sold Bitcoin Cash (presumably, it should only have sold Bitcoin because that is its domain name and doing otherwise might confuse users)
4. Bitcoin Cash is an altcoin (which is both bad and makes it clearly not Bitcoin).
5. Bitcoin Cash favors its payment system function over its store of value function.
6. Bitcoin Cash cannot compete with centralized payment systems.
7. The world needs sound money more than another payment system.

Here are my responses.

1&2) The word scam is 1960s slang for fraud. Fraud is defined as: “a) wrongful or criminal deception intended to result in financial or personal gain,  b) a person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities.”

None of the instances provided show such a thing. Bitcoin Cash modified the rules of the BTC chain as of 1 August 2017 by raising its block size limit and not recognizing the then-recent SegWit change. This resulted in a planned chain split. This was all clearly stated by those doing it. What was actually done was to carry out precisely the declared purpose and content of the project.

3) The Bitcoin Cash blockchain and the various developers of its peer-to-peer software implementations must be distinguished from the various companies, exchanges, and wallet services that support Bitcoin Cash. A lot of people have spent a great many years correcting this same error with regard to BTC itself. The claim that "bcash [sic] is a scam" is structurally identical to the claims of Bitcoin skeptics over the years that "bitcoin is a scam," and shares many of the same errors of conflation and quality of thought-process as the original, familiar claim.

If a wallet did present its Bitcoin Cash related services in a way that actually confused users as to which chain they were buying or using, that would be a problem. The wallet services that I have looked at have each gone out of their way to warn and remind customers that BTC and BCH are separate chains and not to confuse them, because this could result in losses for their customers. If a particular company sold one coin claiming that it was another coin, that would indeed be fraud on the part of that company, subject to criminal prosecution for fraud under existing positive law. Even if any such actual fraud did happen in some specified case, however, such events would be irrelevant to whether the BCH peer-to-peer system itself "is" a scam, which is the claim under consideration.

The various developers of BCH-supporting peer-to-peer software created a clean split from the BTC chain with replay protection and a distinct name, code, and logo. I have seen no divergence that could be described as "fraudulent" between claims about BCH and what it actually is. Overly enthusiastic, perhaps. However, this degree of congruence between description and reality appears higher for proponents than for critics. For an actual fraud, this should be the reverse.

Regarding the “altcoin” charge (4), I set out the following initial viewpoint on August 5, days after the chain split:

The minimum requirement for a process to be called evolutionary is descent with modification. Thus far, Bitcoin has gradually evolved as a single chain with modifications to its software. This split, in contrast, is Bitcoin’s first speciation event. Both BTC and BCH build on and carry forward the Bitcoin chain in a valid unbroken lineage of blocks tracing back to the genesis block.

The best chain in Bitcoin is defined as a chain of valid blocks with the greatest accumulated proof-of-work difficulty. In this model, the validity test comes first, followed by the total difficulty assessment. The software variants behind each chain have recently implemented certain substantial rule changes that are not now recognized as valid on the other chain. The BTC chain, for example, does not recognize the BCH chain’s modified block size limit, and the BCH chain omits SegWit, which recently activated on the BTC chain. Bitcoin block history diverged after block #478558, which is the last “common ancestor” that the two chains share.

The term “altcoins” has been used to denote cryptocurrencies that are not Bitcoin. Both of these chains, however, are valid Bitcoin chains as defined above. From this standpoint, the commonly expressed opinion that BCH is a new altcoin may be viewed as a use of language for rhetorical and emotional, rather than cognitive and elucidative, functions. Sharing almost all specifications and over eight years of transaction history, each is far more Bitcoin than either is altcoin…

Proponents of each chain will naturally want to claim the banner of “true” succession, much as most religious sub-sects story themselves alone as the one truest representative of the ancient founder’s original teachings (rarely acknowledging the odd coincidence that all of the other sub-sects likewise tell just such a story about themselves).

5) Generally, I find this a false dichotomy. “Store of value” is a confused quasi-economic populist idea. And there are actually three separate issues: medium of exchange, payment system, and “store of value.” As for the first and the last, I wrote on October 11:

A medium of exchange use always takes place across time and involves addressing the inherent risk and uncertainty of the future. The variables under discussion are therefore the relative amounts held, the duration of holding, and the increments of future spending of the medium of exchange. In contrast, the idea of an alleged “store of value” use often employed in this debate as if it were a contrast to a medium of exchange use is imprecise and impressionistic. Just as money does not “measure” value, as Mises emphasized, but is rather exchanged for goods at some indefinite future time, “value” cannot be “stored,” as if it were a certain amount of food. This “store of value” idea is more a weak intuitive analogy than a rigorous economic concept. Underneath this illusion, there are only intertemporal exchanges that take place over different time scales and in different amounts.

As for payment systems, 6) if Bitcoin Cash “cannot compete against centralized payment systems,” then it will fail. Yet a failed endeavor is not automatically to be considered a fraudulent one. Most entrepreneurial projects fail. Their proponents were shown to be mistaken in their beliefs about future market trends. I have also argued that such competition must include reference to what I believe is another very significant value, which I described on October 11:

Bitcoin enables people to transact without third-party intermediation. Let us call it “permissionless transacting.” Every other kind of remote transacting requires some third-party facilitation, often by a bank. But the position of facilitator comes with the ability to refuse to facilitate, whether through corporate policy or because authorities order it. It also comes with the ability to track and create a permanent record of spending, including dates, parties, places, and amounts, destroying privacy.

With Bitcoin, states can certainly take steps to outlaw certain types of transactions, but unlike with banking systems, authorities cannot block transactions to begin with. They can only seek to prosecute criminalized acts after they are committed. In societies that purport to respect due process and the rule of law, this happens to be all that such authorities are supposed to be doing anyway.

7) The world needs sound money. Absolutely it does. This is Bitcoin's greatest potential contribution. However, since money is the most commonly used medium of exchange and a unit of account (economic calculation), it could not possibly become "money," sound or otherwise, without effective, available methods of transferring it. Payment systems that provide “permissionless transacting,” as just described, are also potentially quite valuable. Systems that combine both at the same time to varying degrees would be extremely valuable.

BTC and BCH chains and respective teams have diverged across several issues that relate to how best to actually accomplish such valuable objectives, with what steps, taken in which order of priority and on what time scales.

As I argued on August 5, it is probably to the net benefit of pre-fork BTC holders to allow these differing visions to progress along their respective paths and then see where each leads in a practical evolutionary process:

In contrast to action, speculation and modeling are far more subject to partiality, bias, and social and financial pressures in the selection, construction, and interpretation of models. Action can supplement or partly displace hot air. What will happen with SegWit? Watch and learn. What will happen on a live network with a higher protocol block size limit? Watch and learn. This opportunity for the addition of progressive sequences of reality checks on the respective chains might be positive in itself. The “test” this represents is highly imperfect, as discussed below, but is still probably better than unmitigated talk.

Barbell and beef experiments—Lessons and customizations

For the self-made lab rat, little is more fascinating than running spontaneous self-experiments to find ways to increase effectiveness, especially if it involves crushing at least some ill-founded conventional assumptions in the process—preferably multiple ones at a time.

While readers more often hear about my research into legal theory or bitcoin monetary economics, I do post an occasional entry on health (see my grand unified theory of evolutionary health). What follows is an update on the current state of my “barbells and beef” activities, which fill out the Nakamoto Institute-declared maximalist trinity of “bitcoin, barbells, and beef.” The emphasis this time is somewhat more slanted toward barbells, but beef is not wholly neglected—as it should never be.

I have worked with different weight-lifting systems for some years, starting only later in life, but I finally came across one, on the recommendation of Saifedean Ammous, that makes the most sense to me, feels best, and with which I am having the most success. This is the approach formalized by Mark Rippetoe in his books Starting Strength and Practical Programming for Strength Training.

The last thing I had tried was based on Body by Science by Doug McGuff. I ultimately found this program a miserable one to experience. I just felt bad doing it and didn’t want to continue. In contrast to McGuff’s system, Rippetoe explains, convincingly I believe, the superiority of natural barbell movements requiring whole-body integration and weight-bearing and practical balance, over isolated machine work. In addition, the idea of pushing reps to failure is not a very productive one and I felt it created a dismal participant experience of exhaustion.

I was fortunate to have the opportunity to set up two 90-minute private lessons in June with Jeremy Tully, a certified Starting Strength coach at Bay Strength in Oakland, California. This was invaluable. Even though I believe I am relatively good at self-teaching from books and videos, the coaching still improved my form a great deal on all four basic lifts. This is a real savior as the weights gradually increase, for it is form above all that prevents injury and makes the lifts more ergonomically effective in terms of load physics.

What I find motivating about Rippetoe’s approach is that the workouts are largely the same each time, while the amount of weight lifted increases. Adding a similar small amount of weight each session sets up what is called a linear progression. This helps “gamify” the program by making progress objectively obvious, consistent, and easy to track.

Great on lifts; get diet advice elsewhere

One of the infamous problems with Rippetoe’s system is not its weight-lifting advice, but its dietary advice. The latter, which includes a gallon of milk a day, has often resulted in some adherents gaining weight that is NOT all lean.

Instead of this, I have been doing a different type of experiment in parallel since mid-September. I joined the “nequalsmany” human carnivore study, which has launched a new way for individual self-experimenters to coordinate their research and aggregate their data from similar programs. Dr. Shawn Baker has been instrumental in helping to organize and promote this. I have been on the program for the past 68 days, but I had already mostly transitioned onto it in the weeks before starting officially. During this time, I have eaten basically only meat and drank only water. Those interested in learning more about this strategy should go and read everything ever written by L. Amber O'Hearn at ketotic.org. There, that was easy.

I have lately begun to make a few exceptions due to some issues having to do with an unusual condition called histamine intolerance (speaking of that link, also go and read everything by Georgia Ede at diagnosisdiet.com). This condition is essentially an often-middle-age-onset sensitivity to foods that are aged, animal foods prominent among them. So I have to do a lot of extra work in relation to conventional supply chains to try to get the freshest possible meats. Even so, to help further mitigate the effects, I have recently added some dairy products, which do seem to help with my unusual symptoms, but I have nevertheless eaten perhaps 95% meat during the past two and a half months, the rest, only recently, being some lower-histamine cheeses and high-fat Greek yogurt. In other words, no plant foods in sight, and certainly no Rippetoe-esque milk gallons.

Provisional results

As many others before me have reported after successfully transitioning to a carnivorous diet, I feel better and more effective than ever, sleep better, and have lost some middle-aged excess around the waist. My natural concentration is now such that I should use a break timer because otherwise I can work for five or six hours or more at a sitting without noticing or looking up. This was NOT the case on previous eating strategies. In my bad old carb-eating days, I would start to think of a snack break after 90 minutes or so. Now, I eat once in the morning and literally have no thought of food again for approximately seven–nine hours, at which point I eat a second time.

Moving on to more quantitative results, with the combination of these two programs, my overall body weight has remained about the same for the past two–three months, though it is down slightly. However, since the beginning of September, the weights I have been lifting (for five-rep sets) have increased by a combined average of 17%, comprising 24% for one basic barbell exercise and 16% each for the other three. Thus, while my body weight has remained essentially stable, my strength has increased 17%. This represents a substantial increase in power/weight ratio, one of the most important variables in a great many physical endeavors.

Rippetoe’s program is by no means a “body-building” system. Such systems use quite different training methods, for example, far higher repetitions per set and more isolation exercises for the main purpose of gaining visible, though not especially efficient, lean mass. Nevertheless, for a strength program, too, some lean tissue has to be built as one of several types of physiological supports for the capability gains.

This means that my body composition has improved, with fat lost somewhat more than offsetting lean gained. As a percentage of body weight, my barbell weights have risen, slowly and steadily from early September through mid-November. The pace of increase should also be understood to reflect an age in the mid-forties as opposed to, say, the mid-twenties.

Program customizations

I have made a few tweaks to the basic Starting Strength program with time.

The basic initial program looks about like this (5x3 = 5 repetitions x 3 sets):

A Day: Squat 5x3, Press 5x3, Deadlift 5x1

B Day: Squat 5x3, Bench 5x3, Deadlift 5x1

(The B Day drops the deadlift for other exercises before long)

One–two recovery days in between, mostly one.

The most common outside criticism of this program is what is said to be an overemphasis on lower-body work over upper, according to Jose Nino, who knows his way around different programming systems. So my first modification based on this observation was to drop the squat from every workout, placing it only on alternate workouts, just like all the other exercises. To do so, after some trial and error, I eventually came up with this:

A Day: Squat 5x3, Bench 5x3

B Day: Press 5x3, Deadlift 5x1, support exercises

One–two recovery days in between, mostly two.

This places one upper-body and one lower-body/back exercise on each day. This went on for quite some time, I was happy doing it, it didn’t take a huge amount of time (roughly 60 minutes per workout including warm-up sets), and progress continued. I put in an occasional extra recovery day at times such that the workouts averaged two–three times a week.

My next, very recent, program customization has been somewhat more daring in its departure from standard programs. After reading Practical Programming, I was struck by all the added complications in intermediate programming, except for the deadlift, which just went on its merry way linearly progressing at one work-set a week!

So I thought, Why not try something more in that direction with the other lifts too? That would be much simpler and easier. Laziness is the mother of invention.

My latest workout combines more lifts onto one day, but with just one work set for each lift. This makes it possible to hit each of these four lifts more often while going to the gym less often. This also enables dropping the number of warm-up sets for later exercises from four to three since the lifter is already warm from the previous exercises and need only revisit the form under a few different weights before proceeding with the main-event set.

Dropping to one set might also keep the linear progression going longer. If any theme emerged from Practical Programming, it is to keep the linear progression running as long as possible before moving to intermediate programming. And if any aspect of the linear progression rationale was emphasized above all, it was putting more weight on the bar, slowly but steadily, from each workout to the next for as long as possible within the linear model.

This latest customization looks like this (plus warm-up sets):

A Day: Press 5x1, Squat 5x1, Bench 5x1, Deadlift 5x1

B Day: Press 5x1, Squat 5x1, Bench 5x1, support exercises: 1x AMRAP pull-ups, dips, and/or weighted back extensions

Two recovery days in between.

This is still quite new, so I’m going to have to see how it fares over the coming weeks.

Facing up to diminishing marginal utility and rising marginal cost

The economist at the gym sees diminishing gains and rising production costs. Image from the Cover of Practical Programming for Strength Training by Mark Rippetoe and Andy Baker.

Much of the weight-lifting literature, including Rippetoe’s, seems to assume the goal of indefinitely increasing strength further, and then pushes right on to the question of how to do this. But the meddling economist must interject. “More is better” does not reflect the marginal character of both costs and benefits.

As Rippetoe explains, as strength increases, more training time, and increasingly complex training methods, are required for additional gains. The law of diminishing marginal utility shows that each additional gain will be less useful for health and function than each previous gain was. At the same time, each such marginal gain comes at a higher and higher cost in training time and complexity. If narrower and less valuable gains are coming at an ever higher cost of production, it should make sense to find a plateau at some reasonable amount of invested time and effort. This is so unless, of course, one does have a more specific goal of pushing the outer limits of personal capability, such as for competition.

I suspect that I will be happy to plateau with these lifts on a simple advanced novice program and then discover natural maintenance weights at which there is neither further progress nor regression. This should enable improved capability while avoiding all the additional time and effort needed to eek out diminishing added gains. The results should cover most of the health and function benefits with minimal effort.

What I am curious about now is what lifted-weight levels this relatively simple customized program will end up plateauing at. At this point, the weights that should be increasing—the ones on the bar—are still doing so, and the weight that should not be increasing—the one on the morning scale—is either stationary or edging down. Both are happening together, a provisional success for this self-made lab rat.

P.S. A few lifting-related tips and tricks

1) Since most conventional commercial gyms do not have fractional weight plates, I ordered some through Amazon and take them to the gym with me each time (1kg, 0.5kg and 0.25kg plates so far).

2) Warm-up sets are important. My own customized warm-up sets, except for deadlift, now follow the pattern: 1) Empty bar 5x, 2) 40% of work weight 5x, 3) 60% of work weight 3x, and 4) 80% of work weight 2x.

3) I use the app Strong to track workouts and progress. The Starting Strength app worked fine to start with, but only implements the official program and does not allow for customization.

4) I ordered some Nike weight-lifting shoes and do like them. Some people swear by socks or Five Fingers, but socks at least are technically against commercial gym rules, though some people slip off their shoes anyway.

5) My favorite hack of all follows from the fact that many conventional commercial gyms ban the use of chalk for improved grip. Instead, one can take the small paper towels the gym provides to wipe down equipment and wrap them around the bar, one under each hand. This creates a solid grip for the deadlift without chalk.

