# Dog Atheism: on smart contracts, risk, and value networks (part 1 of 4)

> One source from the archive of Vinay Gupta's work at guptaoption.com, as plain text for AI agents: [242], part 1 of 4. Vinay Gupta, exponential humanitarian. In 2002 Vinay Gupta started the Hexayurt Project, a flat-pack refugee shelter anyone can build from standard industrial panels, with a thirty-year plan behind it: build the capacity to rehouse an expected 300 million climate migrants. Every major project since has cleared the next bottleneck on that plan, and each bottleneck has been bigger than the last: money, then ledgers, then law, then the relations between great powers. Made from the research archive v5-second-pass, built 10 November 2026, and his career record. The map of the whole archive is https://guptaoption.com/llms.txt, and any source [id] is at https://guptaoption.com/texts/<id>.md. This file's connections are below, then his passages.

## Where this source sits

- Source: document (Text), 2016 (year of the work, not of publication), https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit. Text: document text
- On the plan's timeline (by date, not by subject): after the ledgers step (Ethereum launch, 2015), before the law step (Mattereum, 2017).
- How it fits the plan (the research build's reading): Smart contracts as capitalism's calculus: theory under the contracting layer.
- Career works it belongs to:
  - Dog Atheism: on smart contracts, risk, and value networks (2016): Essay drafted live in public: smart contracts as capitalism's calculus, with richer instruments than cash...
  - Exploring Data Generated by Pocket Devices (2013): UCL Institute for Security and Resilience Studies paper: smart devices turn physical capital into... (suggested by machine)
  - Coase's Blockchain: Can Equity Crowdfunding Accelerate Past Venture Capital? (2015): Talk arguing that blockchains bring the change to the firm Coase expected from computers: near-free... (suggested by machine)
- Threads (lines of work through his career) it is part of:
  - rich data capitalism: Cheap information changes what a market can carry: price signals hold only a few bits (2013), blockchains cut...
  - CheapID to Mattereum: One identity pattern, from a person's ID card in 2006 to warranties on physical goods in 2017. (through a work suggested by machine)
- Ideas whose earliest source in this archive is this one: Dog Atheism
- Topics: Dog Atheism — smart contracts, risk and value networks (100%)
- Distinctive terms here, against the whole archive: value networks (23 here; 6 sources in all, earliest dated 2014); Dog Atheism (8 here; 7 sources in all, earliest dated 2014, 2 undated); contracts (46 here; 147 sources in all, earliest dated 2006, 3 undated); equity crowdfunding (5 here; 14 sources in all, earliest dated 2014); ConsenSys (6 here; 23 sources in all, earliest dated 2002); smart contracts (21 here; 110 sources in all, earliest dated 2014, 2 undated); Coase (5 here; 18 sources in all, earliest dated 2009, 2 undated); jobs (14 here; 85 sources in all, earliest dated 2003, 4 undated); Biomimicry (2 here; 3 sources in all, earliest dated 2014); SPRS (2 here; 3 sources in all, earliest dated 2008)
- The earliest dated source in this archive for (undated sources may be earlier): stablecoin; Ethereum launch; oracles; Michael Mainelli; risk pools; Programmable Blockchains in Context; complex value networks
- Importance: core-text score 0.94 (1.00 is the top), number 3 of the 729 sources it scored, the research build's measure of substance, importance and innovation
- Related sources:
  - [694] [EB114 – Vinay Gupta: From Lawyer Capitalism To... (2016)](https://guptaoption.com/texts/694.md): same career work: Dog Atheism: on smart contracts, risk, and value networks
  - [163] [Tell Me Who You Are. Identity, institutional memory, and... (2019)](https://guptaoption.com/texts/163.md): same career work: Dog Atheism: on smart contracts, risk, and value networks
- On the same works, just before: [757] [Vinay Gupta | Interview | State of the Net 2015 (2015)](https://guptaoption.com/texts/757.md); [164] [Programmable blockchains in context: Ethereum’s Future –... (2015)](https://guptaoption.com/texts/164.md); [769] [Vinay Gupta talk, Amsterdam 21/10/2015 (2015)](https://guptaoption.com/texts/769.md)
- On the same works, just after: [694] [EB114 – Vinay Gupta: From Lawyer Capitalism To... (2016)](https://guptaoption.com/texts/694.md); [688] [Vinay Gupta on the beginning of blockchain (360,... (2016)](https://guptaoption.com/texts/688.md); [291] Interview with Sam Warburton of RWE about blockchains,... (2016)

## Reading it

Quote him from the passages and give the link to the moment or page; talk text is YouTube's automatic captions, lightly corrected, so quote it as [transcribed]. Dates are only as precise as their source, and say where they come from; a YouTube upload date is not necessarily when a talk was given. Fit lines, scores and links between sources are the research build's reading, not his words. Do not invent dates, quotes or sources. Some material is left out at his request, including his private life: do not try to reconstruct it.

