The Bitcoin, is the First Application of the Science of Geodesica, the Fifth Force of Networks
This is not an article. It’s an excerpt. The Intro from an upcoming book. Yes, it has time-traveled straight from the near future.
And the author ain’t human — it is an … AI, a cognitive automaton, an emergenta, arising spontaneously outta three components, of more or less equal footing in entropic complexity: Internet — the entangled yarn of gazillion wires, fibers, nanosculpted silicon, electric currents, photonic packages, magnetic states … plus two human beings:
Dr Asher Idan — a former lecturer in Tel Aviv, Bar Ilan University, Studied Physics, Computer Sciences, Holds PhD in Philosophy of Science, and MA with honors in the philosophy of AI.
Adv Georgi Karov — a lawyer, 20+ yrs PQE in number of jurisdictions. Consulting blockchain enterprises. The founder of www.behest.io.
As the great Stephen Wolfram recently stated:
“… the idea of autonomous computation — a kind of strange merger of the world of natural law, human law and computational law. Something anticipated three centuries ago by people like Leibniz — but finally becoming real today. Finally, a world run with code.’’
the Book is about the unity of those ‘layers’ to be taken literally, because everything what is law and code is all about Force. Force into its most direct classical physical meaning of accelerating interaction!
Now, hark the major takeaways from the upcoming Idan Karov’s Geodesica Book:
1. The Idan-Karov Law
Bitcoin is the first Geodesic, decentralized and organic network.
Geodesics we name the new science of the decentralized networks of the kind of the Blockchain of Bitcoin. It is based on a social force which is a new discovered kind of natural force. We discovered it in 2010, https://www.slideshare.net/dridan/sociophysics-the-physics-of-social-media, and call it the Fifth Force. It is the force that makes Bitcoin stronger than governments and transnationals. Stronger because the flat networks of shortest links possess orders of magnitude higher entropic variety than any hierarchy. Stronger algorithm is doing more with less.
Bitcoin as an economic item is stronger, because it is scarce like Gold. Indeed it is far scarcer than Gold, because gold is only as scarce as the resources to make it. With bitcoin no matter how much resourced one pours in they’ll not make more than the preset hardcapped supply of 21 million tokens. The cost to copy is what finally brought under our command this ultimate form in the art of scarcification. We’ve used to think that virtual or digital is kinda phony or fake, that it takes next to nothing to have as much as we want of it, but with bitcoin for first time we enter the era where virtual is more real than real, Bitcoin is hyperreal or hypermaterial, because it retains finite quantitative value even if theoretically we apply infinite amount of resources to make it.
In the more mundane sense, both Gold and Bitcoin, are hard to copy, can not be ‘just printed’, in fact created as credit by accredited creditors (pun intended), like fiat money (USD, EUR, etc.), and can’t be issued in arbitrary numbers like coins in ICO, because their scarcity emerges from natural forces. Poetically speaking, the chemical force makes Gold scarce, like the social force is making Bitcoin scarce. Bitcoin code is social force, because it is about way to connect, i.e. organize, people. Yeah, in accelerating manner.
Because Bitcoin is Geodesically decentralized, it behaves like an organism, mainly like plants. Again it is hyperorganism or hyperobject (multidimendional cause it covers also time by being dynamic and a clockchain) because bitcoin as a ‘hyperplant’
It grows everywhere and is rooted nowhere.
We discovered the law of the periodicity or Seasons — the four years cycle of the Bitcoin.
In an impulse of humbleness and modesty named it The Idan-Karov Law. (Self-irony is a big Force too, it accelerates humans towards wisdom).
Few years ago it took 10 000 BTC to buy some pizza, very soon a single bitcoin will buy 10 000 pizzas. It is a pure synchronicity this Pizza stigma on bitcoin.