6) I ordered up some Captains of Crush grippers for home grip training on non-barbell days.

[UPDATE 29 December 2017]: Not long after this post, I started the 5/3/1 program. Having completed the first four-week cycle, I am a big fan of this program. Progress has accelerated without having to spend a lot of time. Using the 5/3/1 Strength app now automates all the percent weight calculations, which is the only potentially complex part. I recommend reading the 5/3/1 book and this article. Wendler specifically addresses trying to only do one big set without more volume at lower weights, reminiscent of what I was about to try at the end of the above post. He mentioned in the just-linked article that he did actually try that and it did not work.]

Interview: Bitcoin, blockchains, and economic theory

Dr. Andreas Tiedke, a businessperson, attorney, and author, asked me some questions about Bitcoin for the Mises Institute of Germany (misesde.org) community. The interview covers some fundamental issues in understanding how bitcoin works as well as observations on current issues. This was conducted first in English, which is below. My German did prove sufficient to read Dr. Tiedke's resulting translation, published here. Well done!

Image: Tony Lozano.

AT: Do you know who Satoshi Nakamoto, the alleged inventor of Bitcoin, is? Do you think it is really Craig Steven Wright?

KG: Satoshi remained anonymous with great care, most likely for good reasons. His invention could be quite disruptive. He may also control a million or more bitcoins (and now a million BCH as well) from the early days of mining to get the network on its feet. This currently has a potential market value of several billion euros. These coins have never been moved. I have seen no evidence that leads me to believe he has changed his mind on anonymity.

AT: There is a legend about an early offer to deliver pizza for 10,000 bitcoins. Do you know whether it is true? The pizza baker must now be a millionaire (about 40 million euros)!

KG: Someone offered 10,000 BTC on a mailing list to anyone who would deliver pizza to him. Someone took him up and ordered pizza from a delivery place near the asker using a credit card, doing so from another country. The pizza buyer received the bitcoins, the asker received the pizza, and the pizza delivery place received only an ordinary credit card payment. Technically then, the pizza served as an intermediary for exchanging bitcoin for the credit card payment, as bitcoin could not be used at that time to buy the pizza directly. Nevertheless, this became a milestone in people’s minds in which Bitcoin interfaced with “the real economy.”

For monetary theory, it is important to understand that for Bitcoin’s first several months of existence—nearly a year—the tradable “bitcoin” units had no market value. It was just a technical experiment. Only later did the tradable units begin to gradually gain a market value.

AT: Some believe that the blockchain has two main disadvantages: First, transactions cannot be anonymous because every transaction is stored. Second, it will become too big in the future, also because every transaction is stored. Do they have a point?

KG: All transactions are anonymous in principle in that they lack any identifying information on persons or organizations. This contrasts with banking systems in which accounts must be associated with identities—except for the old Swiss numbered accounts. There are no accounts in Bitcoin itself, only addresses and transactions. New valid addresses can be generated from scratch anywhere, even using dice.

That said, Bitcoin’s blockchain is public and it is possible to “connect the dots” to uncover identities behind transactions. Each wallet has different privacy characteristics and there are privacy best practices, such as always using a new address for receiving.

An “evolutionary arms race” prevails between privacy features and blockchain analytics. The blockchain provides a permanent record of all that has occurred on it, so analysts can just keep going over all this data at their leisure to find associations. On the other hand, several development projects aim at improving privacy. Payment codes, for example, add a layer that enables payments to be made without revealing the underlying address. For more on the privacy characteristics of current wallets, see the Open Bitcoin Privacy Project.

As to whether a given blockchain would become “too big,” that is a subjective assessment. Too big to whom and for what? Generally, the costs of data storage, processing power, and bandwidth all plummet year after year, and developers are also working hard to revise software such that it makes more efficient use of given resources. These are all important contexts for considering this.

AT: What is bitcoin in your opinion? Is it money or an asset, a capital good?

KG: This is still a challenging issue. The best starting point is to say that bitcoin is something entirely new, never seen before. As we try to understand it using the terminology of economics or law, for example, those concepts themselves have to be questioned in an interactive process. Beyond economics, I also used this approach in a short book addressing the relationship between bitcoin and property rights theory. So my approach is not only “What is bitcoin?” But also: “Do our theoretical concepts need some refining in light of bitcoin?” The alternative is a tendency to pretend to force bitcoin into some existing box into which it does not actually fit.

Another useful principle to apply was one emphasized in the work of Ludwig von Mises—economic concepts have to do with the analysis of human action. So in looking at Bitcoin, I have emphasized that it is critical to distinguish the technical “layer” from the economic one. For example, Bitcoin existed as a technical system for nearly a year before its tradable units gained any market value. And it was nearly two years before it gained any appreciable use in the buying and selling of goods. So clearly these economic valuations emerged on top of what was already there, which was this technical layer. That means people began to figure out that they could begin to make certain economic uses out of this technical thing that was already running. Exchange values and trading venues gradually co-emerged.

I argued here that bitcoin gained market value for use as a medium of exchange, which means an economic good demanded not for its own sake, but to be held and exchanged for other goods or services at some indeterminate later time. Initial uses of the units before it gained any exchange value were extremely thin and require some analysis to even identify: for example, being valued as a collectible item, or as a by-product or symbol of participation in an interesting software project, a researcher plaything, in the earliest days.

Some have come to view bitcoin today as more of an asset. Rather than cash to use for day-to-day transactions, it is more a larger-value vehicle held in reserve. Of course, different people have used it in both ways and the same people also use it in both ways at different times. Both uses are possible so long as it maintains a positive exchange value and some reasonable liquidity. The value of the supply being unchangeable can overcome some degree of other inconveniences.

However, these categories are not exclusive, but on a continuum. A medium of exchange use always takes place across time and involves addressing the inherent risk and uncertainty of the future. The variables under discussion are therefore the relative amounts held, the duration of holding, and the increments of future spending of the medium of exchange. In contrast, the idea of an alleged “store of value” use often used in this debate as if it were a contrast to a medium of exchange use is imprecise and impressionistic. Just as money does not “measure” value, as Mises emphasized, but is rather exchanged for goods at some indefinite future time, “value” cannot be “stored,” as if it were a certain amount of food. This “store of value” idea is more a weak intuitive analogy than a rigorous economic concept. Underneath this illusion, there are only intertemporal exchanges that take place over different time scales and in different amounts.

AT: Why the division of Bitcoin and Bitcoin Cash?

KG: The BTC/BCH chain split was one outcome of a disagreement over a protocol limitation on the maximum size of each block added to the chain. I have written about political-economic considerations on the block size limit here, as well as a follow-up series addressing common criticisms starting here.

The “cash” side emphasizes that it is important for people to be able to transact in bitcoin without too much difficulty, and that this usability is an important component of its value. The “digital gold” side emphasizes the idea that such convenience is not especially important compared to a secure vehicle for long-term savings—adding that anyway, promised “layer 2” transacting options should supply these additional practical needs in the future, still denominated in on-chain bitcoin. A widespread belief underlying the conflict is that these are somehow contradictory visions rather than complementary ones.

AT: After the recent sharp rise in the bitcoin exchange rate, some people now warn against further investing in bitcoin and some even say this could be compared to the tulip mania in 17th century Holland. Your thoughts on this?

KG: This is exactly what the same people always say, year after year, and Bitcoin is still going strong, closing in on nine years with basically no downtime. I first came across this argument in spring 2013 in the run-up to about $250, but apparently it had already been expressed in 2011 in the run-up to about $30. It may be fair to argue at times that the bitcoin price is in a bubble phase, but it is another claim entirely to argue that the thing itself is a bubble—and nothing more.

My sense is that this kind of “nothing but a bubble” thinking is often associated with minimal to no understanding of how Bitcoin works on a technical level. In the absence of such understanding, these critics can only envision a vague nothingness in place of Bitcoin’s technical underpinnings. Yet since many clear descriptions are now available for free online from beginner to advanced, such claims seem to indicate a willingness to comment without learning.

AT: Some think that blockchain technology will have huge consequences for society in terms of decentralization. They say that this technology will give small, decentralized entities an edge over big centralized organizations. Some even say that the existence of big companies like Google or even states could be threatened by blockchain technology. Do they have a point?

KG: From my perspective, there are two main implications of the first blockchain. First, bitcoin units are a medium of exchange and potential form of money that has arisen from the private sector—actually the informal sector—not from the state. This deflates the old chartalist claim that money can only come from the state, or at least can survive only with the state’s blessing. In contrast, it took states years to even start to notice it.

Second, Bitcoin enables people to transact without third-party intermediation. Let us call it “permissionless transacting.” Every other kind of remote transacting requires some third-party facilitation, often by a bank. But the position of facilitator comes with the ability to refuse to facilitate, whether through corporate policy or because authorities order it. It also comes with the ability to track and create a permanent record of spending, including dates, parties, places, and amounts, destroying privacy.

With Bitcoin, states can certainly take steps to outlaw certain types of transactions, but unlike with banking systems, authorities cannot block transactions to begin with. They can only seek to prosecute criminalized acts after they are committed. In societies that purport to respect due process and the rule of law, this happens to be all that such authorities are supposed to be doing anyway—in contrast to the PreCrime Division in the science-fiction story Minority Report.

As for “decentralized” and “centralized” in Bitcoin discussions, these are first of all computer-science concepts. A network is either designed with a center, such as a conventional server/client system, or without one, in which case the center has been taken out of the design, thus “decentralized.” With Bitcoin, this mainly refers to adopting a peer-to-peer architecture and not having any central currency issuer that could manipulate supply.

I think these computer-science terms have come to be used in a vague mix-up with economics concepts such as monopoly and competition, scale and industry competitiveness. They can generate more confused ideas than useful analyses. Economies of scale in different industries, and other factors influencing relative firm sizes, are not necessarily going to magically transform because there now exists a non-state money lacking a central issuer that can be used without third-party facilitation.

AT: Could you explain what the essence of blockchain technology is? What makes it so great?

KG: I would recommend reading my article on this topic with respect to the technology and methods behind Bitcoin for a fuller picture, both of the scale of the invention and why people have such a hard time understanding it. In essence, Bitcoin combined at least four major elements, most of which were first developed within about the past 40 years. Most people do not understanding any of these elements, or maybe only one or two of them, and then vaguely. These are hash functions, digital signatures, peer-to-peer architecture, and open-source development. So of course people who understand few or none of the parts cannot hope to understand a whole that combined them into something far greater than their sum.

One key thing that a blockchain does is form an unforgeable record of past information, with new information continually being added at the end of the chain. Thus, while new information can be added, that already recorded cannot be erased or revised in the slightest way. This history cannot be rewritten. The fact that the tradable bitcoin units have a market value is also essential to financing the mining network in a decentralized way. The system’s security and the unit’s market value are interdependent.

There has been a movement to define “blockchain” as the “real” innovation of the Bitcoin system, with the bitcoin (monetary unit) part being just sort of one silly initial idea for using a blockchain. According to this view, it is the “many other applications” and different sorts of “tokens” that are really exciting. I think this is completely backwards.

While it is true that a blockchain design might have some useful applications other than digital cash and if these are indeed made to work in practice and gain real users, that would certainly be positive, a blockchain is an extremely cumbersome and expensive thing. This means there ought to be compelling reasons for using a blockchain rather than a simpler, faster, and cheaper design. The blockchain design was created to solve a very specific problem—how to create scarce digital cash with no central issuer. For most applications other than digital cash, however, a blockchain is probably wasteful, unnecessary, and over-hyped—unless proven otherwise through actual use as opposed to marketing pitches.

AT: It is said that the core of blockchain technology is the math behind it. The solution to the so-called “Byzantine Generals Problem”. Could you describe what this problem is and how blockchain technology solved the issue?

KG: The problem is how to get different people in different places to agree on the validity of a given piece of information without relying on communications that could be compromised and falsified at source, in transmission, or both.

The lynchpin of the solution that Satoshi found was in a characteristic of hash functions. A hash is a “one-way function.” Information goes in and one specific hash of that information comes out. However, the hash cannot be used in the other direction to reconstruct any of the original information.

In Bitcoin, miners have to find a hash that is below a certain value. Visibly, it has to begin with a certain number of zeros.

000000000000000000aebd4d821ad8ee2ef30c4aaccc7619ce309d8570f7fb9b

The “difficulty adjustment” changes this threshold. The miners have to increment a random number field and keep looking for resulting hashes until they find one that is below a certain value. It is unimaginably difficult to come up with a valid hash within the difficulty requirement to begin with. It takes billions of trial and error attempts to do so. However, it is trivial to check afterwards whether a given proposed hash is valid for the block.

So solving the hash of the next block (“mining”) is extremely difficult. And the solution cannot be forged or falsified because anyone on the network can quickly verify whether a proposed solution is valid. A valid solution serves as a proof that work must have been done to find it, and is therefore called a “proof of work.” There is no short-cut way to arrive at a valid hash other than doing the hashing work, which means investing in facilities and equipment and consuming electricity to brute force the hash for each specific block candidate.

So returning to the “Byzantine Generals” situation, with proof-of-work, an invalid message can always be revealed as such because it can be checked using the information in the message itself, after it arrives. The message as it arrives contains all the information needed to establish whether it is a valid message or not in relation to the chain it proposes to extend. There is no need to establish whether it was falsified in transmission. It does not matter if it was. It is still either valid or not as it presents itself wherever it arrives.

Another key trick to make this work is that each miner’s valid hash is only valid for that miner because his own reward address is already incorporated into his candidate block before the hash is found. That reward address is part of what is being hashed. Therefore, no others validating a proposed answer can just expropriate it for their own benefit. That particular answer they are examining already builds in the winning miner’s own address for collecting the block reward being sought.

AT: Bitcoin has a limit of 21 million bitcoins that can ever be mined. But in August, the Bitcoin blockchain was split into Bitcoin and Bitcoin Cash. So, isn’t the production potential limitless, then, like with central banks? And even out of the Bitcoin blockchain, limitless other digital coins could be created. Couldn’t this threat the value of the Bitcoins?

KG: This is a fascinating topic and I also wrote an article about it here. Essentially, both bitcoin (BTC) and bitcoin cash (BCH) are valid continuations of the previous Bitcoin blockchain, but the two are now permanently separated. They can never interact again as the same chain. It is a little like speciation in the natural world. Though long-separated groups of life forms share a common ancestor in the distant past, they have changed such that when descendants meet again later, they can no longer interbreed—and this is irreversible. In this case, a Bitcoin “speciation” event happened on August 1, 2017 when blocks were found that some versions of the software found valid and other versions did not find valid because of specific differences in the rules those respective versions were enforcing.

As for the claim that this split was inflationary, I will quote from my article on this, because I don’t think I can say it better a second time:

“Zero ‘new bitcoins’ have been created from a monetary-inflation standpoint. Control of any existing bitcoin unit before the split gave rise to corresponding control of one BTC and one BCH unit after the split. Since this reflected the precise and complete pre-existing constellation of unit control with no alteration for each and all former holders of the single-chain BTC, no redistributive Cantillon effects follow.”

Cantillon effects, for those unfamiliar with the term, refer to changes in the distribution of wealth among money holders when new money goes first to some users rather than others. In this case, every existing BTC unit became in the same moment one BTC unit and one BCH unit for each holder.

I have also argued that the fact that combined prices of BTC and BCH rose in the weeks that followed, and dramatically, may suggest net value added for holders. This could be because of a market perception that the various development teams can now proceed more smoothly with their respective scaling visions, and we can see what actually becomes of these efforts in reality, rather than being limited to models, talk, and promises.

Of course, anyone could split a chain at any time and continue it with certain modified rules, but it is an entirely different matter for such a chain to gain any economic value, and particularly any investment of scarce SHA256 mining power. The most likely outcome is just that no one mines a fork and it does not continue: extinction.

Yet both BTC and BCH chains have survived to the present time. BCH has maintained a market price that has ranged from $200–900, and is currently about $350. In quite recent memory, that was considered a high price for the pre-split BTC. This outcome was not at all a given.

An infinite number of new chain splits without any real economic justification or real-world support from miners should just result in an infinite amount of nothing happening, as each one dies off quickly or never really gets started. For daughter chains that do survive—in this case BTC and BCH both have—this survival itself may imply some perceived net value added for holders of the pre-split coin. The two are now competitors, along with all the other cryptocurrenices. This chain split was quite distinct from the crop of many hundreds of other cryptocurrencies, which are new chains started with their own rule-sets and fresh structures of coin ownership.

AT: Bitcoin detractors contend that the volume of Bitcoin trade is limited and the technology could not manage the number of transactions that take place with fiat money every day. What do you think?