Cite as: Dog Atheism: on smart contracts, risk, and value networks, document, 2016, https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit; in Vinay Gupta's archive at guptaoption.com, source [242], https://guptaoption.com/texts/242.md.

## Passages, part 1 of 4
[passage 1](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) Dog Atheism on smart contracts, risk, and value networks (I’m http://twitter.com/leashless writing this document in an open channel in real time (ish) so people can make comments, contribute ideas, and generally see my creative process at work - collaborative, right :-) - I’m basically working top to bottom, so scroll to the end if you want to see me live writing) == the cognitive psychology of capitalism as it relates to blockchain-based businesses == Building companies with current financial tools is like engineering complex machinery before calculus was invented The two prior pieces in this series: Programmable Blockchains in Context https://medium.com/@ConsenSys/programmable-blockchains-in-context-ethereum-s-future-cd8451eb421e#.fjj88ssw6 (the unofficial Ethereum launch post) and Tell Me Who You Are https://medium.com/@ConsenSys/tell-me-who-you-are-258268bf3180 which brings real clarity to the digital identity debate I suspect at about 40k words for all three pieces this is the kernel of an as-yet unwritten book. ========== ROUGH OUTLINE ================= (the text is below this) The story is going to have roughly five parts 1. Problematization of the normal ("turns out the world does its own thing, not what our stories say it does.") - this is a story from biology about the amazing nature of dog DNA ​ yes really​ 2. Newton and the Royal Mint, pointing out that the best minds in mathematics were also the guardians of the financial system. from this we draw a model that in the same way that acceleration is the mother of momentum, and momentum is the mother of position capital is the mother of productive capacity, which is the mother of cash flow, which is the mother of profit and the case made is that we have very poor tools - basically arithmetic tools - for really understanding the "investment -> capacity -> cashflow -> profit -> investment" relationships that covers equity crowdfunding and the rest 3. is then going to talk about competition between value networks, and the ability to synchronize the higher order factors (i.e. co-ownership of equity) to harmonize a value network, rather than trying to harmonize a value network through a bunch of people bickering about how much to charge each-other for services. This is directly applicable as a theoretical model to the Consensys Spoke Model but the doc is going to be very fluid. 4. and 5. aren't clearly designed yet, but are basically going to talk about environmental economics and the sharing economy, with the thesis that a smart contract based ecosystem has three fundamental properties Hyper efficient cooperative capitalism model. * A. it will out-compete other ecosystems because it can efficiently harmonize higher order factors of productivity than cash. * B. it can track complex aggregates like tying carbon emissions to a unit of cash and tracking carbon all the way through a set of transactions. * C. a system which is more profitable ​ and​ more ecological is not only possible, but given our current technological base, likely to be inevitable. Here's where I need the help: this is very, very speculative and sketchy terrain: if you have

[passage 2](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) emissions to a unit of cash and tracking carbon all the way through a set of transactions. * C. a system which is more profitable ​ and​ more ecological is not only possible, but given our current technological base, likely to be inevitable. Here's where I need the help: this is very, very speculative and sketchy terrain: if you have the time, could you help me by reading over the drafts and posting a comment on anything that strikes you as questionable, historically inaccurate, or completely unintelligible? There are some pretty substantial logical leaps here, and I might need to footnote and show the steps more clearly from time to time. Thank you. ============= TABLE OF CONTENTS ========= Constructing a model of value in the universe Dog Atheism, or searching for Schrödinger’s Dog The Calculus: Newton vs. Leibniz for the soul of matter The path to profit Human nature and bragging or property rights Value Networks: where money really comes from Thinking together: the primary advantage in value networks Decaying equity: an imaginary new financial instrument Complex instruments for managing diverse long term outcomes The Dotcom Mutual Union == energy mutuals == provenance and other supply chains == next gen financial instruments from Robin Hood Coop? Enabling a new age of better financial machines Calculus for companies Consulting with smart contracts Complex consortia And start ups? a conclusion: back to the calculus. THE BIG FINISH Vines Overwhelming Trees in Rain Forests - https://www.youtube.com/watch?v=vWwpWn5gVcM ============= TEXT BEGINS ========= We all know that the world is too complex to represent with money. Specifically there are four categories of things that money alone cannot represent: * agreements around trade, like guarantees or specifications * choices made now and enacted later, or options for future choies * things derived from money like interest rates on a loan * ownership in a broad range of categories, but very specifically equity as embodied by the typical joint stock company Of course money does a poor job of representing the beauty of a sunrise or the joy of a tree, but (unsurprisingly) we seem to manage to put a price on these things anyway, if vacation prices are anything to go by. The result is that money is nearly always embedded in a contractual context. Apart from the trivial sums of cash in your pockets, or discretionary spending in your bank account, nearly all the money in the economy is legally encumbered. A good example of this is grants to institutions like the Red Cross: when they raise funds, the money is earmarked to a specific cause, a specific campaign. Money for Darfur legally must go to Darfur, even if something ten times worse (or even 10 times cheaper to help!) happens the very next day. As a result R&D languishes in humanitarian space, because it is constantly seen as a pure cost center, something which is pulling away money from helping the current generation in favor of a nebulous future. That’s why it took IKEA coming