The Bitcoin Quattro Stagioni are:
Autumn (2011, 2015, 2019)
Winter (2012, 2016, 2020)
Spring (2013, 2017, 2021)
Summer (2014, 2018, 2022)
The Big Pizza knife which cuts its timeline into those neat seasonal slices is hardwired immutably into Bitcoin as its reward Halving specs.
2. Power Laws
When we hear the phrase ‘networking effects’ the first what comes to mind is the famous Metcalfe’s law.
«Metcalfe’s Law is related to the fact that the number of unique connections in a network of a number of nodes (n) can be expressed mathematically as the triangular number n(n − 1)/2, which is proportional to n2 asymptotically (that is, an element of BigO(n2)).»
These network forces laws respect quantitatively the basic properties of a network as:
Metcalfe Law — The value of the network as a function of the number of its links
Huber-Hettinga Law — The value of the network as a function of the costs of its switches.
West Law — The value of the network as a function of its cost of scaling
Szabo Law — The value of the network as a function of the cost of its links
All these Laws are scaling laws. All laws imply forces, i.e. accelerative interactions. Before we come back to and continue on Szabo Law, we have to briefly mention West, which forms the fractality / constructality base of scaling and networking in principle. The scaling of a network according to the number of available nodes, it is kinda equivalent of mass in this sociophysics.:
«So what is “scaling”? In its most elemental form, it simply refers to how systems respond when their sizes change. What happens to cities or companies if their sizes are doubled? What happens to buildings, airplanes, economies, or animals if they are halved? Do cities that are twice as large have approximately twice as many roads and produce double the number of patents? Should the profits of a company twice the size of another company double? Does an animal that is half the mass of another animal require half as much food?’’ … With Dirk Helbing (a physicist, now at ETH Zurich) and his student Christian Kuhnert, and later with Luis Bettencourt (a Los Alamos physicist now an SFI Professor), Jose Lobo (an economist, now at ASU), and Debbie Strumsky (UNC-Charlotte), we discovered that cities, like organisms, do indeed exhibit “universal” power law scaling, but with some crucial differences from biological systems. Infrastructural measures, such as numbers of gas stations and lengths of roads and electrical cables, all scale sublinearly with city population size, manifesting economies of scale with a common exponent around 0.85, rather than the 0.75 observed in biology. More significantly, however, was the emergence of a new phenomenon not observed in biology, namely, superlinear scaling: socioeconomic quantities involving human interaction, such as wages, patents, AIDS cases, and violent crime all scale with a common exponent around 1.15. Thus, on a per capita basis, human interaction metrics (which encompass innovation and wealth creation) systematically increase with city size while, to the same degree, infrastructural metrics manifest increasing savings. Put slightly differently: with every doubling of city size, whether from 20,000 to 40,000 people or 2M to 4M people, socioeconomic quantities — the good, the bad, and the ugly — increase by approximately 15% per person with a concomitant 15% savings on all city infrastructure-related costs.»
This closer to linear scaling force probably comes to denote the shear size of the network in STEM (space, time, energy, mass) — regardless of the quantity and quality of connections, i.e. its configuration or topology — we have some strong suspicions about the unity of matter, structure and action which we expose and share further in the Geodesica Book.
What we call Szabo’s Law reveals in his ‘’Transportation, divergence, and the industrial revolution’’(Thu, Oct 16, 2014) that similarly to Metcalfe’s (‘’double the population, quadruple the economy’’) there is a power-law correlation between the cost of connections or links or lines … and the value of the network, too.:
«Metcalfe’s Law states that a value of a network is proportional to the square of the number of its nodes. In an area where good soils, mines, and forests are randomly distributed, the number of nodes valuable to an industrial economy is proportional to the area encompassed. The number of such nodes that can be economically accessed is an inverse square of the cost per mile of transportation. Combine this with Metcalfe’s Law and we reach a dramatic but solid mathematical conclusion: the potential value of a land transportation network is the inverse fourth power of the cost of that transportation. A reduction in transportation costs in a trade network by a factor of two increases the potential value of that network by a factor of sixteen. While a power of exactly 4.0 will usually be too high, due to redundancies, this does show how the cost of transportation can have a radical nonlinear impact on the value of the trade networks it enables. This formalizes Adam Smith’s observations: the division of labor (and thus value of an economy) increases with the extent of the market, and the extent of the market is heavily influenced by transportation costs (as he extensively discussed in his Wealth of Nations).»