KG: The volume of bitcoin transacting on the BTC chain has come to be artificially limited relative to demand by a 1MB block size limit that has been in place since 2010. BCH was one effort to address this by raising the protocol block size limit to 8MB. That is a level that is once again well above current regular demand, as it was for the limit’s entire previous history until recent years. Another effort to address transaction volume entails building cryptographic systems that enable trading that is “off-chain,” but purportedly preserves the quality of permissionless transacting denominated in bitcoin.

I do not see any contradiction between these models, as I have explained here, but since many involved do seem to treat these more as competing than complementary approaches—and have made a competitive sport of belittling and insulting those whose views differ on this matter—this has contributed to the chain split, possible future chain splits, and the overall level of political-style contention.

My own take is that on-chain and various existing and proposed off-chain options should be treated as dynamically limiting competitors in a relationship of synergy and competition. If an off-chain option actually offers superior characteristics in terms of cost and speed, it will naturally draw some business off the main chain, reducing on-chain traffic (and fees). This could enable certain types of traffic off chain that would not have taken place on chain.

At the same time, the off-chain options themselves require some on-chain transactions, for example, to open and close payment channels or to create a unit link with a sidechain. If such options come into wide use, they could in turn lift on-chain traffic themselves. So the factors operate in both directions and in unpredictable ways. On- and off-chain options can both create business for each other and take business away from each other in a complex and unpredictable interaction. The presence of both expands the sphere of end-user choices. In this kind of situation, on-chain and off-chain options ought to be free to compete with each other in practice, as opposed to “competing” within models and promising-contests.

I view the block size limit as it now stands as artificially favoring off-chain solutions in the context of this natural competition for traffic. Promoting the continuation of an industrywide ceiling on the provision of on-chain transaction-inclusion services has lifted the price of on-chain transacting well beyond what it otherwise would have been at this early stage of Bitcoin’s development. Numerous Bitcoin businesses have left the BTC chain due to this, at least for now.

Meanwhile, most of the promised off-chain second-layer ideas are not actually available for users yet. Nor is there any guarantee how much users will adopt these when they do arrive. These solutions work remarkably well in the minds of the people building and promoting them and in the imaginations of others who look forward to their arrival. However, such beliefs can never replace an actual market adoption test. Nevertheless, on-chain capacity has already been left restricted today relative to growing demand before promised alternative transacting solutions have a) arrived and b) actually been adopted by users.

One result has been a ballooning of the market value of other cryptocurrencies. As the retention of the current block size limit on the BTC chain has pushed actually working Bitcoin business models away, BTC has fallen from about 85–90% of the total valuation of all cryptocurrencies to 45–50%. This is so despite BTC’s overwhelming first-mover advantages in network effect and active developer talent. First-mover advantage is quite powerful, but it is not all-powerful.

AT: An article in the Swiss newspaper Neue Zuricher Zeitung covers a conference of economists in Vienna where Bitcoin critics met. Several arguments against the future of Bitcoin were made, amongst others from Adi Shamir, who is said to be one of the co-developers of the cryptographic basics on which Bitcoin technology was built. He states that there are not enough Bitcoins because the number is limited to 21 million. To my knowledge, Bitcoin is dividable nearly endlessly. And, as Murray Rothbard said, that once money has been established in the market, every quantity is “optimal." There is no social profit in increasing the money supply. What are your thoughts?

KG: As you point out, there are two separate issues, divisibility and inflation. First of all, the actual unit used within Bitcoin software is called a satoshi, and the maximum number of those is 2.1 quadrillion (2,100,000,000,000,000). That is 280,000 units per person on Earth at the current global population of 7.5 billion. A “bitcoin” is just an arbitrary accounting unit of 100,000,000 satoshis, and one that the Bitcoin system itself does not even recognize. Wallets and exchanges use the convention of a “bitcoin” only for intuitive convenience.

Off-chain systems such as payment channels could already increment even smaller amounts. It would also be possible to alter the Bitcoin software so that it directly recognizes units smaller than a satoshi, though there is no guarantee this would ever be done.

Other than these issues of divisibility, most people complaining about limited supply are just inflationists and I wrote about them here. The opposite of inflation is deflation, which for most practical purposes means that the monetary unit is gaining value rather than losing it. Although the total bitcoin stock will continue to expand for quite some time, its rate of expansion steadily declines, eventually reaching zero. Nevertheless, it can still be viewed as deflationary in the sense of having a rising purchasing power over time. The great Jörg Guido Hülsmann described why such rising value is so significant for society in Deflation and Liberty:

“Deflation…abolishes the advantage that inflation-based debt finance enjoys, at the margin, over savings-based equity finance. And it therefore decentralizes financial decision-making and makes banks, firms, and individuals more prudent and self-reliant than they would have been under inflation. Most importantly, deflation eradicates the re-channeling of incomes that result from the monopoly privileges of central banks. It thus destroys the economic basis of the false elites and obliges them to become true elites rather quickly, or abdicate and make way for new entrepreneurs and other social leaders…

Deflation is at least potentially a great liberating force. It not only brings the inflated monetary system back to rock bottom, it brings the entire society back in touch with the real world, because it destroys the economic basis of the social engineers, spin doctors, and brain washers. (pp. 40–41).”

Here is that word “decentralize” again, this time in an explicitly economic rather than computer-science context. Deflation “decentralizes financial decision making” means that people who spend their own saved money instead of spending borrowed money (or state handouts) have more autonomy and independence. This is because they do not have to seek the approval of creditors or VCs (or welfare bureaucrats) with regard to whether they get funding and how they use the funds. Yet this distinction also applies to any size of entity that is in a position to invest its own money instead of someone else’s, to act using savings rather than debt. A rising-value unit encourages savings while falling-value units—such as all fiat currencies—encourage debt and unhealthy dependence.

Bitcoin has arrived as the first rising-value medium of exchange seen in a long time. Inflation- and debt-addicted and dependent governments would certainly never have created such a thing.

BTC plus BCC showing strong combined gains as market attention shifts to next controversy

The combined price of bitcoin (BTC) and bitcoin cash (BCH) has risen about 75% since the formerly single Bitcoin split into two chains on August 1.  Events thus far appear to support my suggestion that the split could well be a net positive for holders of bitcoin prior to it.

In my August 5 article, “Descendants with modifications: Bitcoin’s new and possibly beneficial evolutionary test,” I argued that a marginal shift away from talk and toward innovative action could in itself prove a net positive. To at least some degree, an actual split would enable claims that one approach or another was superior to be replaced with practical reality checks across the board.

However, I also emphasized that the split was still a poor “test” from a scientific standpoint. Not only do the chains differ in headline qualities—one is activating SegWit and the other has revised its block size limit to 8MB (already two major variables in themselves)—but also in a whole list of other confounders. For example, the two chains differ in associated development teams and testing and review practices, which leads to contrasting levels of market confidence in the different code bases as a whole. This reflects far more than just the headline contrasts. In addition, the two started out with widely differing hashing power levels and coin prices. Nevertheless the split should provide some way to proceed with implementing respective visions of how innovation should progress, and to that extent could well beat a continuation of “unmitigated talk.”

Since that article appeared, the BTC price first rallied dramatically while the BCH price languished. One megabyte block size limit enthusiasts on social media sought to out-compete each other in boasting about how decisively they would “dump their bcash" (using a popular term of insult for bitcoin cash) as soon as they could. When trading in bitcoin cash finally came up to speed on exchanges, such commenters promised, BCH would crash as dumping of the latest new "altcoin/shitcoin" began in earnest. Since then, one by one, various cryptocurrency exchanges and wallets have announced support for BCH, with more to come.

In the event, the BTC chain still has its own dramas to live through. A stark reminder of this came with a blog post by BitPay instructing users in how to move to software that implements phase 2 of the “SegWit2x” or “New York” agreement, which calls for a revision of the BTC chain’s block size limit to 2MB in November, following phase 1, its recent activation of SegWit.

Full-fledged American-style “outrage politics" ensued against BitPay, as opponents of the block-size limit revision portion of the SegWit2x framework accused BitPay of fraud for not clarifying that moving to the BTC1 software it was recommending to its customers would split them off from the portion of the BTC network running Bitcoin Core software. Bitcoin Core software has merged code that disconnects Bitcoin Core nodes from BTC1 nodes. Few to no active Bitcoin Core contributors support the BTC1 project while a significant number of miners and bitcoin companies expressed support for the SegWit2x agreement.

It is unclear how this will be resolved. Intransigence and belligerence reign on social media between the vocal on the two "sides." Another chain split is possible, once again over exactly the same issue, the specific height of the block size limit. This next split, however, might be less clean than the last, which did have critical user protections in place, notably replay protection. A scenario in which BTC1 and Bitcoin Core navigate into an unclean chain split has the potential to leave Bitcoin Cash looking like the more stable option for the time being. With a limit revision already behind it for now, it could end up sitting on the hill overlooking the next BTC chain battle with a detached attitude of: "Bitcoin Cash user unaffected."

After the BitPay post brought this next controversy facing the BTC chain back onto the front burner of the market's attention, the BCH price promptly more than tripled from $300 to briefly peak at over $1,000, while the BTC price began to soften slightly.

The BTC + BCH total price, however, has continued to rise steadily for the time being (see chart). As of this writing, the combination remains more than $2,000 higher than before the chain split.

Looking ahead, much will depend on the interplay between hashing power, mining difficulty, and price. The dynamics of differences between the mining difficulty adjustments on the two chains could have some dramatic effects as mining power shifts in pursuit of profitability, resulting in follow-on differences in block discovery times.

As I concluded my discussion on August 5, so I will conclude this one: “The complex sequence of outcomes to ensue must now be seen in practice and over time.”

[Update: The original version used BCC for Bitcoin Cash throughout, but this code was already in use by another cryptocurrency. Since that time the Bitcoin Cash community has clearly shifted to BCH, so in this text I have changed to BCH where simple to do so (not in the title and graphics).]

Descendants with modifications: Bitcoin’s new and possibly beneficial evolutionary test

Source: Charles Darwin. 1845. "Journal of researches into the geology and natural history of the various countries visited by H.M.S. Beagle."

The BTC/BCH chain split of 1 August 2017 could add value for holders of the former bitcoin during any period in which the summed value of each coin exceeds the value that the former single coin would have had. Holders of BTC before the split came to hold equal amounts of BTC and BCH after the split, prior to any subsequent individual trading.

Zero “new bitcoins” have been created from a monetary-inflation standpoint. Control of any existing bitcoin unit before the split gave rise to corresponding control of one BTC and one BCH unit after the split. Since this reflected the precise and complete pre-existing constellation of unit control with no alternation for each and all former holders of the single-chain BTC, no redistributive Cantillon effects follow.

This split looks like a better-case scenario, at least “less bad,” than several of the other fork types proposed and discussed over the past months.

At this early phase, bitcoin cash (BCH) trading remains nascent, as exchanges and wallet services work to serve customers in a post-split environment. Potential traders remain limited because many exchanges do not yet offer BCH account crediting or have temporarily disabled relevant withdrawal and deposit options.

Various partisans have already claimed that as soon as normalized trading is achieved the BCH price will either collapse or rally, or some sequence of both. Pre-split futures and post-split exchange data (such as it is) have thus far shown an approximately $250–500 range for BCH. The bitcoin (BTC) price hardly reacted from its recent pre-split range of approximately $2,600–2,800. Either way, relatively wide changes to the BCH price are likely to be the rule until at least some time after normalized trading options come on line and hashrates and difficulty levels settle out to a greater degree.

The summed prices of BTC and BCH have mostly exceeded the former BTC all-time high, hinting at possible net value added from the split. This could be illusory due to the poor trading environment, but this sum could also have been lower instead, particularly if viewed as a network, mining, and trading disruption: the BCH price range could have started lower than it did, the BTC price could have fallen unmistakably, which it did not—or both.

Looking ahead, hash rates and difficulty adjustments are other key points to watch. Although the BCH chain protocol revisions did add certain more flexible mining difficulty adjustment methods, it remains to be seen if this will be sufficient to prevent very long block times over the coming weeks, which, amid price declines, could further reduce mining profitability on the BCH chain for some time. The future allocation of hash power, pace of difficulty adjustment, and price all remain to be seen.

Separate from these temporary and news-oriented issues, in the balance of this article, I will interpret the chain split in more fundamental terms.

Potential net value added from innovation and experience effects

If a net value gain from the split is actually present and does persist, such an outcome would not be entirely mysterious. Innovation proceeds through action far more than talk. SegWit activation (BTC chain) and a substantial block size limit increase (BCH chain), respectively, both promise to partially replace months and years of talk with action and experience, which is, in general, bullish for innovation.

In contrast to action, speculation and modeling are far more subject to partiality, bias, and social and financial pressures in the selection, construction, and interpretation of models. Action can supplement or partly displace hot air. What will happen with SegWit? Watch and learn. What will happen on a live network with a higher protocol block size limit? Watch and learn. This opportunity for the addition of progressive sequences of reality checks on the respective chains might be positive in itself. The “test” this represents is highly imperfect, as discussed below, but is still probably better than unmitigated talk.

The misleading conventional understanding of innovation is that practice follows theory; that “basic science” comes first and then begets technological innovation. The historically far more common process of innovation has very often followed the opposite pattern. Some fundamental innovation attempts occasionally succeed (mostly they fail). After the rare successes, new theory and research come along to try to explain and formalize what entrepreneurs and tinkerers had already done (after the best pontifical efforts of old theory to prove that what had been done could not have been).

Descendants with modifications

The minimum requirement for a process to be called evolutionary is descent with modification. Thus far, Bitcoin has gradually evolved as a single chain with modifications to its software. This split, in contrast, is Bitcoin’s first speciation event. Both BTC and BCH build on and carry forward the Bitcoin chain in a valid unbroken lineage of blocks tracing back to the genesis block.

The best chain in Bitcoin is defined as a chain of valid blocks with the greatest accumulated proof-of-work difficulty. In this model, the validity test comes first, followed by the total difficulty assessment. The software variants behind each chain have recently implemented certain substantial rule changes that are not now recognized as valid on the other chain. The BTC chain, for example, does not recognize the BCH chain’s modified block size limit, and the BCH chain omits SegWit, which recently activated on the BTC chain. Bitcoin block history diverged after block #478558, which is the last “common ancestor” that the two chains share.

The term “altcoins” has been used to denote cryptocurrencies that are not Bitcoin. Both of these chains, however, are valid Bitcoin chains as defined above. From this standpoint, the commonly expressed opinion that BCH is a new altcoin may be viewed as a use of language for rhetorical and emotional, rather than cognitive and elucidative, functions. Sharing almost all specifications and over eight years of transaction history, each is far more Bitcoin than either is altcoin. Some new term may be required. For example, in a public draft article, Daniel Krawisz, a long-time altcoin critic, has quite recently suggested the term "bitcoin child" to specify any chain that traces its history back all the way to the Bitcoin genesis block, a category that now includes BTC and BCH, but no others.

Proponents of each chain will naturally want to claim the banner of “true” succession, much as most religious sub-sects story themselves alone as the one truest representative of the ancient founder’s original teachings (rarely acknowledging the odd coincidence that all of the other sub-sects likewise tell just such a story about themselves). Regarding coin names, it is sufficient if the tradable units of the two chains are named in such a way that those using them now or in the future do not encounter any practical confusion. Bitcoin (BTC) and Bitcoin Cash (BCH) appear sufficient for this. For continuity, Bitcoin dominance indices might choose to sum the valuation estimates for the two post-split Bitcoin chains, perhaps after trading normalizes and if it appears that both will persist for some time.

Of most practical relevance now is the quality and prospects of the existing chains, as they have actually come to exist, moving from the present into the future. Practical measures of their prospects center on hash rate and unit price trends.

Rather than relying primarily on such ever-shifting market criteria, however, I prefer to begin by examining what defines the respective chains themselves. If we are talking about mining, mining what? If we are talking about price, the price of what? Identification properly precedes evaluation. In this case, a comparative identification is natural given the context of descent with modification, in which common features far outnumber differentiators.

Which chain is the “truer” successor is, in principle, not especially important in direct analytical terms. It might be useful as sociological research into the study of the development and spread of beliefs, or somewhat more useful than that as a source of hints for investors as to likely relative popularity based on belief frequencies in relevant user populations (meme frequency).

Nevertheless, BCH’s critics have taken to consistently labeling it an altcoin (which it is not), and moreover asserting that it is impossibly distant from being any true and proper successor of the one real bitcoin, which they believe the BTC chain unquestionably is. In this context, it should at least be noted in counterpoint that from a strictly content standpoint—rather than a popularity standpoint—BCH is arguably a nearer successor to 2009–2015-6 BTC than a post-SegWit BTC.