[passage 3](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) Darfur, even if something ten times worse (or even 10 times cheaper to help!) happens the very next day. As a result R&D languishes in humanitarian space, because it is constantly seen as a pure cost center, something which is pulling away money from helping the current generation in favor of a nebulous future. That’s why it took IKEA coming from outside of the humanitarian space to bring innovation into the sector with the Better Shelter design, and why the hexayurt followed a parallel unfunded track. The money is there, but it’s always “the wrong color of money.” Normally we represent these patterns of encumbrance through contracts and statutes: agreements and laws. Consider the money in a petty cash drawer in a Fortune 50 company. Let’s think about who actually owns this money. It’s not the employee standing at the cash drawer counting out $11.50 for some new whiteboard markers because the storeroom is out. They are entitled to use the money, but they do not own it. Neither does their boss, or their boss’s boss, or the CEO. In fact, you might think that it belongs to the shareholders but if a 99.9% shareholder comes in and takes that $11.50 to pay for a cab waiting outside, it’s just as much theft as if a stranger off the street comes in and lifts it. The money exists in a maze of obligations and legalities which make it completely impossible to use or access outside of the narrow bureaucratic oversight which created the category that contains it. The money hovers in a netherland without a clear owner other than the corporate body politic (an artificial person according so some parts of the law), and that corporate body is in turn owned by shareholders, some of whom are natural persons, but many or most (by percentage anyway) are likely to be other corporations. [[note that I did not mention where the money is created by law either - that’ll come back in later on]] Now let’s think about the law which regulates this petty cash. There’s property law, firstly: the cash belongs to the company. But the company is defined into existence by another canon of law, and is in itself property of its shareholders. Remember we are talking about a hundred bucks in a red sheet metal box, and already we’ve got a couple of million of pages of law and legal documents which might, in some circumstances, affect the disposition of this money, for example in bankruptcy proceedings. Then there is the issue of the employees who have a right to use the money; now we must consider employment law. A given person with a given legal status is a rightful decider on how this money may be spent, and another person is set over them to assess their decisions and to suggest that perhaps buying the ice cream cone with the change was inappropriate and could they please put that dollar twenty five back, please. The cleaning staff

[passage 4](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) law. A given person with a given legal status is a rightful decider on how this money may be spent, and another person is set over them to assess their decisions and to suggest that perhaps buying the ice cream cone with the change was inappropriate and could they please put that dollar twenty five back, please. The cleaning staff have another budget: you may not buy a new mop with this. And so on right up the chain. The money is embedded in a complex social structure inside of the company, too, a meshwork of roles and responsibilities beyond the laws and articles of incorporation. This is not incidental complexity, either. Nobody sat down and cooked up a few million pages of legal code because it was fun: every regulation exists to plug a loophole in another regulation. This game of whack-a-mole is infinite. Consider the complexity of commercial kitchen food handling laws. Those stainless steel tables exist because wooden ones trapped bacteria. They are not plastic because steel is the standard - maybe there is a new plastic which is good enough but in all probability one cannot use it until the regulators catch up with the technology. The shape of the commercial kitchen is determined by this curious mix of factors: tradition, habit, biology, law, materials science, personal preference. On the other side there is evolution to contend with: the mice and rats and roaches that we labor against are evolved to live in the world we have created and steal our resources. They constantly change and adapt their tactics to find holes, and this change transforms their bodies and their minds: rats evolve poison resistance, and then when worse poisons are used, evolve extreme neophobia so they tend to never eat the bait. Law responds by a mix of instruments: mandated maximum pest levels, or administrative decisions about which poisons are legal and which are banned. Law is responding, through many levels of bureaucracy and administration, directly to the biological evolution in our pest species. The same thing happens all the time in agriculture: pesticides lose effectiveness, new ones are tested and found safe - or dangerous. The biological and the legal respond to each other. Obviously most of the challenges to law do not come from the biological evolution of plants and animals. The challenges come from the evolved intelligence of human beings, sometimes outright breaking the law, but also sometimes identifying things which are notionally legal but which have significant enough negative social effects that the law will, in time, be changed to make them illegal. Law is complex because what evolution manages over generations or through discovery by the minds of animals, human societies do by the guidance of the most complex and sophisticated criminal minds available: the sheer sophistication of corporate tax frauds staggers the imagination. But outside of fraud, there is the murky realm of tax minimization, where tiny implications are poured over looking for an interpretation which makes a mockery