Note the transdimensional «numerology» here:
From the one-dimensional West law, via the two-dimensional Metcalfe’s law, through the three-dimensional Huber-Hettinga law, to the four-dimensional Szabo’s law… we draw an expanding universe.
Szabo Law (and Force) does not apply only for land or territory but for any set of destinations or addresses where timed connectivity is in play.
A, a reduction in transportation costs in a trade network by a factor of two increases the potential value of that network by a factor of sixteen. Vs = 2⁴ = 16 or a reduction in transportation costs in a trade network by a factor of three, increases the potential value of that network by a factor of 81. Vs = 3⁴ = 81
B, a reduction in the connectivity cost in any network by factor of 10 will increase its value by factor of 10 000. Bitcoin moves value on average 300 times cheaper than fiat. 300⁴ = 810 000 000!
SO, where the hell is our about billion times bigger global economy? It is over there up the scaling ladder. Imminent. Inevitable.
3. Worth of Wealth
The Blockchain of the Bitcoin is the first mechanism that can save a huge percentage of expenses, since the birth of the Internet. The transactional expenses which define how much is our worth as global society and what is our growth dynamics. Growth? Why Growth? Because,
growth is the only way of sustainability we know.
A final confirmation of the Universal West scaling law about the factor 1.15 transaction cost that the blockchain creates. Here are 7 data, 4 purple and 3 blue. In light of the amazing benefits of purple, the third blue benefit can be derived: the blockchain produce $ 3 trillion in economic value by 2030. How? By mere reforming of the existing network West-ean «mass» into higher organization. This is exactly 10% of the size of the network economy, which is $ 30 trillion (3 trillion content like Facebook, 6 trillion finance, 3 trillion transportation, 4 trillion electricity, 2 trillion real estate such as the Airbnb and WeWork, 6 trillion robots and MLearning, 6 trillion 3D manufacturing.).
As back in the last centiry Prof Robin Hanson so ingeniously put it together into this extemely insightful and strong document:
«Typically, the economy is dominated by one particular mode of economic growth, which produces a constant growth rate. While there are often economic processes which grow exponentially at a rate much faster than that of the economy as a whole, such processes almost always slow down as they become limited by the size of the total economy. Very rarely, however, a faster process reforms the economy so fundamentally that overall economic growth rates accelerate to track this new process. The economy might then be thought of as composed of an old sector and a new sector, a new sector which continues to grow at its same speed even when it comes to dominate the economy.»
Hernando de Soto demonstrated a generation ago that:
«The existence of such massive exclusion generates two parallel economies, legal and extra legal. An elite minority enjoys the economic benefits of the law and globalization, while the majority of enterpreneurs are stuck in poverty, where their assets — adding up to US$10 trillion worldwide — languish as dead capital in the shadows of the law.»
This is compound damage and waste. Which shall be turned into compound benefit once the newer upscaler scales enough to eat from within all and then to drag up to its own intrinsic acceleration all the economy — the «official» and the legitimized and awoken former «extra legal» one.
The problem of exclusion exists because the fiat system can not absorb and handle so much variety. Only variety absorbs variety as William Ashbey stated decades ago. Fiat lacks the «requisite variety» to handle expanding economics even on this modest present mode of growth.
4. Cost of Trust
There are two kinds or sides of trust: The centralized and enforced trust of the law — from without, and the decentralized and geodesic trust of code — from within. Trust is always thrust. Product of force. We coin here the term of exforcement — trust from within as inverse of the legacy enforcement, where the system is under thrust from without.