First, the BCH chain block size limit functions for the time being as a high upper-end traffic-burst defense, which matches the originally stated role and years-long practical function of this limit. This is more consistent in economic terms with the former BTC throughout the majority of its historical development until relatively recent times. In contrast, it was a significant new development when the particular height of the block size limit began to function for extended periods as an economic output ceiling on the industrywide production of Bitcoin transaction-inclusion services. Regardless of one’s opinion on whether this new economic effect is desirable, it remains that it was a significant departure from most of Bitcoin’s past viewed in functional economic terms.

Second, BCH does not implement SegWit. Again, regardless of one’s particular opinion on the net desirability of SegWit, it will in fact arrive on the BTC chain—but not on the BCH chain—as a significant data-structural departure from the organization of the former Bitcoin’s blocks.

Both BTC (with the new SegWit and some other recent changes) and BCH (with its revised block size limit and some other recent changes) are direct successors of the Bitcoin that came before them and each differs in some substantive way from that former Bitcoin. Against a backdrop of continuous Bitcoin software modification and innovation over the years, this stands out as the first time protocol choice options have elicited sufficient sustained disagreement among participants that a chain split has in fact resulted. For the lower block-size limit camp, the key factor was the limit change being unacceptable to them; for the higher block-size limit camp, it was the failure to revise the limit, and for some SegWit activation as well, being unacceptable to them.

Some observers have expressed concern that this first Bitcoin chain split could set a precedent for additional splits in the future. This seems possible, but somewhat doubtful to me. First, it is unclear the extent to which this first split will prosper, and if it does quite poorly, this might discourage future attempts rather than encourage them. Second, months and years of debate, effort, proposals, and campaigns, all primarily centering around the block size limit issue, preceded this first chain split. This suggests this step has by no means come about lightly. Most importantly, I view the block size limit as quite unique and distinctive among Bitcoin protocol issues and think it unlikely that other issues are likely to rise to the level of sustained disagreement that would be required for another similar split. [That said, the 2MB hard fork already planned for November could lead to another split, but that plan predated the current split and some believe this split might even reduce the probability of the other one rather than enhance it.]

A poorly designed experiment, but all we get

The emergence of these two daughter variants of the former Bitcoin, which diverged from a common ancestor block on 1 August 2017, enables a certain evolutionary test in that both represent descent with modification following a speciation event. However, it is by no means a “clean” experiment, able to test the effect of changing a single variable. Alas, real-life evolutionary tests are usually “dirty,” reflecting the net effects of a complex interplay of context and interdependence. Even a single genetic change in an organism that does have some practical effect seldom has a simple, singular effect, but instead results in a certain cascade of effects, interactions, and adjustments.

As an experiment in the scientific sense, then, this chain split is badly confounded due to the many major variables differentiating the two chains. This includes, at least: the block size limit height difference, the presence/absence of SegWit, the respective quality levels and reputations of software development teams and software testing processes, differences in user traffic, and the extent and stability of relative hashing power. Most of these variables can impact both general user confidence (subjective) and bug probabilities (more objective). A good experiment, in contrast, would seek to change one variable at a time. This development does not do this—not even close.

A reasonable case can be made that the BTC/BCH split, such as it is, may be a net positive for holders of the previous “single bitcoin.” Bitcoin’s evolution continues for the time being along paths that have diverged into two chains differing across a set of multiple variables. This may well bring a certain marginal shift toward more practical experience opportunities and away from talk and modeling, which could in itself represent net value added from the event. Relative hashing power, unit prices, development efforts, and software quality levels are all likely to shift over time to various extents and directions not easy to predict (though always easy to “predict” afterwards). The complex sequence of outcomes to ensue must now be seen in practice and over time.

[Update: The original version used BCC for Bitcoin Cash, but this code was already in use by another cryptocurrency. Since that time the Bitcoin Cash community has clearly shifted to BCH.]

Additional Issues with the Balance and Accuracy of the Anti-Musk Narrative

After posting my reassessment of Elon Musk yesterday, I saw that the initial responses were mostly positive and to the effect that my reading seemed to be balanced and fair. A couple of interesting issues and angles have come to my attention in the day that has followed.

One topic concerns whether the Tesla Model S is quite as great as some initial magazine reviews suggested. Another is the narrative that Tesla could not survive without subsidies, given the alleged phenomenon of "sales dropping to zero" as soon as subsidies end. The third is a rather surprising turn—evidence that Elon Musk has been speaking out against electric vehicle subsidies and that he has been promoting their abolition.

Not so great?

A reader pointed out that Consumer Reports, after initially reviewing the Model S with glowing superlatives was then forced to remove the car from its recommended list in late 2015. The reason was that poor reliability reports were coming in. Things were breaking and needing fixing at a relatively high rate.

I have seen superior assessments of the Model S on safety, performance, buyer experience, total buyer maintenance cost, and service relationship. That is quite a list of superlatives for an upstart company selling an entirely new type of car. It is the safest car on the road. It has the fastest acceleration. In doing all this, it is quiet. Actually, it can swim in flood waters like a James Bond boat (the manufacturer does not recommended making a practice of this though). In the area of service, Tesla employees show up at people's homes to fix the car and then leave.

Reliability strikes me as just the sort of area that would depend most on improvement over time through iterations of experience. Here we have a completely new company with a completely new type of car up against century-old companies building incremental advancements of century-old types of cars (at least in comparing the Model S to conventional luxury sedans). My prediction would be that the reliability issues should be steadily improving as specific issues are identified and fixed and the company learns from experience, redesigns parts, adjusts suppliers, etc. A small-scale version of this phenomenon is why I never buy a new number release of an iPhone, but always wait for the "S" version. Most major engineering issues are introduced with the whole number redesigns and have been eliminated by the time the upgrade iteration arrives. One can prioritize being first and taking on a higher risk of issues, or wait until the earliest adopters have already served as the Guinea Pigs. It is a matter of personal preference.

Evidence quality behind claim of zero sales without subsidies

As for the narratives that no one would buy Tesla cars without subsidies, here's one specific claim from a recent article: "After Hong Kong rescinded a tax break for EVs effective in April, Tesla sales in April dropped to zero."

I have not researched or considered any detailed multi-country or up-to-date data on this, but looking only at this one statement, it immediately occurred to me that it is quite common for buyers of higher-end items or capital equipment to be aware of the end or the beginning of major tax or subsidy changes and then time their purchases accordingly. Even much more broadly, sales always rise before a sales-tax increase, then drop off for some time after the change takes effect. There is typically some degree of "sales rush" leading up to such a change followed by a sales drop-off and eventually normalization. The particular time scales depend on the specifics of the product.

This makes me wonder just how much of this "sales dropped to zero" narrative might be an artifact of such normal smart-buyer timing. The only surprising outcome would be if buyers of $100,000 items would delay purchases until after an available discount was set to evaporate. To assess this, the whole data series in each case, including well after the change in subsidy, would have to be analyzed to account for this common factor in sales trend analysis. Or one could omit such analysis, cite figures immediately after the end of the subsidy, and thereby appear to have solid evidence for a subsidy-dependency narrative.

Does the alleged subsidy queen actually want subsidies?

The final issue I found was actually quite surprising. With so many critics painting Musk as a subsidy-seeking corporate welfare queen, I just sort of accepted this as though it must be true. I know he is a deal-maker and seeks out the best opportunities to acquire factory land, for example, and this includes getting the best possible deals from governments. But does he actively seek subsidies? According to the anti-Musk narrative, he must, right?

Just before I found the information below, it had already occurred to me on logical grounds that if some subsidies are of fixed amounts per electric vehicle, which many are, they may well have been LESS important to Tesla than to its competitor electric-vehicle makers (of course, this doesn't address the advantage relative to FF vehicles). A $7,500 subsidy on a $100,000 car (Models S and X) is 7.5% of the purchase price, the equivalent of a couple of options more or less. This same subsidy on a $30,000 car is a 25% discount. True, the latter case would now also apply more to the new Model 3, but this has not been the context for these criticisms in the past.

Just after having this thought, a simple search revealed something I did not expect to see at all:

At a May 2017 earnings call, Musk made the following statements:

In fact, the incentives give us a relative disadvantage. Tesla has succeeded in spite of the incentives not because of them...Tesla's competitive advantage improves as the incentives go away. This continues to be something that is not well understood...

I should perhaps touch again on this whole notion of—it's almost like over the years there's been all these sort of irritating articles like Tesla survives because of government subsidies and tax credits. It drives me crazy. Here's what those fools don't realize. Tesla is not alone in the car industry; all those things would be material if we were the only car company in existence. We are not. There are many car companies. What matters is whether we have a relative advantage in the market.

As Anton Wahlman explained (4 May 2017):

Musk's argument is that the tax subsidies are worth more to Tesla's competitors than to Tesla, and that therefore Tesla would be better off without them, relatively speaking. Musk has made this argument in previous forums before, including on a previous earnings call as I recall, in the context of California's ZEV (zero emissions vehicle) credits, which Tesla is able to sell to other automakers as a purely politically engineered 100% gross margin profit. He made the argument on the 1Q 2017 earnings call again. In that ZEV case, his argument is that Tesla sells these $5,000-a-pop credits to other automakers at a discount, whereas those automakers make and consume some of those $5,000-a-pop credits internally without applying such a discount.

If removing subsidies removes a competitive disadvantage for Tesla, this might easily be written off as simply strategic self-interested promotion once again. However, if we are engaging in a moral assessment of Musk the public figure and claiming that he shamelessly seeks to live off the public purse, his active opposition to electric vehicle subsidies still does not fit all that smoothly into the anti-Musk narrative that I sought to qualify in my recent post. In addition, it cannot have been lost on Musk that the end of EV subsidies would also remove a special price advantage over conventional vehicles, against which Tesla also competes.

Interestingly, Wahlman's article went on to explain why other automakers might also be happy to be free of EV subsidies—they come with expensive strings attached.

Elon Musk apparently looks forward to competing in a subsidy-free world (who knew?). But what about the other automakers? Wouldn't lower subsidies for electric cars mean fewer electric cars sold for them?..It sure would. And the other automakers would love it too!

Why? Because under the current regime, they are manipulated by both the U.S. Federal tax code, as well as by California's ZEV mandate, to develop and produce more electric cars than for which there is true natural free-market demand. And that means billions of dollars in investment for products that they eventually have to dump at negative margins.

In writing my reassessment of Elon Musk, I suspected the anti-Musk narrative to be a bit overdrawn, tending too far toward the negative in an imbalanced way that does not do justice to the reality and tends to dismiss valid positives in the sweep of also-valid negatives. The observations and discoveries above now seem to indicate that the evidence and thinking behind the anti-Musk narrative might be even somewhat weaker than I had been suspecting. I think the ultimate point is to strive for a realistic and nuanced assessment: to call the positives positive and the negatives negative and acknowledge that both streams are present in parallel.

A Mixed Hero: A Libertarian Reassessment of Elon Musk

Many libertarians seem to love to hate Elon Musk these days. His crime is to live at the public purse. His companies would be bankrupt without green subsidies and cheap government loans and contracts. He seeks out favorable terms from governments and angles to capture subsidies and cheap loans with no reservation and with vast success at doing so. This situation, along with certain financing practices and relationships among his companies, has led to it becoming fashionable to disdain Musk as a public figure and to characterize him with sweeping put-downs.

I have a more complex assessment of Musk as a figure. I enjoyed listening to his 2015 biography by Ashlee Vance. I tend to look for the positive things in people. One positive quality here is the ability to re-envision products from the ground up in a completely different way. The Tesla is not just the evolution of the car, but a completely new way to think about what a car is. A car is a thing with an engine and a drive train, right? True for a century, but not any more. Musk has done in the fields of cars and rockets, what Steve Jobs did for computers and phones, completely re-envisioned what they could be, how they could be built, and how they could be used.

A second quality is execution under very challenging circumstances. Anyone can have big ideas, but only the few are able to successfully execute on them in the "really existing" world. SpaceX's rocket designs and rocket reuse and the Tesla Model S were almost universally deemed impossible—until the job was actually done. Rocket reuse was just a science-fiction fantasy. SpaceX did it. An electric car "that didn't suck" was also an impossibility—until Tesla built the Model S, which has been assessed by multiple car review magazines as basically the best car in the world, bar none, on both safety and performance. It is not only as good as conventional vehicles, it leaves them all behind, not just on green measures, but on car measures as such.

So from a simple first look, at this level, one could argue that however these things were achieved, they were at least potentially positive achievements (though this assessment will be qualified further below). In addition, Musk cannot be accused of relying on subsidies to the exclusion of also having skin in the game. He has repeatedly staked recklessly large portions of his personal fortune on bridging impossible-looking financial stretches for his enterprises.

I fully support the view that actively advocating for the expenditure of public funds is immoral. The only moral way to advocate for the use of public funds is to argue in favor of their return to the people to whom they rightfully belong, namely those whose wealth was forcibly extracted, mainly the original taxpayers.

On the other hand, if taxpayers in their role as victims of the state accept state handouts that are already flowing—provided they do not actively advocate for the continuation of such handouts—it is perfectly moral for them to take receipt of such funds as a form of limited restitution for other damages they suffer at the state's hands on a constant basis. This includes not only direct taxation but all the myriad seen and unseen harms from the arbitrary "regulation" of many aspects of life and work, all unjust restrictions on the liberties of mutually consensual production, trade, and association.

In this context, Musk's actions in relation to subsidies and government contracts must be viewed as mixed. Green vehicle subsidies, for example, already existed before Tesla. Building a car that would qualify for them does not—in itself—constitute advocating for the subsidy program. Seeing only crappy electric cars receiving subsidies, an entrepreneur could quite reasonably set out to build a better competing car that would also receive these same pre-existing subsidies instead of the crappy golf-cart cars.

Of course, Musk certainly does promote such programs. However, only at the point where he benefits from programs the adoption or maintenance of which was actually influenced by his advocacy—does a moral case against his benefiting from them become unmistakable. The minimal conceptual dividing line is that simply benefiting from subsidies is not objectionable per se, advocating for them is objectionable, and advocating for them and then also receiving benefits as a result of such advocacy is the worst case.

In this view, I suspect that his guilt is far more mixed than a simplistic portrayal of "his company benefits from subsidies, and could not exist without them." His enterprises have surely benefited in all three types of ways, ranging from acceptable to less acceptable to not acceptable.

Context is also important. No car company would exist in its current form and at its current scale without unimaginably massive subsidies continuously provided to all automobiles over many decades, distorting not only the entire structure of transportation, but also the very formation and shapes of cities and communities. This vast structural distortion of the entire transportation industry, which systematically twists spatial relationships between residences and businesses, takes a simple form: the production and maintenance of roads provided free of charge to drivers, financed by taxation. A simple heuristic to consider while commuting is that every time one has to pay by waiting, such as in a long line or in thick traffic, the state is squarely to blame.

In prosecuting Musk for his moral position in relation to the receipt of government support, another "extenuating circumstance" of wider context must be considered. What his companies have done with the money and other advantages he receives from state entities is far more valuable a contribution than almost anything else that follows from other uses of such money and advantages.

Most of the state's money goes to "the production of bads," to use Hoppe's terminology, as opposed to the free market's production of goods. We do not want the production of bads to be carried out more efficiently. Indeed, we do not want bads to be produced at all—less of them is better.

Not only is the money the state extracts from the productive population wasted once when initially extracted, the ways that this money is subsequently used are generally quite wasteful a second time, compounding the damage to society. In the US case, most government money goes to the following types of uses: financing global military interventionism and promoting armed conflict and death all around the world, financing vast bureaucracies that meddle in all aspects of society, undermining healthy natural incentives, promoting fragility, harming employment, limiting innovation, and spreading social and cultural degeneration, high time preference, frailty, and dependency across the population.

Against this backdrop, Tesla has extracted something from the stream of public money and used it as part of a project which has produced arguably the best car the world has ever seen.

Why libertarians should want to focus vitriol on this, one of the best existing uses of the state's handouts is somewhat mysterious. Why not spend the same time complaining about the 99+% of uses of state subsidies and privileges that lead to worse outcomes than this?

It is far easier to criticize than to achieve. A sad and strong cultural tendency is to find flaws in hero figures and emphasize those flaws over their positive characteristics. But what does such cultural cynicism bring?

My approach is the opposite in two ways: focusing on the positive and focusing on qualities. I look for admirable aspects of a person. I look for actions and qualities to which positive adjectives such as heroic can be applied, rather than attempting to apply a blanket noun such as hero (or not a hero) to necessarily multifaceted persons. I always look for what I can admire and/or borrow, in both people and thought systems. If I were to look for the worst in others and focus on that, it would be simple, but would accomplish nothing, since I would always find and focus on negative aspects of persons, aspects which I did not want to emulate. If instead I look for the best in each person, I always have something available to learn from and emulate. Likewise, if I look for the best in each thought system, and dismiss the rest, I always have one new puzzle piece to add to my own global knowledge synthesis.

