Bitcoin And The Thermodynamics Of Computation

2 years ago

The Santa Fe Institute has a past of studying analyzable adaptive systems. Bitcoin has a heavy transportation to complexity mentation and thermodynamic theory.

This is an sentiment editorial by Spencer Nichols, a contributor astatine Bitcoin Magazine.

“Continuous maturation and the consequent ever-increasing acceleration of the gait of beingness person profound consequences for the full planet… This is surely not sustainable, and, if thing changes, we are heading for a large clang and a imaginable illness of the full socioeconomic fabric. The challenges are clear: Can we instrumentality to an analog of a much ‘ecological’ signifier from which we evolved and beryllium satisfied with immoderate mentation of sublinear scaling and its attendant earthy limiting, oregon no-growth, unchangeable configuration? Is this adjacent possible?” — Geoffrey West, “Scale”

Geoffrey West Ph.D., erstwhile president of the renowned Santa Fe Institute (SFI) and founder of the High Energy Physics radical astatine Los Alamos National Lab, recently appeared connected “The ‘What is Money?’ Show” (TWIMS), hosted by Robert Breedlove, to speech astir his mathematical model describing however antithetic types of networks, (including biologic and societal networks), standard their maturation implicit time. West and Breedlove covered the former’s bestselling publication “Scale: The Universal Laws Of Growth, Innovation, Sustainability, And The Pace Of Life In Organisms, Cities, Economies And Companies.” In their conversation, they discussed what thermodynamics whitethorn thatch america astir the web operation of those phenomena, and included immoderate treatment of Bitcoin, of course. In his book, West uses the lens of a biologic organism’s metabolic complaint and applies the conception to recognize the metabolic complaint of quality societal networks — namely cities, economies and companies — and their wide temporal sustainability successful the discourse of the limits of thermodynamics and web adaptation. In doing so, helium weaves unneurotic biology, physics and accusation subject to analyse humanity’s existent economical trajectory and what this mightiness connote for our corporate aboriginal amid the staggering magnitude of societal and technological alteration we person already begun to witness.

SFI, wherever West presently serves arsenic an advisor, is simply a privately funded, interdisciplinary probe radical spanning the domains of physics, chemistry, ecology, biology, computation and economics. The institute emphasizes the survey of analyzable adaptive systems, oregon systems with galore interrelated components which make emergent macrosystemic properties inevident erstwhile considering each constituent successful isolation.

Theoretical biologist Stuart Kauffman, 1 of the archetypal SFI nonmigratory researchers, defines a analyzable strategy as, “A strategy with galore parts and galore processes wherever the parts and the processes tin interact with 1 another, retired of that emerges a crystallization of organized parts and processes that past bash thing useful.”

Examples of analyzable phenomena see economies, ecosystems and societies arsenic good arsenic the planetary climate. These types of systems are often addressed with the tools of non-equilibrium thermodynamics. It is fundamentally the survey of non-linear dissipation of vigor wrong analyzable thermodynamic systems arsenic the web adapts to biology conditions via feedback mechanisms, known arsenic non-equilibrium systems. A important pioneer successful the tract is Ilya Prigogine, who won the Nobel Prize successful Chemistry successful 1977 for his enactment connected non-equilibrium thermodynamics for processing “a mentation astir dissipative structures, which maintains that agelong earlier a authorities of equilibrium is reached successful irreversible processes, orderly and unchangeable systems tin originate from much disordered systems.”

While SFI’s enactment is grounded successful quantitative methods and the hard sciences, it endeavors to synthesize caller perspectives careless of their seeming disparity. The institute seeks to recognize the underlying “shared patterns successful analyzable physical, biological, social, cultural, technological and adjacent imaginable astrobiological worlds.” The American novelist Cormac McCarthy (“No Country for Old Men”) offers a description of beingness astatine SFI:

“Scientific enactment astatine SFI is ever pushing creativity to its applicable limits. We ever tribunal a high-risk of failure. Above all, we person much amusive than should beryllium legal.