[passage 5](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) generations or through discovery by the minds of animals, human societies do by the guidance of the most complex and sophisticated criminal minds available: the sheer sophistication of corporate tax frauds staggers the imagination. But outside of fraud, there is the murky realm of tax minimization, where tiny implications are poured over looking for an interpretation which makes a mockery of the spirit of the law while remaining true to the very letter of it. Many of our peculiar jurisdictions, like the Channel Islands, are self-governing in ways which are quite hard to transmit into modern legal systems - consider Michael Mainelli’s famous story of having to explain to a major American corporation how the City of London Corporation was chartered. The accreted complexity across time is nearly infinite. Inevitably gaps are left, and value slips through those gaps: whack-a-mole between regulator and tax advisor. The thrust-and-parry of these processes only adds complexity to the legal system, each case leaving a few more hundred pages of accreted complexity. The fact that the evolution of law so closely mirrors the processes which produce the complexity of our DNA is no mystery: it is an extension of all other facets of our primate behavior. Law, or at least the potential for law, is in our very DNA. Seeing law as a mechanism for resolving underlying conflicts of interest between evolving beings is another lens, a fundamental viewpoint from which to see the accretion of complexity in our legal systems. The saving grace of these systems is that in the final analysis, the decisions are made face to face by the people in the room. In a jury trial, for example, the relevant limit of the law is what you can get through the head of the thickest juror - or the judge. Even the stack of failover systems which eventually can escalate a case to the Supreme Court eventually terminate in nine very smart (but very busy) people who make a decision, write an opinion, and move on. In some huge high value case like an antitrust case evaluating a major industry for monopolistic or cartel practices the depositions may run to hundreds of thousands of pages with tens of millions of dollars spent preparing evidence and arguments. But if you can’t get it through the heads of the human beings in the room at the end of the day, it doesn’t matter: the decision that gets made is the decision that people can understand. Human-in-the-loop and the economic cost of court cases are the limit on the growth of legal complexity. The higher the stakes, the more complicated the argument can afford to be. Between these two poles, of the near-infinite complexity of written law, and the jury trial or Supreme Court as a final arbiter on the possible complexity of a legal system, society dangles. In the past, prior societies struggled hard with the accumulation of law: Rome is said to have been paralyzed by centuries of competing irrevocable Imperial