I agree that Musk is guilty of actively seeking to gain from state handouts. However, this is partly mitigated in that at least some of these handouts were already being handed out, and could therefore be legitimately captured as partial restitution for other damages that the state continuously inflicts. It is also partly mitigated in that the uses to which these funds are being put are arguably positive developments relative to the worse outcomes that result from almost all other uses of money derived from state coffers.

It should be made clear that extenuating circumstances do not make it morally acceptable to advocate for the receipt of subsidies from the state. Nevertheless, guilt on this count (albeit probably somewhat more mitigated guilt than some critics have implied) should not be interpreted such as to invalidate the man's positive attributes and accomplishments.

As I read Musk's biography a couple years back, I came to view him more as the type of mixed Randian semi-hero who blends a certain heroic genius in some areas with serious flaws elsewhere. His genius is a vision- and engineering-driven entrepreneurship that has proven able to repeatedly achieve "the impossible" in practice in productive sectors of technological achievement (mainly transportation). One of his flaws is being all too gleeful in his pursuit of capturing ill-gotten gains from the state as one of the means he uses in this process.

The purest of the Randian superheroes all went on vacation from their professions in an exclusive mountain resort. Engaging with the real world to achieve great things today is often messy and complex. This is not an excuse to soften one's moral principles in action. However, Musk's own moral worldview contains no compunctions about attempting to influence state and regulatory actions, including in favor of his own enterprises. He can therefore be accused of being morally mistaken on this topic. Yet this amounts to the relatively simple claim that he is not a libertarian, which I do not think is in dispute.

I do not buy into the bases of some of Musk's bigger-picture motivations, above all global warming death hype. In addition, I argue in "The Unbearable Lightness of Martian Gravity" that his Mars colonization vision could very well turn out to be a dead-end, not on technical grounds, but on biological ones. That said, I do not criticize in order to take down a hero figure. I acknowledge and appreciate the heroic aspects of the figure, while also acknowledging the flaws and pointing out what I believe to be the errors.

Ron Paul said that if we are reducing the size of the state, the place to start is not with old ladies' state pension checks, but with outlandish militarism and a state-orchestrated monetary system that enables virtually unlimited debt financing for the state and its cronies. Probably one of the last things to cut out in dismantling the interventionist state is old ladies' pension checks, and this after other policies that have undermined responsible private retirement saving, real insurance, and natural multi-generational care practices have been long since eliminated.

Likewise, libertarians complaining about uses to which government money is being put might consider that Tesla subsidies could well be among the best uses to which such money is currently being put. They might therefore redirect their attention and vitriol to the widespread mass production of unmistakable "bads" financed by the state, those that are far worse than some of the more impressive American engineering innovations in recent memory.

Outlines of a Unified Evolutionary Theory of Human and Environmental Health

Introduction

Healthy food and its production should be possible and mutually compatible. The components of what follows have been developing in the world for a long time, but in obscure corners. Now, aided by the incomparable power of the internet to spread heretical information, these insights are spreading. Evidence is being collected and disseminated in unprecedented ways. Here, they will be presented as parts of a synthesis, in which each part reinforces the others. A page of recommended resources to follow up on each topic is linked at the end.

1. Evolutionary health perspectives

Technological progress has many benefits. Yet some aspects of older styles of life, including patterns of sleeping, eating, and moving, and also aspects of food production, may have been healthier for people and environment alike than typical modern versions. Rediscovering and re-engaging some of these could raise health and well-being today.

The principle of evolution by natural selection revolutionized biology. Evolutionary theory can also help sort out the deeply confused and corrupted modern field of nutrition, though not on its own. There are several lines of evidence to go with it: biochemical pathways and interactions, controlled nutrition experiments (not epidemiological studies, which are both commonly performed and mostly useless), and archaeological and anthropological investigations of hunter-gatherer groups.

The illusion in hunter/gatherer mortality statistics

Inupiat Family from Noatak, Alaska, 1929, by Edward S. Curtis.

One line of evidence is research on hunter/gatherer populations conducted prior to their taking up modern practices such as eating sugar and grain and sitting around a lot and snacking. Some of this research was conducted by Weston Price. These groups were found to be either free of or far less subject to the “diseases of civilization,” including cancer, diabetes, heart disease, strokes, cognitive degeneration, and chronic joint and tooth decay.

A popular image of hunter/gatherer groups is that their lives were "nasty, brutish, and short." Quoting statistics on low average life expectancy among such groups is a favorite maneuver of casual critics. But such numbers conceal more than they reveal. Non-dietary factors in pre-modern life collapse the averages. These other factors include rampant infant and childhood mortality, death of mothers in childbirth, predators, prey fighting back, fights and battles among rivals, accidents and resulting infections, and infectious diseases. The overwhelming factor behind improved average life expectancy in modern times is the alleviation of such tragedies as these, above all, large numbers of babies dying before age one. Changes in such data tell us of the effects of modern hygiene and medicine. However, they tell us nothing about what we are investigating: What are the effects of nutrition and lifestyle on health and long-term degenerative conditions?

Evidence suggests rather that hunter-gatherers who survived the diseases and battles of youth tended to live long, with high awareness, robustness, and capability and little to no sign of the many and varied degenerative diseases afflicting moderns. The simplistic idea that they did not develop these diseases only because they died too young to suffer from them does not hold—the ones who lived long did not develop them either!

To The Primal Blueprint and beyond

Although I had been interested in healthy eating since my teen years, and spent a number of years as a vegetarian, the book that marked a sharp shift on my path of research and personal experimentation was The Primal Blueprint by Mark Sisson, which I read in October 2010. This book presents a blend of open attitude, systematic information, and a balanced, principled approach that goes beyond nutrition to exercise and other lifestyle habits viewed with an evolutionary lens.

Other works soon informed my perspectives through phases. I transformed my approach to nutrition and exercise step by step based on new information and experiences. I, like quite a few others, have passed through trying primal and paleo approaches, LCHF, and fasting. I have now moved on to a largely zerocarb approach.

Beyond these many food and training changes over the years, I also took steps such as using software to alter computer and phone screen color temperature according to the time of day, switching to a standing desk for some types of work, using a sunrise-simulation alarm clock, and limiting smartphone reading in the sleeping area (audiobooks allowed). I think such measures helped improve sleep quality and reduce eye strain. Finally, I have discovered important insights into agriculture and environmental issues that connect these personal themes to larger-scale issues.

2. The Metabolic Power of Not Eating

Some key insights about nutrition come from surprising source: the practice of not eating sometimes, or fasting. A recent puzzle piece fit for me and many others has been to reduce “eating windows” and more consistently practice intermittent fasting (IF). It turns out that a positive health-promoting intervention is to just not eat for various periods, for example, 16 hours, 23 hours, or 35 hours, with occasional longer stretches (each person should consult with professionals before doing this, especially if already on a medication that might have to be adjusted).

IF can be done intentionally. However, many practitioners of very low carb and zerocarb diets report spontaneously not being hungry for long periods. In this case, IF becomes partly an outcome of the eating strategy, not just an intentional practice. That said, being consciously open to IF allows one to more easily capture natural fasting opportunities that arise when hunger is absent.

Fasting traditions have been around and recognized as health promoting for at least thousands of years worldwide. However, a contemporary challenge for the practice is that no one is positioned to profit from promoting and supporting it—except the person doing it. There is no special food to order and no special drug to consume. There is no product to be hyped and promoted as the wonder cure. The cure is what is not consumed. Via negativa.

Already being fat-adapted and in ketosis makes fasting easier. There is a certain freedom from always being locked into having to have that next meal or snack. While adaptation is required—anywhere from days to weeks and beyond—once adapted, myself and many others have reported consistent benefits from nutritional ketosis, fasting ketosis, and their interplay.

Fasting may be viewed as a way to intentionally replicate a "bad-hunting day" from the paleolithic past. Of course, no self-respecting paleo hunting group would have decided to have a bad-hunting day, but they would have had some anyway. Our metabolic systems would have adapted to these periodic fasts, would have come expect them. Yet today such pauses are largely missing. Moderns in search of optimal health may have to take steps to reintroduce them, this time on purpose.

When a bad-hunting phase lead to hunger, one should expect our bodies to send the following message: get out there and hunt, and hunt more effectively than lately. That means: more energy and enhanced concentration and attention. It does not mean getting cold and depressed in the cave, a path to non-survival.

The modern approach to dieting—reducing calories while still eating the same regular meals, just smaller ones—has a set of effects opposite to the positive affects of fasting, Dr. Jason Fung argues in The Obesity Code (2016). With chronic low-calorie dieting, metabolism sinks, energy and concentration fall, hunger is constant, and one feels colder. This is the opposite experience from fasting (especially after adaptation). However, it is this “eating less,” as opposed to true fasting, that is the one doomed constant in almost every failing modern “diet.” A central reason for this difference is now understood from controlled trial and biochemical research, Fung argues: the two conditions have completely different impacts on the key phenomenon of insulin resistance. Fasting improves it.

This section has suggested the importance of not eating sometimes. Next, when we do eat, what should be on the menu? What should humans eat to thrive?

3. The Zookeeper's Dilemma

An inverted Zoo. Which are in better health? (Photo CCBY Greg HewGill)

Imagine you are a zookeeper. A clear and pressing question about each animal is: What do they eat? To maintain healthy animals, the first priority is to try to replicate what they eat in the wild. Feeding carnivorous lions rice cakes and herbivorous zebras fish cakes will lead to sick and eventually dead animals on both sides of the fence.

One sign that something is very wrong with modern human diets was expressed by Dr. Barry Groves. He pointed out that although we observe a great deal of chronic and degenerative illness among modern humans, this is largely unheard of among wild animals. However, it is seen among captive and domesticated animals, specifically, animals that are being fed the wrong food.

So what do humans eat? Are we likewise being fed the wrong food?

Well, we eat a great many things, but that does not really help our inquiry. So what is the next question?

In caring for animals, one would ask: What do they eat in the wild?

But again here, with few exceptions, humans today no longer live "in the wild" in any helpful sense, so this kind of information is also not easy to come by. Nevertheless, it is possible to investigate what ancestors of modern humans ate when they much more nearly lived "in the wild" during long, evolutionarily formative periods, say, 50,000–100,000 or more years ago.

Answers to another question would also help: What kinds of foods do we thrive on? Humans are able to eat a wide range of food and survive doing it, but what would be ideal? This shifts the emphasis to what foods humans do best on indefinitely versus merely what they can manage to stay alive on for some years.

This is a subject of extensive medical research. Sadly, much of it is flawed due to over-reliance on study designs that are incapable of demonstrating causation. Such often confounded and poorly designed "studies," however, are far cheaper to fund and then use as the basis for getting another paper published. They also form endless fodder for journalistic articles summarizing such papers, gathering clicks while further distorting what the research itself can legitimately be said to support (usually not much).

Thus, another "evolutionary" influence on the field of human nutrition is "publish or perish," both for researchers and journalists. "Arrive at the truest answers and explain them accurately" is far down the list of priorities in this system. Another angle is "follow the money." Much of it traces back to funding from pharmaceutical and "food" companies with, respectively, overpriced pill bottles and boxes of cheap food-like substances to peddle.

Highly meat-leaning

Balancing a number of different lines of evidence, I have arrived at the view that humans are basically carnivores that can also survive on plant foods as a fall-back. That is, they can survive on plant foods even for long periods, but cannot do so without suffering degenerative harm. Feeding humans primarily—and especially only—plant foods causes them to become gradually malnourished, to sicken in a variety of ways, to "fail to thrive."

This tends to be obscured for two reasons. First, such degeneration can take years and decades to progress. Second, moderns who move toward vegan diets often report feeling better, so those diets must be good, right? Third, a few people seem to do well on vegan diets even over quite long periods and these are cited as counter examples (while most of the others just suffer through or quietly quit).

On examination, however, new vegans are quite often reporting feeling much better after moving away from something rather specific—modern diets of processed foods. They are not moving away from an ancestral diet rich in fresh fatty meat, which is also already free of processed foods. After a few years of veganism, however, with some exceptions, many find their health and mood deteriorating and are forced to quit.

Just because something is better than something else by some measures, such as feeling better or losing weight, this does not necessarily mean it is also ideal or even good. It might just be less bad than something else that came before it. A conventional processed-food diet is quite bad indeed from a health standpoint. Almost anything could be an improvement over it. As for veganism itself, with some exceptions, a typical long-term vegan is both thin and sickly and will soon list up their many and varied health challenges, which they hope in vain that the next concentrated plant supplement might fix. Actions, and diets, must be judged by their results, not only their intentions.

It may come as a surprise to many that tens of thousands of modern humans have eaten meat exclusively, some for many years, many swearing by the dramatic health benefits of the change. Many only arrive at this protocol after having tried all manner of other methods that did not work as well for them, or that even worsened their conditions. We may not yet understand exactly how or why this works so well for so many, but the accumulating number of case studies leaves little doubt that this must be investigated far more carefully than it has been to date.

4. Best for people and environment

If it is true that meat eating is the best human diet for health, another question follows. How could large-scale meat eating possibly work for a modern society? Tiny populations of paleo hunters could do it, but they were working with massive roaming herds, and many of those species went extinct! Besides, isn't meat production already bad for animals and the environment, even without being expanded further?

That they are is a clear impression given in the popular press as "settled science," so "settled" in fact, that no one even bothers to call it settled. Questioning it would be a pure heresy of the worst kind. So let us proceed to do so.

Although the belief that meat production is bad for the environment has become quite popular, the balance of evidence I have seen indicates that this view is severely misguided. To explain this, we must turn to some still different perspectives and sources not directly related to nutrition.

The view that fatty meat is the healthiest primary food for Homo sapiens—that we are basically carnivores that also have a nifty ability to fall back on plant foods in a pinch—raises a wider issue. If this were true, how could modern food production possibly shift from serving carbohydrate-centric to animal-fat- and protein-centric eating patterns on any large modern scale?

Virtually unquestioned conventional wisdom insists that not only health, but also "the" environment dictate lower, not higher, reliance on animal products. The truth, as is surprisingly often the case, may be the exact opposite. Indeed, even separate from human nutrition issues, properly managed large herd animals might be the only way to halt and reverse the large-scale environmental destruction caused by modern plant agriculture and poor land management. Moreover, whatever environmental destruction caused by grain agriculture for feeding ruminants cannot be blamed on the cattle. They naturally thrive on grass rather than grain. And they can eat grass all by themselves; that's just how they roll.

The key insight is that large heard animals and vast stretches of grassland coevolved over geologic time. They came into existence and thrived as part of a single ecological system. One of the last modern examples of this was the unending sea of bison encountered by the early European explorers of North America (before some of the pioneers systematically exterminated the animals, also further undermining cultures that had long subsisted on them).

Decades ago, Allan Savory set out to answer some pressing ecological questions. He arrived at the view that the most important and underestimated global issue is the mass desertification of grasslands. And he argues that there is only one way to effectively alter the process.

Savory's breakthrough was to discover that desertification has not been caused by “overgrazing,” as is usually thought, but by mis-grazing. Earlier effects of mis-grazing were then reinforced by misguided herd reduction or removal, which made the problem still worse, not better. More animals, properly managed, not fewer, would have been the solution. Today, he and his institute teach methods of using proper management of herd animals to recover desertified land and transform it into far more biologically productive pastures using know-how assembled under the heading “holistic planned grazing.”

Holistic planned grazing, in my view, constitutes an evolutionary approach to land management. It recognizes and builds on the ancient co-evolutionary interplay between grassland flora and large fauna. Large herds kept themselves moving across grasslands—fertilizing and tilling along the way—while staying grouped tightly to defend against predators. When they moved on, the land and flora had plenty of time to recover and regrow. The right know-how on the part of herd managers can replicate these dynamics without relying on predators to shape herd movements.

As Savory's methods have shown, such properly managed pastures naturally retain rainwater through the grass, soil, and other life that grows there, all in an evolutionary dance with the same types of animals those grasses themselves co-evolved with. Vast surfaces of the earth were once covered with thriving grasslands occupied by roving herds of untold millions of beasts. Holistic management provides a way to recreate habitats that mimic essential elements of this past in an efficient modern way. A fundamentally biological problem requires a biological solution, Savory argues, not a chemical or an industrial one. On this basis, by the way, we can already suggest that "lab-grown meat" would just further contribute to environmental problems that a vast resurgence of real animals, properly managed, could help solve.