“We are perfectly relentless successful hammering down the boundaries created by world disciplines and by organization structures. If you cognize much than anybody other astir a subject, we privation to speech to you. We don’t attraction what the taxable is.

“We are beyond relentless successful seeking retired the champion radical successful each discipline. We volition get you present nary substance what, and we volition springiness you the abstraction and the resources that you need.

“We don’t attraction however young you are.

“We person successful wide avoided becoming progressive successful matters of policy, but if you are moving connected a programme that involves sustainability, oregon the environment, oregon quality welfare, and you deliberation we person thing you could use, prime up the phone.

“The acquisition opportunities that we connection — particularly for young radical — are simply not disposable elsewhere. Period. And lastly, occasionally we find that an invited impermanent is insane. This mostly cheers america each up; we cognize we are connected the close track.”

Some well-known scientists from SFI’s probe assemblage see Sean Carroll, Lee Smolin, Sara Walker, Leroy Cronin and existent SFI President David Krakauer.

In an arsenic interdisciplinary pursuit, erstwhile episodes of TWIMS person explored the qualities of wealth done a lens of Austrian economics and philosophical thought portion besides taking inspiration from physics and biologic evolution. Past guests of the podcast person described Bitcoin arsenic a form of cybernetic life (Michael Saylor), an augmentation of humanity’s psychotechnology (John Vervaeke, adjunct prof of cognitive science) and a form of liquid biologic fitness (Geoffrey Miller, prof of evolutionary psychology).

West’s technological travel has taken him from high-energy particle physics to the survey of biology and societal systems astatine each scales. Surprisingly, fixed helium studies societal phenomena, West remarked that helium has yet to make a heavy knowing of Bitcoin and cryptocurrency, much generally. To spot SFI module prosecute with Bitcoin, albeit successful an introductory manner, is highly important fixed the institute’s stature successful the fields of complexity science, corporate computation and academia successful general. West was SFI president from 2005-2009 and was listed among the “100 Most Influential” successful the 2006 Time Magazine, truthful his endorsement of proof-of-work (or not) connected TWIMS would supply important fodder for fashionable sermon astir Bitcoin and its biology implications. While West did not connection immoderate peculiar endorsement of Bitcoin, thankfully helium did not connection immoderate attributions to Dutch cardinal slope worker Alex de Vries oregon the (thoroughly debunked) science™ espoused by Greenpeace either.

West elaborate his antecedently held aversion to the survey of wealth and adjacent shared a communicative of his non-investment successful bitcoin contempt tips from friends and colleagues who recommended helium bash truthful implicit the years. Notably, contempt his somewhat Keynesian, neoliberal economical viewpoint, West appeared unfastened to exploring libertarian economical thinkers, including the likes of Murray Rothbard and Ayn Rand astatine the proposition of Breedlove.

SFI has had its stock of run-ins with salient Bitcoiners successful its history. Wences Casares delivered a speech astatine SFI successful 2014 titled “Bitcoin is Gold 2.0.” The pursuing year, tech-focused worth capitalist Bill Miller purchased bitcoin astatine $200, citing SFI’s 2015 symposium. He co-authored “Money and Currency: Past, Present, and Future” with existent President David Krakauer, referencing enactment arsenic an power successful his determination to buy. Incidentally, Miller endowed the institute with a $50 cardinal donation (its largest ever) successful November 2018, to further the survey of analyzable adaptive systems.

Miller reported, “My agelong affiliation with SFI has been among the astir rewarding of my life, some personally and professionally.” Miller adjacent referred to his namesake publication arsenic “the field that bitcoin built.” Completed successful precocious 2021, the archetypal and lone lawsuit hosted astatine the SFI Miller Campus frankincense acold was titled, “The Thermodynamics of Natural and Artificial Distributed Computational Systems,” and its docket noted a “focus connected systems that:

Are distributed with aggregate spatially separated subsystems;
Are not astatine thermodynamic equilibrium (and successful general, not adjacent successful a stationary state);
Have important thermodynamic costs of connection among the subsystems and important thermodynamic costs of the accusation processing wrong the subsystems.”