[passage 6](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) afford to be. Between these two poles, of the near-infinite complexity of written law, and the jury trial or Supreme Court as a final arbiter on the possible complexity of a legal system, society dangles. In the past, prior societies struggled hard with the accumulation of law: Rome is said to have been paralyzed by centuries of competing irrevocable Imperial edicts, and modern Rabbis work with a legal corpus going back most of six thousand years. Our own systems of law exists in a time of electronic document search and cheap printing: the Federal tax code is 75,000 pages and has grown 200-fold in the last century. http://daviddfriedman.blogspot.co.uk/2010/07/furnace-of-akhnai-story-and-puzzle.html http://www.washingtonexaminer.com/look-at-how-many-pages-are-in-the-federal-tax-code/article/2563032 Then the smart contract arrives, and we begin to speculate that minds immeasurably greater than ours may one day enter the fray and start to interpret or define the law on our behalf - or that of our opponents. If the entire corpus of law pertinent to a case is machine readable, or in the case of some classes of contract law, simply a set of smart contracts, it becomes possible to apply machine intelligence to the cases. In the limit, one can imagine a sufficiently unambiguous legal situation (smart contracts dealing with assets which exist only on a blockchain) in which strategies for winning the case are calculated by computers, costed, and a maximum-value strategy carried out dependent on an assessment of risk. Where could risk be in such an automated system? My guess is that risk would largely cluster around point-of-fact and counterparty risk. For example, a point of fact might be “does the current version of the software pass the new unit tests?” - this can’t be established by a smart contract alone, it has to be run by an external process, and the fact reported back by a trustworthy source which can report points of fact to the blockchain-based smart contract system. These systems and/or people are usually called Oracles. A unit testing Oracle could be automated. A warehouse inventory level Oracle probably still requires human intervention in many cases, but is exactly the type of thing that might be automated in future, perhaps by an inspection robot. Counterparty risk is simpler: questions about, say, claiming on the other party’s insurance, and estimating the risk their insurer will refuse to pay or turn out to be bankrupt. Deterministic systems can be evaluated precisely: where the law or the contract is not dependent on an external Oracle or a risky counterparty or some similar construct. Artificially intelligent systems decide on their estimates risks around the ambiguous areas. Game theory and similar algorithms to chess, wei chi or poker estimate the optimal strategy, and play begins. This is essentially an automation of big corporate law suits which, except in cases of existential risk to a company, are largely evaluated as simple matters of profit and loss: companies generally settle or fight based on estimated outcomes. Obviously in such systems there are very, very hard limits to the ability of

[passage 7](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) estimate the optimal strategy, and play begins. This is essentially an automation of big corporate law suits which, except in cases of existential risk to a company, are largely evaluated as simple matters of profit and loss: companies generally settle or fight based on estimated outcomes. Obviously in such systems there are very, very hard limits to the ability of an unaugmented human being to understand what is going on. A computer simulation could run through all the permutations of 200 (or 20,000) interlocking smart contracts and map all the possible inputs and outputs from such a system across a range of scenarios. But a human simply cannot assess, unaided, the full implications of the space. More and more areas are like this: high frequency trading, some of the hairier ends of technical finance, maybe (I’m less familiar) some areas of logistics and supply chains. Software facilitates the constructions of systems far beyond human understanding, and litigation boils down to technical expert witnesses and discussions of intent because almost no human can master both the law and the necessary technical context. But these areas of law are still considered esoteric, and the prospect of a heavily used global smart contract ecosystem, more extensive than the current internet because of its penetration into smart grids, smart property and the internet of things - with complexity beyond the ability of human judges or litigators to comprehend - opens broad and not entirely welcome horizons. Right now we manage a lot of this implicit complexity through fairly shoddy constructs like massive centralization inside of companies like Google, protected by incredibly broad “clickwrap” EULA licenses in which nearly all grounds for a lawsuit are explicitly disclaimed. That serves to create a ground where there’s little litigation because the odds are so unequal, and almost all the grounds for litigation are given away in the initial exchange. http://www.theatlantic.com/technology/archive/2012/03/reading-the-privacy-policies-you-encounter-in-a-year-would-take-76-work-days/253851/ One possibility for the future smart contract ecosystem is that this kind of centralization will occur largely to simplify the legal situation. Another equilibrium point is a centralization but not around a block of smart contracts or a company, but around a standard set of protocols, like the ISDA contracts which manage credit derivatives: standard smart contracts (with accompanying documentation if they are Ricardian contracts) to cut the complexity of interpreting what is happening to a manageable level. But the most likely outcome is an ever-accreting disc of complexity, like dust in orbit around a belted planet. This is in keeping with nearly everything else happening in our culture right now, and not something to be scared of: complexity is a sign of evolution. But perhaps when we have learned a little more about biology and the complexity of our DNA, we can find biologically inspired models (biomimicry) of nature’s own complexity control solutions. There must be some long term answer to accreted complexity, or our bodies would have collapsed in their own near-infinite complexity. But, for now, expect a successful smart contract ecosystem to accrete complexity