This would happen to produce a large potential population of animals thriving in environments quite natural to them. They might then also contribute a major, nutrient-dense, modern food supply. Dr. Michael Eades arrived at a similar view after a thoughtful review of Savory's ideas and critiques of them (2 Jul 2017). He provides an exceptionally clear description of these practices. Moreover, it is politically notable that herding can be more decentralized and distributed than mass grain agriculture, enhancing local self-reliance and independence.

White Oak Pastures in Georgia, USA provides one inspiring example of transformation of a formerly conventional ranch. Using multi-species holistic management, it has not only recovered burned-out agricultural land, but has also breathed new life into a town that had been nearly deserted.

Healthy grasslands, herds, and nutrition

The foods most destructive to human health have one thing in common. They are mass agricultural crops. Sugar, wheat, and corn top the list. All of them are subsidized by governments. All of them are promoted by official dietary guidelines. All of them are highly profitable for “food” companies.

And all of them kill and maim. They just do so insidiously through their contributions to chronic systemic inflammation, excess weight, diabetes, heart disease, cancer, arthritis, depression, suicide, and the modern conditions of cognitive degeneration. They are central to feeding an endless supply of sickened people into modern "healthcare" (sickness management) systems. Chronic, degenerative conditions provide much of the business for the highly profitable pharmaceutical and healthcare industries year after year. Sick people, flowing money. Who wins and who loses? You lose.

Both anecdotal and increasingly also formal evidence continues to build for beneficial roles of fasting and very low-carb and zerocarb eating in treating, and especially preventing, the entire spectrum of modern chronic ailments. However, the interests that can gain from such practices—at the strictest baseline, sellers of meat and water—are far more dispersed. Their influence pales in comparison to the concentrated financial, media, and political resources of big food plus big pharma. Billions go to conglomerates selling cheap carbohydrates mixed with toxic plant-derived oils. Billions more then go to companies selling all manner of drugs and aids, which seek to manage the chronic damage accumulating from the consumption of such alleged food.

Nevertheless, from outside of this sorry system, an unexpected larger picture is emerging, one precisely opposite the popular hypothesis that mass agriculturally based vegetarianism is best for both human health and the environment. This is the hypothesis that distributed, holistically managed grazing and carnivory are best for both human health and the environment.

The low-carb/high-fat and paleo-oriented nutritionists on the one hand, and the ecological herders on the other, have independently arrived at different pieces of a single puzzle. The synthesis of these streams of thought and practice has profound implications. The results suggest a food system based around a modern planned pastoralism enhanced with holistic management practices that mimic the co-evolutionary conditions of grasslands and herd animals.

Summary claims of a paleo-carnivore/holistic management synthesis

1. Humans tend to live best mainly on a blend of fatty acids (fat) and amino acids (protein) derived from animal products. Animal products are the best sources of energy, structural materials, and highly bio-available micronutrients for humans. In contrast, eating large amounts of carbohydrates, especially processed ones, and artificial industrial foods such as seed oils, produce gradual metabolic derangement, foremost chronic insulin resistance and its many associated degenerative conditions. Even vegetables, generally considered the unquestionable banner of good health, lack much usable nutrition at all per unit of weight and carry a range of irritants and anti-nutrients (chemicals that block the absorption of nutrients), evolved in a chemical warfare strategy to protect them against being eaten by punishing those who eat them.

2. The best single source for the nutrients humans thrive on is large herd animals. Seafood is also a good resource, though generally lower in fat (a con, not a pro). Early Homo sapiens and some of their cousins may have contributed to the extinctions of many of their preferred larger, higher-fat species long ago, such as paleo elephants and mammoths, but we still have cattle and buffaloes, which work reasonably well. We also now have property rights (to some degree), which defeat tragedy-of-the-commons overuse issues. Notice the word commons in the phrase "tragedy of the commons." It is there for reason: the tragedy happens when legitimate property rights are too poorly defined and defended.

3. The best way to halt and reverse mass desertification and alleviate related water crises is to manage large herds in ways that sufficiently mimic the natural movement patterns of their original evolutionary contexts. This is also so independently of food production and human health issues.

4. Humane and holistic ranching practices provide ideal living environments for herd and other animals. Compared to their evolutionary contexts, animals on holistically managed multi-species farms are protected from random and violent death from predators. Their supplies of food and water are reliable and secured.

5. Mass grain agriculture practices lead to mass destruction of wildlife and long-term soil deterioration. Some of this grain is fed to animals. Grain feed-lot methods are associated with poorer health and living conditions for animals. The grain system replaces multi-species environments with monocultures, which are vulnerable to disease and soil degeneration and require constant attention, often including irrigation and farm machinery, to prop up. In contrast, cows eat grass all by themselves and grass grows all by itself (a little help from holistic management better replicates natural herd movement patterns that co-evolved with predators to support natural grassland water retention, even in dry climates).

5. Implications

A concluding summary must be far, far shorter than the journey itself. For understanding of food production: biological/ecological problems require biological/ecological solutions. Understand where plants and animals have come from and how they co-evolved, then apply that understanding to modern practices. This includes herd animals, grasslands, and people too! For personal use, the principles are: eat meat, drink water, lift heavy, sleep, play, and sprint once in awhile. These are quite reminiscent of Mark Sisson's Primal Blueprint laws, but the ones on food are further specified.

These practices appear to have dimensions beyond physical pragmatism. Many who have tried a plant-free diet for a sufficient period to transition (30 days is often recommended for a trial) have reported profound health and well-being improvements, not only in a range of physical conditions, but also in psychiatric and emotional difficulties. One practitioner in 2009 described the improvement in emotional state after starting an all-meat diet thus: "The noise has stopped and the music has begun."

Many also report a profound sense of freedom from former obsessions with food. All of the decision fatigue associated with whether to eat this or that, when, and how much, vanishes. Former cravings decline and eventually fade. Faced with foods that one had previously considered objects of craving, it is hardly possible to believe that one actually ate those things regularly in the past.

Hours formerly spent on food can now be spent on engaging productively with the world and pursuing one's missions. As Dr. Shawn Baker put it, “If you look at any other animal on the planet, they aren’t looking at a menu and scratching their head.” As human animals with oversized brains and imaginations, we all have better things to do than spending inordinate amounts of time managing and balancing a long list of plant addictions. Freedom from them is possible. The power of being human can be unleashed from the travails of plant-consumption/plant-addiction management.

Hunters act and act smartly. Human hunters have thrived to an apex level through our wits and ability to work together. The "apex diet" is both the origin of this capability and continues to support it today.

I kept references in the text to a minimum for readability. The following page provides links to some of the best resources I have found on these subjects, including papers, blogs, articles, and lectures. To follow up on the many topics and perspectives in the foregoing synthesis, continue with Evolutionary Health Resources.

[This article was revised from its original version, mostly shortened and revised for clarity, on 2 July 2018].

Yes and Nein: Borrowing the best from German and American cultures (and not borrowing the worst)

After nine years living in Germany (as an American), I have distilled a difference in cultural instincts into a simple heuristic that balances the pros and cons of opposite tendencies. This is, of course, a large generalization and there are many individual exceptions, but I think it has some merit as a statement of tendencies.

In America, a first instinctive response to new ideas or ways of doing things tends to be: “Yes, that sounds interesting. Let’s try that and see how it works!” [for the West Coast, interject “wow” or “cool”].

On the negative side, this enthusiasm for the new can sometimes be applied to terrible ideas, which then waste time and money or worse. On the positive side, this makes innovation at a fundamental level much easier than elsewhere. America is a global engine of innovations that transform or create entire industries. In modern times, think of Apple (which has made a recurring habit of this), Facebook, Airbnb, and Uber.

In a simple contrast, in Germany, a first instinctive response to new ideas or ways of doing things tends instead to be: “No, that is not how it is done, that is impossible, no one does it that way and therefore it can’t work.”[1]

On the positive side, this tends to weed out terrible ideas and concentrate time and attention on things that solidly do what they are supposed to, like Autobahns, BMWs, long-lasting buildings, and MRI machines. On the negative side, this makes big-concept innovation much more challenging, since “that is not how it is done” is the whole point of a big-concept innovation—just add “yet.” In contrast, incremental technical and quality improvement within a given track proceed well, particularly in mechanical domains. Things are built to work very well and to keep doing so for a very long time.

From German culture, I embrace a healthy respect for things that actually work and a healthy skepticism about things that are not yet known to work (and that might just fail spectacularly—like socialism and wind power, oops). From American culture, I choose to embrace a style of fundamental innovation and re-thinking that has the power to reshuffle the structure of entire industries and ways of life in a legitimately and lastingly positive direction (unlike the low-fat diet, oops).

So: enthusiasm for the new—when warranted.

[1] There are some stark exceptions. One is the historical enthusiasm for the horrific ideologies of socialism (national and otherwise). This might be partly understood as misapplying mechanistic thinking to the decidedly non-mechanistic domain of society and economy. Another is homeopathy, which is immensely popular in Germany, even though it appears to lack any scientific basis. Besides placebo effects, which could be significant, one of my theories is that it does work in an odd sense: it helps protect people from greater exposure to conventional medicine, drugs in particular. By doing this, it sometimes accidentally leaves people healthier than if they had been subjected to certain unnecessary net-negative conventional treatments instead. First, do no harm.

Ancient travel food meets modern travel: My ultimate paleo travel meal option

A larger batch than I made.

Modern travel can be especially unfriendly to ancestral eating strategies that emphasize fresh whole foods. Although airlines try hard, the logistics are tough, and airplane food in general has a poor reputation. Some low- and zero-carbers tell me they just take the opportunity to fast. Even when traveling by train or car, it can be tough to impossible to scavenge much if any "real" food from rest stops and kiosks.

Fortunately, it is possible to pack something to bring, but what? Weight and spoilage are concerns for many fresh foods, especially animal foods. So this trip, I am going to borrow from a very old approach to preservation and portability of high-powered food. Yes, this time, I'm going to fly with pemmican.

Pemmican is credited as an innovation of native North Americans. After reading and watching as much as I could about food preservation and pemmican's particulars online, I came to think of pemmican less as a specific recipe and more abstractly as a versatile food preservation approach. The strategy hinges on the fact that lean meat and animal fat have very different requirements for long-term preservation. Reflecting this, the lean and the fat are first divided up, after which quite different preservation methods are applied to each. Finally, the results are combined back into a single product.

Fully drying lean meat helps prevent bacterial activity, which depends on moisture. Rendering fat on low heat separates the pure fat out of the source tissues, which degrade quickly. The pure fat by itself, once rendered, can last a long time. It mainly needs to be protected from air and light, which promote rancidity. Traditional packaging methods do just this.

My second trial production run

I chose salmon this time for the lean and beef tallow for the fat, a combination I have not seen, but that sounded good. I also added a few blueberries for flavoring, though this is optional. I started with 625g (22 oz.) of wild-caught salmon, fresh frozen. I thawed it, removed some of the extra water with paper towels, cut it up, and placed it in a food dryer for about 15 hours, turning once early on. The key point here is that the lean must be completely dry and brittle, far dryer than jerky, which should still have some bend to it.

Next, I placed the result in a blender. This time, I blended for longer than I did in my first trial batch awhile back. Sure enough, I got the sought-after "powder" result this time. It took a solid minute or more of blending at different speeds to get there though. A mortar and pestle is traditional for this step.

For this page, I followed the same process as with the salmon with about 200g of wild blueberries, which were also fresh frozen. I dried them on another rack right along with the fish and then blended the dried result down to a powder.

I didn't have to render the fat myself since I was finally able to find a source of beef tallow from a butcher (tallow, once commonplace, has proven hard to find after a half century of relentless, but scientifically baseless, slandering of animal fats). I weighed the powders and then chipped out about an equal weight from my refrigerated tallow supply. I warmed this up on very low heat. The only goal here is to melt it so it can be mixed with the powders.

After stirring the dry and liquid ingredients together in a bowl, I spooned the result into two small plastic containers with sealing lids. The point here is to help prevent any oil from escaping and getting tough stains on clothing and luggage (I will also place the containers inside ziplock bags for this reason, just in case). I lined the containers with butcher's paper, filled them up, closed the paper inside, and sealed the lids.

I will wait until the airplane meals come, and just pull out one of these as a supplement. Very low key. Little can anyone imagine how much paleo nutritional power is going to be packed into those innocent looking containers. If they did know, though, it would look about like this:

Macronutrient analysis

The inputs were 625g of salmon, 150g of tallow, and about 200g of blueberries (respectively, 22 oz, 5.3 oz, 7 oz), which totaled about 975g of ingredients. These were reduced with drying to 290g, so about 30% of the original total weight. Great for travel!

I ended up with about 130g (4.6 oz) of content in each container, plus another 30g that I sampled right away. So what macronutrients are in those two containers?

The estimated macros on all the inputs together (based on the breakdowns on the frozen product boxes) were: 1,940 calories, 126g of protein, 159g of fat, and 12g of carbs (from the berries). So each 130g container includes 873 kcals, 57g of protein, 72g of fat, and about 5g of carbs (rounded). Calories are 228 from protein, 648 from fat, and 20 from carbs. That's 72% of calories from fat.

And so: the perfect travel power food, inspired by the old, old, school, along for my next flight.

UPDATE: Pro tip. Watch out of the 100ml limit on "liquids and gels" at the security line. I would have never thought of this as a "liquid or gel," but the x-ray machine guy was curious. I said it was my lunch and they let me through. Safest way would be to create sub-100ml (g) packages and put them in the clear plastic bag for the security line. Also, recall that if you are flying internationally, this could not be brought into a country with a quarantine on meats. Eat it before landing (no trouble there!).

SpaceX can get there, but biology a probable Mars residence limiter

SpaceX chief Elon Musk laid out a long-term vision for regular interplanetary transport and colonization in a 27 September presentation at the International Astronautical Congress. Details and vision alike were further steps along the path SpaceX has been pursuing for years, as it repeatedly counters naysayers by taking up the so-called impossible—and getting it done.

Yet while Musk concentrated on engineering, propulsion, efficiency, and finance, the toughest limiters on long-term Mars habitation may well turn out to be biological. Could life evolved on Earth, especially more complex organisms such as ourselves, thrive there indefinitely and across generations?

Musk’s aim is to make humanity a multiplanetary species. He envisions a city of a million people on Mars that could become “self-sustaining.” In other words, if Earth becomes uninhabitable, humanity would have a second home, and avoid extinction.

Most of the technical issues with Mars habitation can be addressed with technical means. Radiation can be shielded against. Water, air, and regulated temperatures can be produced, and chemical plants such as for ship propellant can be built. Psychological and other factors in long-term, small-scale hab confinement have already been under study both in space and in remote desert sims.

The gravity of the situation

However, the harshest sticking point for a colonization plan could be something that Musk mentioned, but characterized only as a source of fun—38% Earth gravity on Mars. He presented images of jumping high and lifting heavy things with ease.

The possible problems would only appear, as they so often do, over the longer term. Research on the health effects of low gravity has already begun to suggest a quite unfavorable pattern. Much of this research as been done in zero g, but long-term exposure to 38% Earth gravity—Mars g—could well produce many similar effects along the same spectrum, just more slowly.

Zero g has been found to produce not only the expected muscle atrophy in astronauts, but a host of other health issues, which isometrics and exercise bikes can only partially limit. Research on both astronauts and lab animals point to falling bone mineral density and circulatory issues, including impaired heart health.

Limited research to date thus already suggests negative effects on three major physical systems. Yet muscular, skeletal, and circulatory systems are hardly footnotes to transporting brains; they are most of what a complex organism consists. Moreover, there is no reason to expect nervous and reproductive systems to get free passes either, especially over years and decades.

Studies of zero-g animal embryonic development raise even greater concerns for long-term Mars colonization. Reproduction among spacefaring rodents has gone quite badly. Experiments with mice on a Space Shuttle mission resulted in normal embryos for the earthside controls and no growing embryos in zero g. Rat groups sent into orbit produced some weightless pregnancies, but with no resulting births. The pregnancies spontaneously terminated—all of them.

Evolutionary and developmental processes could always assume 1g

Simple organisms such as bacteria are the least likely to be bothered by gravity changes. The more complex the developmental process, however, the more likely that aspects of this process will be fine-tuned to happen in 1g. That said, Mars g could well be better for development than zero g because it would at least supply developmental processes with some vertical orientation, an up and a down, albeit with a much weaker signal.

The plans encoded in DNA for growing an organism are completely unlike engineering plans. They are decentralized developmental instructions. Each cell responds to its immediate environment. It takes cues from the type of cell it has become, from the types of cells around it, and from the specific chemistry and hormones in its blood supply. The so-far unquestioned constant has been that all earthly life has evolved in 1g (with very tiny variations) and every embryonic developmental process has evolved to take place in this 1g.