If that doesn’t dependable similar Bitcoin, I don’t cognize what does…

The docket besides states:

“The thermodynamics of computation is simply a long-standing involvement successful the physics, machine science, and biology communities, playing a large relation successful issues ranging from the plan of artificial integer systems to the foundations of physics to theoretical neurobiology. The gyration successful non-equilibrium statistical physics of the past 2 decades, sometimes summarized arsenic ‘stochastic thermodynamics’, has provided a large beforehand successful our quality to analyse this topic.”

SFI launched a new probe theme successful February 2022, concerning “emergent governmental economies” with existent President David Krakauer noting that “Adam Smith needs to conscionable Complexity Economics.”

Relating it to the aboriginal days of the quality genome project, Krakauer said, “The tone of contention and practice betwixt institutions volition assistance america illuminate the elements of a analyzable strategy that is acold greater than the sum of its parts.”

The implications of Bitcoin arsenic a bottom-up economical strategy composed of self-organizing agents operating wrong an open, energy-based worth communications protocol seems parsimonious with the survey of emergent governmental economies that SFI appears to beryllium pursuing. This lies successful opposition to the top-down, centrally planned fiat strategy which arguably exhibits a lesser grade of corporate quality erstwhile taking into relationship the economical calculation occupation arsenic it relates to cardinal readying of the monetary system.

Moving backmost to West’s quality connected TWIMS, helium and Breedlove engaged successful a wide-ranging dialog connected the fractal operation of biologic networks, connections betwixt Austrian economics and complexity science, arsenic good arsenic what insights from biology and high-energy particle physics mightiness suggest astir the web operation of analyzable adaptive systems generically successful the discourse of thermodynamic sustainability. West addressed these themes arsenic they subordinate to web power-law scaling. Simply put, power-law scaling observes the narration betwixt factors arsenic a thermodynamic strategy changes successful scale, with 1 origin successful exponential narration to the other. What West and his collaborators discovered is that 1 tin generalize a biologic system’s implied patterns of maturation implicit clip utilizing a quarter-power scaling interpretation (hence power-law scaling), revealing amazingly regular scaling factors crossed each mode of divers biologic organisms.

Exemplifying these scaling laws successful quality is the reflection that connected average, arsenic a mammal doubles successful weight, its metabolic complaint scales with an exponent of three-quarters (^¾). This exponent, being little than one, implies an system of standard (referred to by West arsenic “sublinear scaling”) of metabolic complaint with web size. This ratio is shown by the information that larger mammals unrecorded longer lives owed to the information they go much metabolically businesslike arsenic they scale, utilizing little vigor per compartment added arsenic they grow. (See: Kleiber’s Law from biology.)

In reality, mammals lone turn truthful large, with maturation yet leveling disconnected (sigmoidal growth). This implies that maturation driven by economies of standard yet results successful the cessation of maturation (N) and a unchangeable carrying capacity, shown beneath by a flattening of the curve successful the upper-right. This is wherefore we arsenic humans (on average) bash not proceed increasing successful size past a definite constituent of our development.

Conversely, successful quality societal networks, per-capita artifacts similar gross home product, disease, fig of patents and the fig of societal interactions astir summation with an exponent of astir 1.15 (exponent greater than one) arsenic the web doubles successful size. This is an illustration of returns to scale, oregon “superlinear scaling.”

As an system doubles successful size, its quantity of societal phenomena increases (on average) by 115%. This benignant of superlinear scaling successful thermodynamic systems implies a signifier of maturation called a “finite clip singularity,” whereby arsenic the web grows, societal phenomena standard asymptotically, approaching an infinite quantity successful a finite time.

According to West, finite clip singularities are intolerable successful thermodynamic systems, and if not someway avoided, they extremity successful systemic illness beyond the finite clip singularity. West uses these arsenic a exemplary for knowing the maturation and behaviour of societal networks wrong the discourse of thermodynamics, and considers what solutions whitethorn prevarication to this seemingly inbuilt structural-functional phenomena affecting our quality to standard society.