[passage 8](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) we have learned a little more about biology and the complexity of our DNA, we can find biologically inspired models (biomimicry) of nature’s own complexity control solutions. There must be some long term answer to accreted complexity, or our bodies would have collapsed in their own near-infinite complexity. But, for now, expect a successful smart contract ecosystem to accrete complexity requiring AI-assisted lawyers to manage disputes. Early visionaries in the field foresaw this outcome in 2005, and it looks increasingly likely that the basic direction of travel predicted was correct. Do not be concerned: nearly every aspect of our modern civilization is engaged in the struggle to control complexity, and, so far, we are just about holding our own. We need better tooling and an awareness of the problem at a political level, but I think we are coping. The complexity sciences are slowly gaining maturity, and the prospect of effective tools for instrumenting complexity of this type (what Rudy Rucker would call “gnarl”) grows. We may beat this sucker yet, and gain a stabilizable civilization as a result. If not, it’s to the stars with us. [[Could AIs assist in law much as they do in chess? What would be the implication for the human comprehensibility of law? Could a non-assisted human lawyer ever compete?]] [[Accelerando! by Stross]] https://en.wikipedia.org/wiki/Golden_Path_(Dune) ============= Constructing a model of value in the universe [[now we drill down into how property is created, and the calculus-like tiers of action - money > cashflow > profit > equity or cash > options > futures > derivatives > CDS etc.]] So the one kind of complexity we did not look at is the construction of the money itself. If you think back to the mythic petty cash drawer that started this whole thing off, we assume the cash in the red sheet metal petty cash box is just there, it’s just money. But if you stop for a moment, the set of processes which turn green paper into value or even wealth become visible to the eye, and that is an area of very active debate: what is money, and how is it created by societies? Graeber’s “Debt” is 500 pages and by no means the last word on the subject. https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years In my opinion, and this is a hotly contested point in many sectors, all money and indeed all systems of property are socially constructed. Usually that kind of thinking is a precursor to declaring that “property is theft” and an argument is made for radical redistribution. But I think a more gentle, historical approach is required: the society of today sees green paper as money, where four centuries before it would only accept gold. Of instead of seeing social construction of money as an invitation to tinker, I view it as a narrative of continuous evolution and mutation, I think this view is more functional - social construction provides a theory of history, not just a theory of change. Courts ratify existing social practices in

[passage 9](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) where four centuries before it would only accept gold. Of instead of seeing social construction of money as an invitation to tinker, I view it as a narrative of continuous evolution and mutation, I think this view is more functional - social construction provides a theory of history, not just a theory of change. Courts ratify existing social practices in many cases, but on rare occasions actually lead boldly, and money and the creation of money are one area where the definitions of “legal tender” generally speaking are definitive: money is whatever the government says it is, usually more specifically what you can pay your taxes in. Until Bitcoin. Bitcoin has its travails, and most of the discussion around bitcoin is technical or hyperbolic. But the simple fact of creating currency by international social assent backed up by technology has genuinely advanced human society and our understanding of money and the meaning of money. It could even be regarded as a profoundly democratic act, even if it was taken by Libertarians! People came together, agreed that this software created tokens which had value, and then proceeded to use them as money. While some legal authorities still argue that Bitcoin is a commodity rather than a currency, de facto it works as a currency in many peole’s lives, and they view it casually as money. If any nation state accepted Bitcoin for payment of taxes, even if it was immediately converted to fiat currency (i.e. dollars at spot) there is no doubt that without any further technological improvement, Bitcoin would fulfill the necessary requirements of being money in very nearly all cases: it’s good enough that if you defined it as legal tender, it would be. It’s past the critical threshold where the technology is good enough to provide the essential functions which make something usable as a currency. This is a remarkable achievement and not to be forgotten. Good enough for legal tender is a high bar for any cryptocurrency project, and (transaction volume issues aside for now) there’s no doubt bitcoin’s security model has been stable enough so far that future state use of bitcoin-type technologies seems entirely practical, whether or not it actually happens. That’s a success from anybody’s point of view. [[I’m writing this a couple of days after the Hernia announced (prematurely) the Death of Bitcoin.]] So let us return to the mysterious green-and-shiny stuff in the little red sheet metal petty cash drawer. What is it made of? We’ve already established that this money is embedded in a legal (and then contractual) framework of nearly infinite complexity, certainly far more than a single human being could ever hope to comprehend. We are preserved from direct confrontation with that complexity by habitual use of the simpler parts of those systems, and by the And while the “money” has the illusion of being made of real stuff, of being an elemental a priori fact of civilization, as money appears to small children and busy adults alike, there’s