What about adaptation? As powerful a force as evolution by natural selection is, it tends to require extremely long time scales, on the order of thousands and more generations, especially for larger-scale adaptations. Too great a change—or an entirely unprecedented type of change—and a species will simply not make it.

Adaptations to something so pervasive and otherwise constant as gravity would have to proceed in steps. If a hypothetical planet’s gravity were to (somehow) shift to 38% of its former level, but do so over several million years or more, then life there would have a decent chance of adapting because any given generation would only be subject to minute changes. However, by the time gravity reached 95% of its former level, organisms then would already tend to be optimally adapted to that new 95% level. Checking in again a thousand generations later, organisms would tend to be well adapted to the newly current 90% gravity, and so on as gravity crept down. In contrast, evolution copes far less well with sudden large jumps, which tend to be associated with mass extinctions.

Temperature variation is a variable to which earthly life is widely adapted, both across species and to a lesser degree within each organism. Temperature has changed remarkably and continuously throughout Earth’s 4.5 billion year history and it also varies starkly with season and geography. Temperature adaptation therefore has a vast range of evolutionary precedent. Atmospheric composition, pressure, and radiation levels have also changed back and forth over geologic history.

What earthly life has never had to do, not even once, is what a Mars relocation would ask of it. Low g is something that evolution has had no opportunity to tackle. One of the few rough constants throughout the 3 billion or more years of earthly life has been 1g.

This still does not make some degree of individual gravity adaptation impossible now, but it does suggest that this could be a very serious issue for colonization and a potential deal-breaker for both indefinite stays on Mars and natural reproduction of future generations there.

The probably need for artificial gravity and how to produce it

For long-term extra-terrestrial colonization, artificial structures capable of producing artificial gravity that approximate 1g seem more promising. One concept involves large cylindrical spacecraft on axial rotations. The interior surface of the cylinder can be built to a size and given a rotation to approximate 1g over a large habitable interior surface area. That would be another huge engineering challenge. Yet SpaceX’s work in interplanetary transport, along with advancements in asteroid mining, would help lead to a future in which this too could become more feasible.

Given the grave potential health and reproductive risks of long-term exposure to zero g and/or Mars g for Earth-evolved organisms, those interested in space colonization ought to assign a high priority, alongside ongoing engineering work, to low- and zero-g health research. Critical for colonization are three research areas: effects of Mars g on the health of Earth-leavers, likely health of long-term Mars residents upon potential return to Earth, and effects of low and no g on embryonic and childhood development.

Getting people to Mars is an engineering challenge. Musk, SpaceX, and collaborators are up to the task and well on their way. But the length of time that hopeful new Martian arrivals can expect to live there, in what state of health, and with what likelihood of producing healthy offspring, are critical questions in need of serious research and consideration in relation to any developing colonization plans. Early animal and astronaut studies combined with an evolutionary perspective suggest that shorter-term Mars visits are likely to be far more feasible from a health perspective, that natural reproduction among colonists might well be out of the question, and that the development of spacecraft and stations with artificial gravity is likely to be a biological priority for any future long-term extra-terrestrial residents.

This provides a more realistic base scenario from which to refine the engineering details of an early Mars transport and habitation system. It may well be that 1g environments would have to be available at least part of the time to support health longer term. The most realistic approach to creating artificial gravity is a rotating habitat, but this could well prove easier to achieve in space than on a planet with gravitational and atmospheric resistance, albeit both much lower than Earth’s.

At minimum, it should be clear that lab mice and rats ought to be the first serious colonists on Mars—and this for quite some time. Their mission: to live where no earthly creature has lived before. Godspeed to those pioneering rodents; I suspect they’ll need it.

The curious case of the faster-healing knee and the larger steaks

Some loose ends needed addressing, but why was the recovery so fast?

My doctor took one look at my knee and his jaw dropped. He had hardly ever—or perhaps never—seen a knee that looked that good just four days after arthroscopic surgery.

This clinic specializes in these surgeries, so he sees patients, many of them young athletes, in post-surgical recovery checkups daily. He kept looking at my knee and then looking at me—a middle aged guy. He checked the chart to make sure the surgery was actually just four days ago. Still in disbelief, he asked me what I had done.

What came next was instructive. I told him I thought the surprisingly fast recovery might be due to my very low carb diet.

His response was surreal, because non-existent. He did not acknowledge what I had said. He just kept going on about how good the knee looked and how he had hardly ever seen such a fast recovery.

The rest of the conversation was clear and normal. We talked about how the stitches were coming out next time. We talked about how, given the fast recovery, I probably didn’t need that physical therapy after all.

I was still curious, so I mentioned just once more that maybe the notable recovery could be due to my low-carb diet, because that seems to reduce inflammation.

Once again, no reaction. It was as if I had spoken just that one line in Chinese. No, not even that. Switching to Mandarin would have elicited some noticeable reaction. Would the fact of my statement cease to exist if not acknowledged?

A tale of two otherwise identical surgeries

I have spent several decades in somewhat rough activities including martial arts earlier and amateur adult soccer later. With such activities, it can seem at times like rolling dice when an individual’s luck might run a bit low and an arthroscopic meniscus repair will be called for. Once this kind of tissue tears a little, it just does not heal by itself. Worse, the torn piece can obstruct the joint and lead to additional tearing and other problems. It’s a little like having a hand-knit sweater with a hanging thread that is just waiting to get caught and unravel some more (but with pain involved). The hanging thread just needs to be trimmed off. The invention of arthroscopic technology revolutionized the ease with which this could be done.

My first such surgery was in 2010. Of course, I thought I had learned my lesson and would not be back. But alas, in a single lapse of focus, the other knee over-extended on a bad landing on the futsal court in late 2015, the fault only of myself. So my second such surgery, on the other knee this time, was done recently in 2016.

My recovery six years ago was good, but relatively more ordinary. It at least did not elicit any jaw dropping from the specialist. I recovered nicely, above average, but I do not think I recovered this well.

It was also striking to me after this 2016 surgery that I awakened from anesthesia crisply, with perfect clarity, as if from an unusually excellent night’s sleep. I do not remember a feeling at all like that from my corresponding 2010 recovery room awakening. I recall it as groggy and gradual, more as I would have expected. This may or may not be important or coincidental, but I note that a major effect of a low-carb ketogenic diet is a gradual transformation of preferred cellular fuel sources, including for the brain, so an effect like this is plausible. I have noticed clear improvements in sleep patterns following dietary changes and full anesthesia and sleep are related states.

There is certainly individual variation in recovery rates, but the interesting thing here is the rare opportunity to compare the same person recovering from two identical surgeries at two different times. Six years apart, these were the same surgeries, performed by the same surgeon, and conducted at the same clinic with the same anesthesiologist in the same room. They were for remarkably similar injuries. The surgeries were conducted a similar length of time after the initial incident (in both cases, after about eight months of “conservative” recovery and training efforts). I am the same person. Almost every factor was the same.

So what changed between the two events?

First, I am six years older. But this would predict a slower recovery, not a notably faster one.

Second, I have completely changed my diet, including adding fasting periods. Both low-carb and fasting are known to reduce systemic inflammation compared with more conventional modern diets, with their high frequency, high refined carbs, and brutally high omega six. With lower systemic inflammation (call it immune-system noise), specific inflammation as a healing response at the surgery site (immune-system signal) might proceed with more appropriate focus on the local site and without undue exaggeration.

It was only several months after the 2010 surgery that I discovered The Primal Blueprint and first ditched grains, started even more thoroughly avoiding refined sugars, and replaced industrial processed seed (“vegetable”) oils with natural fats. Then, starting around 2013, I moved toward a still lower-carb, higher-fat whole food ketogenic approach. More recently, just within 2016, and mainly in the past few months, I have been trying out a largely carnivorous approach and have introduced more fasting and intermittent fasting as well.

Analysis and implications

Unfortunately, I have no comparable record of the state of the other knee after exactly four days in 2010, only necessarily unreliable memories and impressions. I could be making this up from memory and confirmation bias. Or the difference between the surgeries could be random or due to some other unnoticed factor.

Still, even as anecdote, these recollections strike me as notable. And on reflection, it occurs to me that one of the sad symptoms of diabetes is poorer wound healing. If a low-carb (and natural fats) diet tends to lead toward the very opposite of a diabetes crisis metabolism, might it not likewise lead to the opposite of compromised wound healing? That is, improved and above-average wound healing. This seems plausible.

The hypothesis here is that conventional high-frequency, high-carb diets might keep most people’s post-operative and other wounds from healing as quickly as they might otherwise. The effects of the resulting unnecessary systemic inflammation would come to appear “normal” only because it would be what clinics would see from day to day within the particular afflicted populations. Anyone doing something quite atypical of that population, such as a very low carb diet, might produce seeming anomalies—relative to this afflicted population. If lower carb and fasting are superior to higher carb and frequent eating, as I have come to think they are—through research, countless biographical and ethnographic reports, and accumulating personal experience—those anomalies would show up as positive surprises.

Greater clarity here could support dietary practices that improve health outcomes while reducing, or at least not adding to, reliance on the medication industry. As I put it in the title of my book review essay on Jason Fung's The Obesity Code, “Only the faster profits.”

Relatively little research money floods in to verify or falsify these types of potential effects, perhaps, because no potentially profitable pills would be entailed in producing them. If such benefits might be real, people changing their own habits would be the primary beneficiaries and direct action to make personal changes would be the primary method.

Block Size Political Economy Follow-Up 3: Differentiation from the 21-million Coin Production Schedule

Continues from Part 2.

One popular argument compares the Bitcoin block size limit to the coin production schedule that sets up a terminal maximum of 21 million bitcoins that can ever be created. Raising the block size limit, this argument continues, could set a precedent for changing the coin production schedule, and then what? Changing the block size limit opens up a slippery slope that could threaten to lead to the end of cryptocurrency standards and boundaries. Just as the coin limit is an essential value proposition of Bitcoin, so other types of limits must be conservatively protected as well.

How can this type of argument be considered?

First, note that this represents an approach opposite to the one I have taken. I have identified and discussed the block size limit as something uniquely and importantly different within Bitcoin from an economic standpoint. The above argument, in contrast, presents these different “limits” as quite similar to one another for this purpose and therefore ripe for analogizing.

Next, one might note how Bitcoin started with its production schedule already in place, whereas the block size limit was added about 20 months later and at just under 1,200 times larger than the average block size of the time. The limit’s original proponents defended it from critics as a merely temporary measure and thus of no real concern.

A common retort to such observations is, in effect, “that was then, this is now.” The project is at a more advanced stage. The current developers have more experience and a more mature view than the early pioneers. The system now carries far more value and the stakes are higher. Today, we can no longer afford to be so cavalier as to just put a supposedly temporary limit right into the protocol code where it could prove difficult to change later…

That is…we can no longer be so cavalier as to just remove such a previously cavalierly added temporary limit...That is…it is time to move on from reciting old founder tales and look to the present concerns.

And indeed, such matters of historical and technical interpretation are subject to many differing assessments. However, there is an altogether different and more enduring level on which to consider this matter. There are substantive economic distinctions between a block size limit and a coin production schedule that render the two remarkably different in kind and thus weaker objects for analogy than they could at first appear.

When “any number will do” and when it will not

This is because raising the total quantity of a monetary unit by changing its production schedule has completely different types of effects from changing the total quantity of a given service that can be provided. Producing an increased quantity of a given cryptocurrency is entirely unlike producing an increased quantity of transaction-inclusion services. This follows from a unique feature of monetary units as contrasted with all other economic goods and services. An arbitrary initial setting for the production of new coins (which operates to define an all-time maximum possible production quantity) works quite well for a cryptocurrency, but does so only for unique and distinctive reasons.

With money, barring certain divisibility issues of mainly historical interest, any given total quantity of money units across a society of users facilitates the same activities as any other such total quantity. This includes mediating indirect exchange (facilitating buying and selling), addressing uncertainty through keeping cash balances (saving; the yield from money held), and facilitating lending and legitimate commercial credit (not to be confused with “credit expansion”). The particular total number of money units across a society of money users is practically irrelevant to these functions. What is critical to a money unit’s value is users’ confidence that whatever this total number (or production schedule) is, money producers cannot arbitrarily alter it, especially upward, so as to rob money holders through devaluation.

Subject to constraints of mineral reality.

A hypothetical model of physical commodity money production on a free market differs in certain important respects from both cryptocurrency and fiat money and bank-credit models. We should therefore closely consider the meaning of arbitrary with regard to these distinct cases.

With precious metal coins produced by ordinary businesses on a free market, the number of units cannot be increased arbitrarily for reasons rooted directly in physical constraints. Each additional precious metal coin to be produced requires specific scarce materials and energy combined with various manufacturing and other business costs, from mining to minting. Each such coin is much like any other good produced and exchanged on the market in that it is a product to be used in the market as money as opposed to a product to be used in the kitchen as dinner. Material scarcity itself protects money users from rouge money producers by preventing arbitrary changes to the quantity of money units. Changes in quantity supplied reflect supply and demand for such coins, including marginal production costs, as with other products.

In sharp contrast to this, a state-run system of fiat money and bank credit supports “flexible” increases in the “money supply.” These are arbitrary in that, unlike hypothetical commercial precious metal coin makers, these legally privileged money producers can generate additional money units at little to no cost to themselves. Notes can be printed and differing numbers of zeroes can be designed into printing plates as the denomination at no difference in printing cost. Likewise, cartel-member bankers can issue “loans” of nothing, filling customer accounts with what has been aptly described as “fountain pen money,” limited to a degree by the current policies and practices of those managing the banking cartel (“regulators,” etc.). Legal frameworks provide some protection for users of such money, most of the time (except when they do not), but such protections are far weaker and less reliable than those from the harder constraints of mineral reality.

Against this backdrop, some cryptocurrencies, led by Bitcoin, feature a novel and innovative third way to protect money users from arbitrary increases in new add-on supply. A production schedule can be specified within the effective definition of what a given cryptocurrency is.

Now in considering the exact number of possible units of a given cryptocurrency, consider two almost identical parallel universes, A and B, which differ in only one respect. Assuming sufficient divisibility in both cases (plentiful unit sub-division is possible), 30 widgetcoins out of a 300-trillion widgetcoin supply across a given society in Universe A carry the same purchasing power as 60 halfwidgetcoins out of a 600-trillion halfwidgetcoin supply across a given society in Universe B.

In each universe, one can buy the same kilogram of roast beef, in one case with 30 units, in the other with 60. Since the 300-trillion versus 600-trillion total money supply is the only difference between these two universes, it makes no difference whether the roast beef is bought with 30 units in Universe A or with 60 units in Universe B. Since the people in the two universes are wholly accustomed to their own respective numerical pricing conditions, their psychological and felt interpretations of the value associated with “30” in the one case and “60” in the other, are likewise indistinguishable.

Naturally, many individuals and organizations in any universe dream of having “more money.” For example, considering that 20 units of a good is worth more than 10, it is easy to equate having more units with having more wealth. Twenty good apples represent an amount of wealth (ordinally) greater than 10 such apples do. This is also the case with holding quantities of the same monetary unit. Twenty krone represents more wealth than 10.

But the crucial point now arrives: the foregoing “more is better” with regard to money applies to the number of units in a given party’s possession, but does not apply—as it does with ordinary non-money goods and services—to the wealth of the society of money users as a whole. Viewed across an entire society, intuitive associations from personal and business experience between larger numbers and greater wealth do not translate into a way to raise overall wealth. Political funny-money schemes with names such as “monetary policy” and “credit expansion” instead produce only sub-zero-sum transfers of wealth from some monetary system participants to others. Such transfers produce win/lose results in which some gain at the expense of others, not to mention the additional net losses from the transfer process itself (thus sub-zero-sum).

With Bitcoin, when the initial design was set—but not afterwards—42 million units, or other possible numbers, would have been as serviceable as 21 million. After the system launched, however, no general benefits could follow from increasing the quantity of possible bitcoins beyond their initially defined schedule. Such a later increase would instead tend to 1) reduce the purchasing power of each unit below what it would have otherwise been, 2) transfer wealth to recipients of new add-on units away from all other holders of existing units, 3) raise uncertainty about the coin’s reliability, likely depressing its market value with an uncertainty discount, 4) create demand for an analog of a “Fed watching industry” that speculates on what might happen next with the malleable production schedule, and 5) give rise to an industry of lobbyists, academics, and other experts dedicated to influencing such decisions.

While the block reward framework does indeed also “transfer wealth” in a sense to miners from existing bitcoin holders as in item (2) above, it crucially does so only in a predefined way, knowable to all participants in advance. The block reward schedule, defined before launch, provides a form of compensation for mining services in the system’s early days. This has enabled the system to evolve and succeed from its launch to the present. This follows not from any arbitrary change to the production schedule, but merely from the ongoing operation of the production schedule initially set.