Network illness nether these types of superlinear conditions tin lone beryllium offset oregon postponed by expanding innovation oregon quality “adaptation” successful the biologic consciousness (shown below) to thrust ratio gains. This “resetting” of the innovation rhythm recursively enables maturation owed to ratio summation (Jevons Paradox), which past continues to provender the societal metabolism of the system successful faster and faster cycles of innovation implicit time. Conversely, if this asymptotic complaint of innovation fails to occur, the web ceases to relation and a illness beyond the finite clip singularity ensues. West’s 2008 paper describes the phenomena of expanding gait of technological improvement successful the discourse of cities:

“To prolong continued growth, large innovations oregon adaptations indispensable originate astatine an accelerated rate. Not lone does the gait of beingness summation with metropolis size, but truthful besides indispensable the complaint astatine which caller large adaptations and innovations request to beryllium introduced to prolong the city. These predicted successive accelerating cycles of faster than exponential maturation [aka maturation driven by superlinear scaling] are accordant with observations for the colonisation of cities, waves of technological change, and the satellite population.”

This phenomena of built-in scaling patterns tin assistance explicate wherefore societal networks collapse, and portion not discussed during West’s TWIMS appearance, I posit the phenomena could usage owed information with regards to the temporal sustainability of currency networks as they subordinate to thermodynamics and the limits of adaptation.

A fiat, debt-based fiscal system, which demands open-ended, continuous maturation to work compounding involvement connected debt, appears inherently unsustainable successful that open-ended maturation of an system drives super-linear scaling of societal metrics. Because the maturation of the strategy is unbounded, and societal phenomena standard superlinearly, the monetary web indispensable illness astatine immoderate point, owed to the web effects of its super-exponential, social-metabolic rate. West writes successful “Scale” to picture the seemingly unsustainable “accelerating treadmill” of technological alteration necessitated by these dynamics:

“Open-ended wealthiness and cognition instauration necessitate the gait of beingness to summation with enactment size and for individuals and institutions to accommodate astatine a continually accelerating complaint to debar stagnation oregon imaginable crises. These conclusions precise apt generalize to different societal organizations, specified arsenic corporations and businesses, perchance explaining wherefore continuous maturation necessitates an accelerating treadmill of dynamical cycles of innovation.”

A mode of tying unneurotic Bitcoin, complexity mentation and heavy thermodynamic sustainability that I find to beryllium rather compelling is the thought of “monetary entropy” arsenic outlined successful an fantabulous Bitcoin Magazine nonfiction by Aaron Segal, titled “Bitcoin Information Theory: B.I.T.” Segal characterizes Bitcoin arsenic the archetypal monetary web suffering from zero terminal ostentation of its wealth supply. In different words, Bitcoin has zero monetary entropy, specified that immoderate economical worth stored successful the web volition not degrade from inflation, but alternatively volition accrete worth arsenic humanity economizes and increases the instauration and organisation of quality wealthiness implicit clip (the earthy process of economical deflation). This incentivizes solvency and reflects a genuinely earthy involvement rate.

Conversely, fiat currencies incur monetary entropy owed to their affirmative terminal ostentation complaint (aka summation successful the wealth supply). Monetary entropy requires holders of the currency to execute much and much economical enactment implicit clip for their superior to support its value. This is fundamentally the “Red Queen” occupation successful action, successful notation to Lewis Carroll’s “Alice successful Wonderland”: One indispensable — economically speaking — tally faster and faster conscionable to enactment successful the aforesaid place.

From my speechmaking of “Bitcoin Information Theory,” ostentation seems to beryllium antithetical to the principles of sustainability successful that inflationary currencies necessitate open-ended exponential economical maturation wrong finite temporal and carnal constraints. As well, I posit that this embedded, continuous-growth work of a debt-based system drives the strategy towards a finite clip singularity owed to super-linear scaling of societal phenomena.

