Words made fleshy: how does an e-currency carry any weight?
Problem: Vanity. Many people are over-concerned with what people think about them. We may grunt, “As if the thoughts of others posed real threats!“ Well, yes, they can. Because thought is the seed of action and realization. Thought is an action in its pre-birth phase. Many thoughts never come to pass into reality, but some do. The average person has 50,000 thoughts per day. 40% of what we do is just force of habit, that is, thoughtless. The remaining actions are born of our thoughts. In fact, our thoughts determine our actions so much, we could say that in us, thought becomes reality.
The internet is a virtual world. That means, it has a reality inasmuch as it affects our thoughts (and secondarily our decisions and actions). How can a virtual reality make the jump into a physical existence?
Non-existent objects have always been a source of mind-boggling paradoxes that have vexed philosophers and thinkers in the past and present. This was already a problem for ancient philosophers. There is, according to Aristotle, a difference between a “being“ and a so-called “being of reason“ (non-existent object). A “being of reason“ is precisely a reality in my thoughts but not in the physical world. This has therefore potentially significantly less impact on my physical reality. It distinguishes itself from “beings“ in that its anchor for existence is the thinker’s mind. “Beings“ just are, whether I perceive them or not.
For example, a one-eyed, one-horned, flying purple people-eater exists as a “being of reason“ in the minds of Sheb Wooley and his listeners, but it has never descended from the sky and never told anyone it wants to be in a rock ‘n roll band. A platypus, on the other hand, as strange and perplexing an animal can be, is a real “being.“
Now when it comes down to virtual internet reality, there seems to be grey zone. These beings are basically represented through images and light and letters. But are they “beings of reason“ and if so, until when? This becomes especially significant when we’re talking about bitcoin and other e-currencies who want to get away from hard fiat currencies of “being.“
Every currency is a representation of another “being,“ which we all believe to be present and real somewhere. Every currency is in this grey zone, is analogously a “being of reason.“ The note exists indeed in your hand, but its value exists in your mind. You don’t really possess the gold or other standard. It only has value if others think it has value too. Be it fiat currency or electronic currency, it is built upon the foundation of mutual, distributed trust.
This trust is precisely what enables a “being of internet“ to jump into real existence. People trust and they act based on this trust. Trust becomes the weight of the currency. And real things come about from reasonable ideas.
“The word became flesh.“ The incarnation of thought repeats itself all throughout human history, an idea of Christian Philosophy. The emergence of e-currencies is an idea (or dream) come true. The growth in interest and attention to these monetary units has accumulated and given way to their rise in value. Increase in trust creates realities. People put their money where their mouth is, if they trust what they say is true.
Let’s take a look at LinkedIn. LinkedIn is a platform for professional and social interaction. Real people create identities online. Through endorsements, other online identities testify to the validity of their identities. Job recruiters, salespersons, insurance claims’ analysts use these identities to hire, sell and verify. The unemployed actually find real employment. Hungering salespersons find big leads and close real deals. A claims’ analyst discovers the truth behind a disability and saves the company thousands (that said tongue in cheek). The “being of internet,“ in this case a representation of real beings, makes people move and do stuff. This is because of the trust instilled in the distributed ledger platform.
Why trust e-currencies like bitcoin? They use the blockchain design principles to create a trustworthy basis for investment (the first step to “incarnation“). These seven principles are wonderfully elaborated in Tapscott and Tapscott’s Blockchain Revolution: networked integrity, distributed power, value as incentive, security, privacy, preservation of personal rights, and inclusion.
Among these seven principles, one sticks out that is especially causal in the incarnation of internet beings. Although all of them play significant roles, this one seems to clear all the doubt about the willingness of creatures to make e-currency real in their lives. Why? Because we all care about what others think of us. We all want a good reputation.
This principle is having value as incentive. The blockchain system brings the incentives of all stakeholders into line. Bitcoin is for example programmed to reward those who work on mining blocks and to belong to those who use it. It’s the incentive to be responsible and care for the system, no bullying others and no dishonest work.
The mining of a block on the blockchain requires an immense amount of resources. Therefore those who mine a block using their computing power are rewarded with bitcoins. This compels participants to be trustworthy, because they want to see blockchain’s long-term success. They will invest in being more efficient, spreading the word, increasing trust in the system, because they are stakeholders. Bitcoin is a claim on the blockchain, which means performance leads to ownership. The value is therefore maintained in the common interests of all participants.
In addition, the problem of inflation (in ancient Greek Philosophy, the problem of “multiplicity of beings“), which devaluates because of oversupply, is overcome in the bitcoin system. The supply of bitcoins is capped at 21 million, meaning that at the current mining rate, all bitcoins will have been mined by 2140. This is an incentive to participants to keep the system intact and steadily developing to its maturity.
Then how do we go from value-incentives to reality? It’s simple: people generally act in their own best interests. Action transforms beings, and allows ethereal ideas to become translated into daily realities.
In the end, we’ll never really know whether and where “beings“ and “beings of reason“ meet, but in the movement from thought to action we uncover a pretty good indicator. If a word become flesh, it is because someone with creative power wanted it. And if blockchain transforms our reality, it’s because many creative powers are convinced it’s better for everyone.