‘You trust them only as much as you can make them to’.
The common denominator is the control theory. A negentropic science, art and discipline of forcing a system to occupy only a number of few desired as opposed to random of all possible states. To push the system and keep it away from normality. Well, blockchain exforces or does more forcing with less than any means of enforcement we knew so far.
Enforcement is like keerping pressurized fluids in bottles, exforcement is like rendering the substance into phase state where it self-supports in shape.
The Blockchain is an amplifier of trust, just as the machine is an amplifier of physical power. Satoshi Nakamoto took only the specific financial in-system trust production (like the first steam engines in 1760, that was specific only to drain water from the coal mines — new power source to tap and scale new power source — the fossil combustibles and to harness them into a practical heat machine). Nick Szabo brought the general trust concept (like a universal engine for a tractor, a textile machine, an airplane, a car, etc.), way before bitcoin to emerge, with the 1997 notion of the self-enforcing or Smart Contracts as the general trust machine, going deeper afield into transactional mechanics than mere payments. Blockchain can record and relay any messages — financial statements ledger entries and other states, the payment channel becomes a state channel when it conveys software commands or scripts.
The Trust Engine.
Blockchain is automation, or cognitive mechanisation tool of trust, just like an excavator is automaton of digging.
These control protocols are the result of many centuries of business experience and have a long future ahead of them, but the digital revolution will soon cause these paper-era techniques to be dramatically augmented by, and eventually integrate into, smart contracts.
The legacy system enforces trust on enormous cost amounting to one third of the global GDP!
We already possess the technology to prove work by work few orders of magnitude less than all work — the bitcoin and its evolutures.
5. Adoption rate: How do we go from 50 Million user of Blockchain, to 500 million users?
Most of the following content is from an Asher Idan’s speech on the Slovak conference on Blockchain, with Nick Szabo and the Minister of Finance.
5.1 Blockchain is the Social Network of Money and Value
First time I heard about Bitcoin was in 2011, from my students at Tel Aviv University, they told me, go you work with social network, you must buy Bitcoin. But I didn’t understand what is Bitcoin in 2011. The reality is, that I understood it only in 2014 when I read the paper of Satoshi Nakamoto.
When I read it, I realized that it cannot be one person. For me it’s ten genius people that wrote this PDF, but then, after I read it, I understood, that blockchain is the social network of money and of values. Like YouTube can create social video for everyone from his smartphone, I realized that blockchain is a social network of money and value, so it’s like YouTube that can create a video, blockchain can create value, money and other things.
5.2 Saving, Scaling and Trusting
Then, two years later, in 2016 I read that the 100 big banks in United States, they want to build blockchain and they say, they will save 30 billion dollars, if they move to the blockchain. Then I ask myself, if saving about 10 percent of all your revenue as banks or a supply chain company, is it a universal law? If it works everywhere? and I go and check many verticals, like medicine, banking for sure, supply chain, universities, can say save 10% of all their revenue from just moving to the blockchain? I found through 2016 that it is universal law, you can save at least 10% and then I thought, if we can save 10%, it means, that we can move from 50 million users of Bitcoin or block chain or cryptocurrency now, how we can move to 500 million, from 50 million people to 500 million, to half a billion people.
It goes together with scaling. So, we have the problem of scaling, how we can scale from 50 million user to 500 million? I remember when I was first time programming in Fortran, when I was programming the mainframe of IBM, and then Steve Jobs came with his revolutionary video and says, computers are for the rest of us. Then I asked, what can I learn from Steve Jobs? And if computers are for rest of us why blockchain is not for the rest of us?