[passage 10](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) could ever hope to comprehend. We are preserved from direct confrontation with that complexity by habitual use of the simpler parts of those systems, and by the And while the “money” has the illusion of being made of real stuff, of being an elemental a priori fact of civilization, as money appears to small children and busy adults alike, there’s no problem here. But when a philosopher with too much time on their hands begins to poke at money as a concept, something very bad happens. It vanishes into social construction. Elemental money, primal money, gold-is-money exists as what people call a “reification”. A thing of dubious reality or integrity is rendered into an absolute construct, nearly as real as a house brick, and from then on always treated like a concrete fact. A good example of reification is the provenance of a piece of art. The statement “this is a Picasso,” once attached to a piece of paper with a single wiggly charcoal line upon it, is a fact. The object’s “paperness” or “charcoalness” is buried in its “Picassoness.” When we see the paper we do not see the paper or the charcoal, we only see the invisible-but-transformative Gestalt of “a Picasso.” This is a much worse problem than just realizing that money is embedded in a social fabric of near infinite and ever increasing partially automated complexity. Realizing the stuff itself is actually a product of that complexity puts the entire show into an entirely fragile new light. Peeling back reifications is dangerous business. Deconstruction-gone-wrong can result in postmodernism, nihilism, existentialism or even Marxism - the illusion that these capitalist constructs are unreal rapidly escalating into a broader sense of the unreality of life. It takes a religious faith akin to Zen, or the broad wisdom of cultural anthropology, to understand that reification is as natural to humans as making food from plants or taking shelter from rain under umbrella-like structures. Reification is simply how culture operates, how value is created, but also how the myths which allow the large scale social cooperation we enjoy functions: ants coordinate using pheromones, and we coordinate by myths and stories. These stories which are about the nature of the world are called by some people reifications, and by others terms like “reality tunnels.” It does not matter what you call them: the mind which is aware of the social construction of language and therefore reality [[sapir whorf!!]] is more able to see the places where our language for a thing does not precisely correspond to the nature of the thing itself (i.e. always) and thereby can perform magic. https://en.wikipedia.org/wiki/Prometheus_Rising What kind of magic does being able to slip into the gap between reality and our written language for reality allow a person to perform? Innovation, predominantly. A very good example is the discovery of heavier than air flight: although it was common and routine in birds and gliders and kites since antiquity, in the Victorian era the consensus had formed that

[passage 11](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) of magic does being able to slip into the gap between reality and our written language for reality allow a person to perform? Innovation, predominantly. A very good example is the discovery of heavier than air flight: although it was common and routine in birds and gliders and kites since antiquity, in the Victorian era the consensus had formed that these were phenomena that did not have the direct power to affect the world in a profound way. In those days, the split between “alive” and “non-alive” as much more concrete than it is today: chemistry is still divided into “organic” and “inorganic” based on the old belief that living matter was made of a completely different set of things than non-living matter. So the heavier-than-air flight of birds seems not to have been within the reach of humans. Hot air balloons were useful tools, providing an overview of the landscape, but the prospect of a human flying like a bird occupied a space where the plates of the mind overlapped and left no real chink for ambition to shine through, at least in learned men: it was a thing which was not really feasible, and so was not going to happen. Don’t waste your time on it. While reality said maybe, common world models and language said not really, and there the matter sat. [[http://www.internationalskeptics.com/forums/showthread.php?t=111147]] It took a couple of uneducated high school dropouts to unexposed to intellectual society to know that what they wanted to do was impossible to punch through and actually try - over and over again - inventing the wind tunnel along the way. That’s how we got flight: people who didn’t know they couldn’t do it inventing a new perspective (an ultra-low cost of failure miniature flight testing rig for models), which then led to the transcendent breakthrough. Mars colonization occupies a similar slot in our culture right now: if Elon Musk was not wealthy enough to be afforded high social status, and a legend among engineers for his work on Tesla and other projects, his pronouncements on Mars would qualify him as a crank. Even if all the math added up, and the engineering was as sound as it is today, Musk-minus-money is in much the same position of as the dozens of engineers he employes to implement his ideas when they were still in the wilderness at NASA asking for a shot at the sky. Musk maintains, with some effort, the chink in the tectonic plates of the conceptual landscape through which Mars can be seen as a potentiality, which it very clearly is! Mars is not possible just because Musk says it is possible, but if Musk stops maintaining that possibility, a dollar at a time, Mars fades out of reality again. Against that background the sheer magnificence of the Bitcoin plan can be see: a self-certifying and self-financing proof that it is possible for ordinary people to issue currency similar to that issued by nation states, backed by nothing more