One free pass only

In sum, a peculiar characteristic of money units when viewed across an entire society of money users provided a one-time and unique economic free pass for setting an arbitrary number of possible bitcoins at 21 million. This free pass could only be valid before initial launch (prior to 2009, or at the very latest, prior to the evolution of any tradable unit value). Changing the schedule later, especially in such a way as to increase unit creation, would have completely different and wholly negative effects from a systemic perspective.

Now returning to non-money goods and services the case is quite different again. The foregoing unique monetary free pass is entirely absent, whether after launch or before it. When non-money goods and services are likewise viewed at the level of a given society as a whole, “almost any number will do” does not apply. An increased total quantity of a non-monetary good or service supplied can be in the general interest, not only in special interests. It can be win/win and not win/lose. If there are more apples or cattle to go around in a given society (as opposed to just more pesos), this does tend to lower the costs of acquiring those goods in a meaningful way. This does enhance wealth in society, not just transfer it around. It represents a real increase in production, not just a “flexible” money fraud as in the case of arbitrary inflation on the part of money producers.

Miners provide one such ordinary “non-money” service when including a given transaction in a candidate block. This is a scarce service provided (or not) to a specific end user by specific miners. It does not fall under the unique category of the total number of monetary units in a society of money users. The total possible number of bitcoins, however, does fall under this unique category. The two numbers differ in kind and for that reason make poor objects for analogy. Both may, indeed, be viewed as “limits,” but it is important to recognize the contrasting economic roles and natures of these two types of limits.

Block Size Political Economy Follow-Up 2: Market Intervention through Voluntary Community Rules

Continues from Part 1.

If a given block size limit is part of a given cryptocurrency at a given time, can economists legitimately say anything with regard to such a limit? Must this topic be left alone as a mere qualitative characteristic of a product that users have freely selected?

From one perspective, if user preferences are subjective matters of taste and opinion, nothing can be said other than that Ravi prefers this, Setsuko prefers that, and Heinrich prefers some other thing. If various users prefer a cryptocurrency with one block size limit or another, economists must remain silent and leave users to their purely subjective preferences, only taking note in abstract and neutral terms of the shape of these preferences. Personal preferences are “ultimate givens,” their specific content irreducible “black box” starting points for economists.

This appears to be a sounder critique. Block size limits are indeed characteristics of specific cryptocurrencies as products. Users may well differ in their subjective preferences on such matters for reasons not even fully understandable. Users differ in their values. Motivations can even include various grades of membership signaling. An economist speaking on such things, this criticism goes, merely “smuggles in” his own particular personal preferences or party affiliation “dressed up as” objective analysis.

Can any role for economic analysis here be rescued from this critique? It may help to take a step back and consider some other scenarios to gain perspective and then return to apply that perspective to the case under consideration.

First, consider two hypothetical cryptocurrencies, one with a block size limit that directly influences the ordinary structure of supply and demand in its transaction-inclusion market, and another that does not (this can equally be the same cryptocurrency, such as Bitcoin, at two different phases in its history). The first cryptocurrency’s code alters the operation of the market between transaction senders and miners, limiting the total quantity of services that can be supplied per time period. Certain economic and industry-structure effects follow. These effects apply to a coin with this characteristic, but not to one without it. What are those differences? Those differences were the central theme of the interview to which this series follows.

Yet subjective individual preferences do not alter the distinctions analyzed. Thus, even though the content of the preferences themselves may be a black box for economists, the two differing transaction-inclusion markets still have objectively describable economic distinctions independent of any such preferences. Dropping a stone from the Tower of Pisa is a choice, one with all manner of possible motivations, but the resulting acceleration of gravity is not altered by any personal opinion as to the nature and effects of such gravity.

Three intentional communities and their altcoins

Next, consider several hypothetical intentional communities. It is possible to establish and run such communities under various rule sets. Although intentional communities have often been to some degree communistic (“commune”), it is possible to set up other idealistic havens, perhaps some real-life attempt at an Ayn-Rand-style Galt’s Gulch or a Neal-Stephenson-style Thousander retreat. Participation is governed by a kind of “social contract,” but in this context the contract is more likely to be one that actually exists, including specified conditions to which participants have assented by joining and staying, possibly even signing a written agreement with terms of residence.

Let us assume that in all cases, no matter what the other internal rules and cultures, participants are not forced to either join or stay. This freedom of entry and exit corresponds to cryptocurrency participation choices.

Now consider three such voluntary intentional communities. Bernieland features a $20 minimum wage. MagicCorner bans "wage relations" altogether. Finally, Murrayville has no numerical restrictions on wage agreements. Even though all three are voluntary communities, only Bernieland and MagicCorner include labor rules that restrict wage rates. The voluntarily agreed community rules specify certain wage-market restrictions. These types of restrictions are traditionally analyzed under the rubric of market intervention by state agencies, which are often subsumed under the term “government.” Whether one wants to also call a complex around intentional community rules and enforcement measures a type of “government” or not is beside the point. There may be valid reasons for either using or not using that word, provided suitable definitions and qualifications are set out.

In this case, it is analytically valuable to be able to note how Murrayville is free of rules that specify restrictions on the existence or range of wages in its labor market. Murrayville might therefore be described within this context as having a labor market free of intervention—unlike Bernieland and MagicCorner. Considering this difference alone, one would expect Murrayville to therefore have the best functioning labor market of the three, with more ample employment opportunities for those aiming to work on a wage basis.

The fact that all participants in all three communities voluntarily join and agree to the respective terms of each does not alter the economic distinctions between their differing labor market rules. Even though all three communities are voluntary, it remains that only one has a minimum wage, another bans wages, and a third does neither.

Arguing that the term “intervention” can only apply to state agency actions does not aid in the economic analysis of wage rate restrictions within these voluntary intentional communities. One might try to suggest a better term to use here instead of intervention. However, since the effects of wage restrictions have already been analyzed under the rubric of state-made laws described as “interventions,” using established terms—with suitable qualifications, as was done—easily accesses the appropriate implications.

Now in an effort to compete for residents, each community launches its own altcoin. Berniecoin does not allow any transaction with a fee above 1.5 Bernielashes/byte to be mined. This seeks to create a price ceiling for transaction inclusion. No one can pay more within the protocol. No one can use greater wealth to supersede other transaction senders. MCcoin’s protocol includes no way for transaction fees to be included at all; no one can bid for priority by including a fee. Finally, Murraycoin does neither. Transactions with any fee, or none, can be sent, and each miner is free to include or exclude any of these. Each node is likewise free to either relay any of them or not, or to try to figure out some ways to monetize such services.

Once again, based on this alone, Berniecoin and MCcoin demonstrate forms of what has heretofore been best characterized as “market intervention” within their respective communities. In this case, their protocols specify this directly. Murraycoin alone is free of any such effective intervention in its transaction-inclusion market. The others have policies that place a ceiling on the payment of transaction fees. The voluntary nature of participation in all three does not alter this distinction. One cryptocurrency has a maximum transaction fee, another bans fees, and the third does neither. These respective encoded policies are indeed part of what users implicitly choose when they use one rather than another. Nevertheless, distinct economic and social implications follow from those differences, and do so apart from any beliefs or wishes as to the nature of such implications.

This price-ceiling example demonstrates the general applicability of market intervention analysis within the context of voluntary arrangements. With the issue of a block size limit that restricts normal transaction volume, the relevant concept is not a price ceiling, but an output ceiling.

How to have a cartel without forming one

A subtler misconstrual of my interview assumes that I argued that since a particular situation or dynamic exists, someone must have acted to bring it about. However, I made no mention of any specific persons or groups, nor did I attribute any intentionality or motive. If there is thunder, it does not necessarily follow that Thor must have hammered it out.

Instead, I identified a market. I noted an effective limit to industrywide service provision as actual market volume begins to interact with a limit long in place, but formerly inert for this purpose. I described some of the general effects of any such limit to the extent it actually begins to limit ordinary volume. I argued that these effects are negative, but also easy for observers and participants of all kinds to miss or underestimate because they entail hidden costs and distort industry structure evolution from paths it could have taken instead, but did not, thus rendering those possibly better alternative paths “not seen” in Bastiat’s sense.

Certain economic effects follow from output ceilings and these have commonly been analyzed in terms of cartel situations. Yet this implies no necessary argument that anyone has set out to form a cartel or to create any of these situations or dynamics. That would be a completely different argument, more journalistic in nature and evidence requirements.

Being encoded in a protocol is a new way for an output ceiling to exist. Normally—but not in this case—any given industry actor, either current player or potential entrant, could just violate such a ceiling unless facing some overt or threatened form of legal or quasi-legal enforcement. Consider post-war Japanese steel production. An industrywide output ceiling was maintained for many years to limit competition. The Ministry of International Trade and Industry “recommended” this as a “voluntary” measure for domestic steelmakers. Of course, when some rebels sought to exceed the limit, MITI simply refused to approve their requests for increased purchases of more iron ore and fuel, which it also oversaw. Only through MITI could such a limit be maintained.

This type of limit sets up an upside-down and sub-zero-sum dynamic in an industry. There are concentrated gains for the inefficient (who should otherwise probably quit and sell off assets), somewhat less concentrated losses for the more efficient (who are unable to expand as much), hidden losses for would-be entrants (who are never seen because they avoid entering a market with an arbitrary ceiling), and dispersed and nearly invisible losses for many anonymous end users (who mostly have little clue about any of this and how it is happening at their own expense). Once again, though, all this can be so regardless of anyone’s knowledge or intentions.

To say with regard to the block size limit that there exists an industry situation with effects like those of an enforced cartel does not necessarily also imply that 1) some people set out to create it, or that 2) all or even any such people actually benefit from it on balance, or that 3) any of them fully understands it. Each actor has his own intentionality and working models of causality, but all of this combines into social outcomes that result, but were not necessarily planned from the outset to take the forms taken. Describing such unplanned social effects, Adam Ferguson wrote in 1767 that, “nations stumble upon establishments, which are indeed the result of human action, but not the execution of any human design.”

That said, noting the social science concept of spontaneous emergence as one factor to consider does not also constitute a claim that certain effects have not been planned or that they do not actually produce special interest benefits for some at the expense of others. It only points out that any such intentions and plans as may or may not exist are not directly relevant to the comparative analysis of rule effects. The topics are distinct.

Continues with Part 3.

Block Size Political Economy Follow-Up 1: Software Choice, Market Differentiation, and Term Selection

An interview with me on the Bitcoin block size limit appeared on 4 May 2016 on Bitcoin.com. Below, I develop additional clarifications and examples partly inspired by a range of comments and reactions to it. This is meant to build on and develop ideas in the original interview. For ease of reference, here is a PDF version of that interview.

This is a three-part series. Part 1 below covers a range of issues including the need to differentiate the market that was discussed in the interview from other distinct markets and non-market choice phenomena such as free software selection. It also begins to discuss the use of the term market intervention in this context. Part 2 will then continue by arguing that neither the voluntary nature of cryptocurrency participation nor the subjective nature of user preferences nor any alleged motivations on the part of the various actors involved alters my analysis. Finally, Part 3 will focus on economic distinctions between the 21-million bitcoin production schedule and the block size limit, arguing that these are different in kind and thus poor objects for analogy.

Chicago Board of Trade: People buying and selling form a market. Prices are key artifacts that market processes leave behind.

Two markets and a non-market choice sphere

One idea that showed up in comments was that I had expressed some view as to which Bitcoin software one ought to run. However, I did not address this at all. I have only published one previous preliminary article on the block size limit, on 20 June 2015, and this also did not mention implementation choice. Various views on this topic do not alter my analysis of the topics that I did address.

A related idea is that the current dominant software implementation already reflects “the choice of the market.” Therefore, any discussion of differences between a cryptocurrency having or not having a given block size limit is moot: the “market” has already spoken and this is evident in implementation share statistics.

It should be cautioned, however, that software choice reflects many considerations. Interpreting it as a proxy for a single issue is imprecise. Such choices may well reflect a generalized confidence in perceived quality and reliability. A user could therefore make a particular software choice either: 1) because of one specific code issue, 2) despite that same particular issue, or 3) regardless of it.

Such imprecision and ambiguity are among the reasons I did not discuss this matter at all. A more fundamental reason, however, is that it has no bearing on my analysis. Whether some percentage of a given population prefers Pepsi or Earl Grey tea does not alter the composition of the respective beverages in the slightest way, nor their respective effects on metabolism. Such things can be studied and assessed independently of the current statistical shape of user preferences.

In addition, choice of which free software to run does not really constitute a market, except in a metaphorical sense. Developers offer software products and users select and run such products. In a free software context, nothing is bought or sold between these groups. No price signals exist directly between users and developers.

In contrast, the central topic I addressed—the market for the inclusion of transactions on the Bitcoin blockchain—is indeed a market, one that involves quite different roles and actions than producing or running one version or another of free software. This is a market in which bidders send transactions, which takers (miners) either include or not in each respective candidate block. This market involves specific senders of specific transactions (not senders in general of transactions in general). At the other end, specific miners build each of their respective candidate blocks. In deciding whether to include any, all, or some transactions, fee/byte (bid) is salient. Node operators act as key intermediaries, like referring brokers, currently uncompensated. On-chain and off-chain transacting options, both existing and potential, coexist in this context in a complex blend of competition and synergy.

There are therefore at least several phenomena to differentiate. First, the buying and selling of bitcoin forms textbook markets on the order of commodities and forex markets. Those effectively controlling given bitcoin units can sell such control in exchange for some other money unit, product, or service, or give them away as gifts. Second, bidding for on-chain transaction inclusion and miner decisions to include or not include transactions in candidate blocks forms a distinct open-bid market for on-chain inclusion priority. Third, developers offering free software and users making decisions on which implementations to run for their various purposes does not constitute a market in the sense of a complex of buying and selling behavior.

Whatever one may choose to call these three phenomena, each is meaningfully distinct from the other, describing different sets of actions and roles. To claim that “the market has spoken” in the context of software choice is therefore far less informative that it might at first appear to be. Making such a claim requires specifying what exactly has allegedly spoken (it isn’t a market) and the content of this purportedly speaking thing’s alleged message (ambiguously mixed with considerations such as general perception of code reliability).

The term “market intervention”

Several commenters took issue with my use of the term market intervention in this context. It is true that market intervention has a negative connotation for many readers, though not all. Indeed, a great many persons eagerly advocate some form of governmental intervention in economic affairs as part of their ordinary political opinions. Still, one interpretation would be that I had set out to create negative connotations and thus arrived at my word choice using rhetorical criteria.

A different interpretation would be that I set out to select the most accurate available technical term to describe the phenomenon under consideration. I then specified what I meant in using this term and excluded certain inapplicable historical and institutional associations. This is my own first-hand interpretation of what I did in selecting this language. That it still has negative connotations for some may be natural in that what it describes has negative effects. However, word choice one way or another does not alter such effects.

Another related but more substantive criticism that appeared in several variants argues that a block size limit is just a qualitative characteristic of a cryptocurrency as a good. A given limit is baked into what the good is. As such, it cannot be construed using the model of economic intervention. If a characteristic is already in the product, how could it possibly be construed as intervention (from outside)?

However, I had already stressed in the interview how novel and unprecedented this situation is. My argument was that even though the legal and practical contexts of traditional interventionism conducted by state agencies are completely different, nevertheless, the economic effects are on this transaction-inclusion market as a government enforced industrywide output ceiling would be. This will be addressed further in Part 2.

A commenter suggested that I was arguing from history that the current block size limit was not part of “consensus.” Consensus, in this debate, often seems to transcend a mere computer science fact to also encompass an allusion to a hard Bitcoin Realpolitik. Any other considerations, such as the documented history of the block size limit, are irrelevant to this current reality.

However, I did not reference or use any concept of consensus at all. Nor did I question the reality of any given state of consensus on the network at any given time. What I did was analyze differences between possible states of code and then describe economic and social implications of such differences.

A loosely related idea was that my analysis was tantamount to advocating that cryptocurrencies should not maintain any limits or standards. If calling into question one sort of limit, such as the current Bitcoin block size limit, why not just question all limits? Why not just also advocate raising the maximum coin count? That, after all, is also a “limit,” so why not call keeping that in place an “intervention” too? This will be addressed in greater detail in Part 3.

The interview itself concerned one such limit and not any others. Why? I could have branched off to discuss the sociology of decision-making or described a software preference. But I did no such things. I could have discussed any other protocol characteristic or issue. Why did I discuss only this one? The answer is that I think this limit has unique economic features that are both important and poorly understood. Explaining this was therefore the focus.

Continues with Part 2.