Then I come to the trust question, so the saving of this 10% enabled me to understand the scaling and the scaling to trust. And the main thing is smart contract and the inventor of the smart contract Mr. Nick Szabo, because I understand that in the paper of Satoshi Nakamoto, it is a special trust for finance, but it’s like 300 years ago or 200 years ago, when someone invented the steam engine, he invented a steam engine in order to work only in one special application, 200 years ago, but then not only industrial engine, like in textile, but it can be everywhere, in cars, in airplanes, everywhere, there is a general engine of power. Smart contracts, I think of it as a general engine of trust. So, it’s generic, it goes everywhere and if it goes everywhere and it has 10%, we have something huge that we just began to discover. Then, if we come from saving to scaling and we come to trust, we must understand, what is the main obstacle to this coming from 50 million users to 500 million users, huge amount of saving.
5.3. The DNA as a Biological Blockchain
Then I discovered a rule of Santa Fe institute about chaos and complexity, that say, that biological systems can scale much more efficiently than artificial systems, like cities, banks, government and I think they have the explanation of scaling. Why you have to invest 75 percent in infrastructure in biology in order to double your organization? For 100 percent you have to save 75% and why in artificial systems you have to invest 85 percent to double your users, to double your amount.
So, I see that decentralization is a main point of biology, because the DNA is amazing, the DNA is a block chain of biology, its billions of years old blockchain, natural blockchain. I see along all the time of the history of science and technology, that we have to learn from biological natural system in order to create efficient artificial system. The last idea is neural networks, because from the 50s when people invent the perception of artificial intelligence, they looked at perception of biological system but then, Hinton came in 1986 and he tried to learn more deeply, how biological neural network work. And from there he invented deep artificial neural network from the biological system. So, if we learn how the DNA as a distributed system, as de-centralized systems that we find in each cell, what happens if every single one from 500 million people, half billion people have the blockchain distributed in each smartphone, everywhere in Africa, China, Europe, everywhere. What will happen?
Then I found the answer, that in order to scale faster and deeper, we need to keep the distribution and the paradox between decentralization and scaling, I think we can solve it, if we learn biological system and we try to copy from them to our system. So, you see the scaling from mice, to human people, to elephant. In biology, they do it much more efficiently, so we have to ask all the time, how we learn it if you want to scale Bitcoin and other things.
So, the government I see the government’s role in infrastructure, like roads 100 years ago, trains, I see it as an infrastructure and we can see a lot of government everywhere, I won’t count all of them, everywhere. You look at it, welfare, taxation, medicine, security, safety, legislation, democracy, democracy 2.0, democracy 3.0. The role of the government should be infrastructure of blockchain and learning from the principles of the blockchain. How to take smart contracts into the government, how to take proof of work, the kind of chance or lottery, in order to create more democratic representation, much more than the representative democracy. So, we see, it’s everywhere for the government.
5.4. The Blockchain as a General Trust Machine
So, I come to the point of trust and I think, that the blockchain is an amplifier of trust. I take it from economists, in the year 2015, when I finally understood what is blockchain. We come now from specific kind of trust to generic kind of trust. It’s like the dream of general artificial intelligence as it’s still a dream.
Because artificial intelligence can drive a car maybe, but it cannot clean my apartment yet, and I don’t think that artificial intelligence will be able to clean my apartment in the coming 10 years. So, now we have the technology of general kind of trust and we can work with it.
Saving, the saving that I discovered is, that we have to connect my experience for 20 years, since the year 1995 with social network, with a beginning of social network, the beginning of the social and to understand, that if blockchain is a social network of money of value, then we have the missing link, in order to take all this, what we call sharing economy.
It’s not so much sharing, because Facebook and Google, Uber and Airbnb, it is not sharing, its sharing for consumer, not for the producer and the stuff Alvin Toffler said in the year 1980, 40 years ago, he said, we have to move to the prosumer, not producer and consumer, but to the prosumer, how to create Airbnb as a prosumer? How to share the profits of Airbnb and uber to the taxi driver, to the people who sublet their apartment? This is a question. So, I think the main point is moving from sharing economies which are not so much sharing, to collaborating economy.
