Rock Paper Bitcoin

We all know the game Rock-Paper-Scissors, in which 2 children (or 2 adult degenerate gamblers) agree to settle a dispute using a random game with simple rules.  Everybody knows the rules.  Rock breaks scissors, Scissors cuts paper, and paper covers rock.  There are other methods kids use to settle disputes.  Flipping a coin is a common and simple one, but it requires a coin and those are less and less available.  Odds-and-evens is a great one that only requires ones hands.  One person is odds and the other is evens and at the count of three (once, twice, three, SHOOT!) each player declares either 1 finger or 2.  If the sum is 3, then odds wins and if the sum is 4, evens wins.  Rock-Paper-Scissors is basically a much more fun version of odds-and-evens.  Instead of a boring number, you get to turn your hand into a powerful avatar.  It can be a rock representing strength shown by a fist.  It can be paper representing coverage, shown as an extended hand.  Finally, it can be scissors using 2 fingers as the teeth.  Both parties are usually left satisfied after a rock goes against a pair of scissors, usually moreso than accepting the result of a coin flip.

Rock-Paper-Bitcoin is not a game to settle disputes.  It is much more than that.  It is a framework to understand people and systems by distinguishing the characteristics that determine their incentives.  On a Bitcoin standard, disputes are settled either by the rules of the network, or through mutual value-for-value cooperation.  There is no need for such a game in that world.  Instead, its a rosetta stone to discover what does and doesn't confer value on a Bitcoin standard.

A Framework To Understand Systems

I discovered the Rock-Paper-Bitcoin framework about a month after buying my first Bitcoin, and I've found it enormously helpful in dealing with the most important problem Bitcoin has caused for me.    The problem is reconciling everything I ever new with the fact that now Bitcoin exists.  I can't look at anything the same way.  Health, Money, Education, Music, Business, they all need to be thought of newly in the context that Bitcoin exists!  Maybe this is easy for children who don't know much about the world, but I'm a middle aged GenX'er who knows a lot, or at least I thought I did.  I will share this framework in this essay and give examples of how I use it to think about systems going forward.  The point of the model is to give Bitcoiners a living framework to discover the world.

The Basics

The basics of the Rock-Paper-Bitcoin framework are based on the first principles that:

• Rock represents the physical, observable world. Think Gold.
• Paper represents an abstraction of the physical world. Think Fiat.
• Bitcoin represents the metaphysical. Not physical, not abstract, but very real

People who choose Rock tend to be:

• biased towards hard assets like gold, silver, precious metals, and real estate
• distrustful of government and organized religions
• (responsible) gun owners that defend their citadels
• privacy maximalists

People who choose Paper tend to be:

• biased towards fiat currency and policies that support them
• biased to value credentials, majority opinion, and mainstream media
• prone to get-rich-quick schemes
• power hungry ladder climbers
• transactional
• worshipers of the wealthy and powerful
• trusting of authority, laws, and government force
• virtue signalers
• unaccountable
• privilege maximalists

People who choose Bitcoin tend to value:

• Fairness
• Trustlessness
• Permissionlessness
• Scarcity
• Energy consumption as a proxy for value
• Saving
• Freedom

People are represented across a spectrum, with representation in the Venn diagram across all three states.  Many Bitcoiners also value the physical world, for example, but now that Bitcoin exists are more biased to benefit from where Bitcoin extends the limitations of strictly physical systems.  Gold alone doesn't grant fairness or freedom because it can be taken through violence.  Gold is hard to transport across a border or over a long distance.  Bitcoin's magical property of being dematerialized has given Rocks a superpower.  Before Bitcoin, it was paper that allowed Gold to scale but at the price of the fractional reserve system that exists today and all of its misery.  You might say that Bitcoin is the scissors that cuts up paper.

Example 1: The Food System

In the example of the food system, I find it useful to distinguish between the physical components (rock) like actual farmland, livestock, buildings, etc. and nonphysical components that have extraordinary influence over the system like the government guidelines and economic subsidies.  Once you see and express, this distinction, one can see how Bitcoin can transform the system by bankrupting the paper components one by one.  Bitcoin will destroy subsidies and obsolete the food pyramid.  Once that happens and those influences are removed, the values of Bitcoin will begin to present themselves in the system.  People will judge the system by their health and vitality, even though these things (like Bitcoin) can't be physically expressed in a way one can view.  Bitcoiners will view fats the same way they view their money - they will demand soundness.  Saturated fats with no double bonds to lend themselves to easy oxidation and rancidness will be viewed as a superior source of energy for the body.  Farms will have ruminant animals that fertilize the soils and then self till with their hoofs, and will rotate around the farms, leading to a rich soil teeming with life (worms, bacterium, fungi, etc).  Today's subsidies only incentivize a monoculture which leads to tilling and soil depletion.  It's incredibly exciting to think about the impact Bitcoin will have on our food system and it was through this exercise that I was able to take a rigorous approach to doing so.  The exercise is even more rewarding when I collaborate on these concepts with other Bitcoiners.  Ultimately, it enables us to understand the world while accounting for the presence of Bitcoin.

Example 2: Education

In the example of education, I again distinguish the physical components (rock)  of the system like buildings, books, idyllic campuses, and people.  I then distinguish the non-physical components that have a strong influence on the system like a schools ranking, prestige, and cost.  With respect to paper, I also take it a bit more literally when listing the diploma.  Note that I don't include notebooks or other paper - I list the diploma specifically because it carries meaning.  The diploma is a certification of the accomplishment of graduating from a school, and it confers all of the prestige of the school onto the graduate.  Notice that there are employees in both the Rock and Paper categories.  Teachers are rock because they are so essential to the functioning of the school that it couldn't function without them.  The same could not be said for any administrator with the possible exception of the janitor.  

Viewing the items in the Bitcoin category, it becomes so apparent that what we think matters in a school does not actually matter at all.  What people really want is to gain knowledge, skill, and wisdom, and mature into a more capable, strong-willed, human being.  Ultimately, nobody cares how prestigious or highly ranked a school is.  Maybe it attracts better professors but it doesn't necessarily confer knowledge or wisdom.  Even a diploma is a fairly meaningless piece of paper if a person can't demonstrate the skill or the maturity to add value in the world.  Thinking about Bitcoin in the context of education represents a shift in priorities.  With scarce money, schools will no longer compete with each other by hiring Michelin chefs.  The student loan system will also not be relevant on a Bitcoin standard.  Perhaps a student commits some Bitcoin to an education and gets a portion of it back when they prove that they can create value for people in the world.  When it comes to hiring a college graduate, I personally would rather see a list of the books read in the last year than their college diploma.

Bitcoin is going to change the way we look at everything.  I look forward to meeting weekly with my partner Business Cat and our podcast guests to spread and continue the discussion as we educate and learn for ourselves how to account for Bitcoin in our world.