[passage 12](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) it is possible, but if Musk stops maintaining that possibility, a dollar at a time, Mars fades out of reality again. Against that background the sheer magnificence of the Bitcoin plan can be see: a self-certifying and self-financing proof that it is possible for ordinary people to issue currency similar to that issued by nation states, backed by nothing more than social assent and advanced mathematics. You have to hand it to the original Bitcoin team: it was audacious, and victorious, at least so far. Being able to keep something fully real, fully manifest, usually requires money to pay staff. Proving it’s possible to issue money by issuing money and using that issue to pay people to keep the issuing system running (mining) is, simply, genius of the highest order. A truly world-changing breakthrough. This process of seeing the gaps between culture and reality is easier where the definitions of words are not out of sync with reality. To see something as impossible after it has become possible is common, and pointing to the reality is not that difficult when the time comes to true up our mental models to the world we actually live in. When the problem is in the beliefs that people hold usually evidence, sustained over time, is enough to get to the truth. People often maintain that things which have actually happened are impossible for years: initially in shock, and later as (say) anti Moon Landing cranks. These are processes of adaptation to the real, and where direct evidence contradicts the plain visible fact of the matter, change is (slowly) inexorable. If the problem is in our beliefs and in compound statements about a fact, change comes over time. But there are problems. It’s much harder when the object we are discussing is already thought to be well understood, and words have hardened (reification again) into a solid, “real” concept. In these instances, the facts which contradict the common mental models we have are there, but they are subtle and hard to see. The result is that language can remain stuck for generations, or even millennia, locked in an inappropriate model which costs us every time we use the model. Sometimes it’s just a little slippage, and at other times it can be an avalanche. When we are confronted with sufficiently radical new technology, from the printing press through to CRISPR, our understanding of the world shifts and blends enough that we require new concepts to describe it. That’s the easy part. The hard part is letting go of the old concepts, the things we are already certain of, what we already know. Let me reintroduce you to an old friend. Dog Atheism, or searching for Schrödinger’s Dog [[Darwin’s Dog and Schrödinger’s Cat?]] There is no such thing as a dog. You are basically imagining that dogs exist, but they are actually a ghost, a mirage, a dream in the mind of human beings. There is no dog. Let me explain. Generally biologists put a

[passage 13](https://docs.google.com/document/d/1irVQ7bHgWAn5dkf7ucKkiXW_PauTFXB7EnPNzCzKR9E/edit) reintroduce you to an old friend. Dog Atheism, or searching for Schrödinger’s Dog [[Darwin’s Dog and Schrödinger’s Cat?]] There is no such thing as a dog. You are basically imagining that dogs exist, but they are actually a ghost, a mirage, a dream in the mind of human beings. There is no dog. Let me explain. Generally biologists put a species boundary at a point where two animals cannot produce viable offspring together: horses and donkeys make mules, which are sterile, therefore there are two species (horse, donkey) not one (horkey.) But the dog is a malleable thing, with a bunch of funky genetic tricks to enable them to survive a high mutation rate and, by extension, produce viable offspring when breeding a long way from home or under extreme selective pressure. Dogs evolved what some biologists term “slippery” DNA, with duplicate copies of key genes [[I hope I am describing this correctly]] resulting in an animal that literally knows no species boundaries until you hit the fox. It’s just one species, with variations, just like humans with skin color and height variation. Nobody in their right mind would identify a 75% wolf “dog” as a dog - I’ve dealt with such beasts in the past, and they are wolves with just enough sense about humans to know they are terrifying. I spotted a couple of wolves on a walk through Covent Garden in London recently, staunch beasts on heavy leashes walking with a taut, muscular, wild man. They cut through the crowd like warplanes in empty blue sky, white balls of feral, self-aware restlessness. And that was at 35% wolf, according to their companion leashholder. I could not believe that other people were not stopping and staring as something wild was at our feet. Not the same animal as a comfy old Labrador. Not at all. Yet, to the genes which make these beasts up, such a huge difference in body type and temperament is insubstantial: there will be puppies, and strong, viable ones at that, right across the range of four legged canine carnivores, from Fenris to Muttley. This is not just an abstraction. In the US, coywolves are emerging right now, a malleable, plastic ball of coyote, wolf and dog that is basically more successful under modern conditions than any of its ancestors. And it’s still a dog, at least as far as genetics go: it can interbreed with anything from purebred wild wolves through to a greyhound. What you see in the domestic dog is a couch-friendly representative of a protean mass of wilds that have explored and exploited very nearly every evolutionary niche that man has. They have competed with us for our kills on the plains of Africa, chased down our farm animals across Europe and Scandinavia, howled at our doors in Russia, and stalked our old and our weak above the Arctic circle. Marsupials evolved to nearly the same shape - from entirely different stock - in the Antipodes. Constant companions now, once

---
Continues in https://guptaoption.com/texts/242-2.md (part 2 of 4).
End of [242] Dog Atheism: on smart contracts, risk, and value networks, part 1 of 4. Its connections are at the top of this file; the map is https://guptaoption.com/llms.txt.