As predicted done West’s statement of finite clip singularities, infinite societal quantities are intolerable successful real-world systems and yet origin the strategy to collapse. In an economical strategy with open-ended maturation baked in, that illness appears to beryllium astatine the precise slightest hastened by compounding monetary entropy.

A adjuvant mode to mentally representation finite clip singularities is Euler’s Disk. Imagine a spinning coin slowing to a stop. As the coin’s rotation slows, its complaint of precession, oregon re-orientation of its rotational axis, approaches infinity and the coin comes to a standstill connected its side. Again, carnal systems don’t bash good erstwhile encountering infinities, and an infinite complaint of precession reflects the strategy coming to a halt successful reality, i.e., the strategy collapses. If you equate precession to web adaptation, we tin spot wherefore the Bitcoin web appears beryllium an arbitrarily scalable monetary strategy successful that it does not accrue monetary entropy, and frankincense does not necessitate an infinite complaint of web adaptation (or precession, successful the lawsuit of coin) via open-ended maturation to proceed functioning. As well, possibly Bitcoin’s strict tether to thermodynamic enactment has implications for the complaint astatine which humanity sows the seeds of its indispensable maturation and adaptation successful the future.

In examination to Bitcoin, agents wrong the fiat monetary system, an inflationary monetary network, are incentivized to accrue indebtedness and gully guardant aboriginal productive superior successful bid to concern contiguous growth. With this, each web subordinate is reacting to precocious time-preference economical incentives embedded into their behavior. Inflation fundamentally induces a signifier of systemic hazard accumulation via monetary leverage, each the portion harvesting aboriginal economical capital.

This fiat monetary strategy (what Pierre Rochard calls the “high velocity trash economy”) decreases the worth of aboriginal currency flows via inflation, whereas I would reason that existent sustainability requires the opposite: a comparative summation successful the worth of our corporate aboriginal arsenic clip progresses via the earthy deflationary process. This is illustrated by economist Garrett Hardin’s “Tragedy of the Commons” arsenic it relates to contamination of globally shared assets pools similar the ocean, fisheries, ambiance and, successful this case, the discount complaint (aka the instrumentality to measure the worth of aboriginal currency flows). Hardin’s mentation seems to use successful the discourse of currency debasement, with Bitcoin fundamentally securely privatizing the instauration of money, and frankincense generating inducement to support the network’s worth alternatively than to defect from cooperation, consequently preventing the accumulation of monetary entropy. By privatizing monetary creation, we debar race-to-the-bottom dynamics astir dilution of the time-value of money, genuinely a singular information fixed however galore monetary systems person risen and fallen implicit the years, mounting quality advancement backmost for who knows however galore generations.

As humanity navigates the modulation from a top-down, centrally planned fiat strategy to a bottom-up, decentralized and self-organizing 1 (where marketplace actors observe the “natural” discount rate), it would beryllium a boon for immoderate of the world’s apical scientists — those who are acrophobic with topics of entropy, web scaling and the heavy aspects of thermodynamic sustainability, similar West — to survey Bitcoin’s imaginable higher-order, socio-environmental and technological effects. As well, SFI’s oculus for interdisciplinary collaboration seems an fantabulous lucifer fixed the Bitcoin rabbit hole’s endless extent and adjacence to the survey of accusation theory, corporate computation and distributed intelligence. Amid the aforementioned TWIMS quality and an emergence of Bitcoin treatment successful Santa Fe, nationalist rhetoric and regularisation concerning the socio-environmental impacts of proof-of-work statement proceed to ramp up. As such, it seems to beryllium premier clip for Geoffrey West and SFI to instrumentality the orangish pill.

“I deliberation the adjacent period volition beryllium the period of complexity.” — Steven Hawking

This is simply a impermanent station by Spencer Nichols. Opinions expressed are wholly their ain and bash not needfully bespeak those of BTC Inc. oregon Bitcoin Magazine.

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