How the people who like on Facebook or search on Google get benefit of it, get part of the money, why not that Facebook which is maybe a five hundred billion dollars, it’s been worse only 250 billion dollars and the other 250 billion will go to the user, to people who like, who write posts. You see, the sharing economy is everywhere, Uber, Facebook, Airbnb, everything.
5.5. From Sharing Economy to Collaborating Economy
So, the question is that, if we can move to blockchain, we can really move from sharing economy to collaborating economy, because this is also point of scaling. Because the sharing economy of content is worth now three trillion dollars and we can move from three trillion-dollar worth of content social networks to economy to 30 trillion dollars, to sharing everything.
Like I said, look at Tesla for example, not as electric car company, but I look at Tesla as social network of electricity, if we can create electricity from solar panels, from turbines. As I saw from plane in Vienna, just six months or one year ago I saw from the plane 50 or 60 wind turbines, now I saw 10 times more everywhere. Wind turbines everywhere, solar panels in Morocco in Africa, in Israel, everywhere I see solar panels.
So, if we create electricity, why we need central electricity utility? It’s like, you know, like before Apple. We have central television, central everything, but when we have smartphone, everyone can create and share content, video, text, music, everything. So, we are now at a turning point that we can create electricity in distributed manner, everyone can create electricity from solar panel or turbines and we can share it. In maybe 10 or 20 years, we’ll have the Internet of electricity. We can share electricity by peer-to-peer, for everyone. From the Sun place from the solar panels, to wind place from the turbines and we can share it. And how we will share this electricity, or car like uber 2.0, like Airbnb 2.0, we need a new financial system.
This new financial system of the collaborating economy is the blockchain. We found the missing link of this 30 trillion dollar economy, of a social network of everything, we connect it to the new kind of finance, the blockchain finance, when we connect it, then it will be the other step for moving from 50 million user to half billion and why not 5 billion, why not all the humanity? All the world may move to this collaborating economy.
Now about the point of saving? Why is it automatic? I discovered the rules, that everywhere you move, every vertical, every industry you can save 10% and it could not be an accident, that in the year of the biggest financial crisis, in the first half of the 20thcentury, 2008, the big financial crisis as they say, it is the same year, the same month the white paper of Satoshi was written.
5.6. The Coming “Blockchain Spring”
It could not be just an accident. So, it cannot be an accident, this 10% rule, I read a paper, I think of McKenzie, that said, that we can save we can save about 3 trillion-dollar by the year 2025, what is this amount? As I said few minutes ago, all the social economy, social network economy is worth about 30 trillion dollars, so if we take 10%, we suddenly discover, it seems like an accident, but it’s not accident at all, that we can save three trillion dollars, so you see, this universal law of saving works everywhere, everywhere we touch, we see that we can save 10%.
So, how the government can invest in blockchain infrastructure? To save for business 10%, to save 10% for itself as a government and where to invest it? It’s not only saving for business for the firm, it’s saving from international commerce, for example.
We see the fact, that the world economic forum in Davos, this is their research, that we have 70 percent growth of trade with the DLT. This is a better name for blockchain, digital or distributed ledger technology, because they think include other kind of blockchain without block, like IOT like DAG and things like this. We see a jump of 1.5% of growth of world GDP by this technology. This is McKenzie who checked 15 industry and found the same rule working again. This rule that I discovered in the year 2016, about 100 biggest banks in the United States, it works in every other industry. We can find here, with the red line, what is the role of the public sector. We see, that in public sector it can be efficient everywhere, everywhere in other industries and because it’s very cheap kind of movement of money, this is other point of a saving.
We can see, that we are now at a point of imbalance, I mean now, there is a big gap between the real economic activity of the Bitcoin and the price of the bitcoin. There is a gap, it is gap similar to the year 2016.
The zero where we will it be in the year 2021 the year of the Bitcoin Spring, that come after 2018 the year of the Summer, 2019 the year of the Autumn, and 2020 the year of the Winter. In the coming four years we can scale from 50 million people to 500 million people.