Theory of Bitcoin Part 3: Understanding how and why laws exist

YouTube video

To understand Bitcoin, you must understand the principles and philosophies behind its creation. The latest installment of the “Theory of Bitcoin” video series with Dr. Craig Wright and Money Button’s Ryan X. Charles serves up another solid dose of background information—this time, on the nature and purpose of law.

Dr. Wright is on vacation in Sicily this week, and inevitably the discussion steers towards that country’s (or rather, Rome’s) historic role in creating a society based on rules and order—one that has many similarities to Western society today.

This shorter episode differs from the two previous ones in that it presents more on the background of a topic that led to Bitcoin, rather than Bitcoin itself. In doing so, it helps to explain more of Bitcoin’s “why?” question—indeed, Dr. Wright goes into some depth about the inadequacies of physics and other sciences in addressing that problem.

Don’t worry, though, because the next episode will continue the legal theme and explain how it pertains to Bitcoin.

Law and humanity

Charles starts by asking if there’s an intimate relationship between the law and economics, since both govern the structure of Bitcoin and how it should be used.

Without a just set of rules and a means to formally resolve disputes, Wright says, you cannot have a methodology for property, trade and exchange—and society will be small and impoverished. Capitalism requires certainty, perhaps more than it needs democracy. People are far less likely to take the risks needed to advance society if there’s a risk they could be cheated, or have their possessions taken from them without any recourse.

The laws we have reflect our sense of justice, morality, and common sense. These are mostly derived from the culture that created them, though the law must also serve to protect a society’s minority groups… so long as they’re not engaging in any activity the greater society finds abhorrent.

Dr. Wright believes firmly in a unified justice system, where no-one is allowed to exist outside the rules. That includes rulers and leaders. Justice must be blind in the sense it treats everyone equally, whether rich or poor, liked or disliked, powerful or not.

The law, like society, must also be able to change—at the same time as being conservative. That’s not a contradiction. It leads to adaptive change, but considers any changes properly before implementing them.

“If you change too much, too fast, things fall apart. If you’re too conservative, things stagnate,” Wright says.

As always, Dr. Wright reminds us of the human element in rules and actions. As humans, we are not perfect. We make errors, bad judgments, have bad days. Even though we can never have a “perfect society” with a perfect set of rules, it should be possible for people to build and have new ideas.

There are also some historic comparisons between the French and American Revolutions. Though they happened at relatively similar points in history, the principles and outcomes were quite different. The American version took individual action and responsibility as its driving ideology, whereas the French turned instead to collectivism and paternalism. Frédéric Bastiat, the French economist and writer (born years after both revolutions) wrote his most famous work on the topic of law and preferred a society that protected individual liberties and private property.

Dr. Wright doesn’t like multiverse theory

As the conversation becomes more philosophical, Dr. Wright compares the laws of science to those of humans. It’s possible to see where his dislike for the “code is law” mantra repeated by many Bitcoiners over the years stems from.

“Science, philosophy… they’re all tools. And humans are great tool users”, he says. But science (particularly physics) doesn’t present us with any truth—only the best statistical answer at the time.

He’s particularly displeased with Multiverse Theory, calling it “a nihilistic view,” “god of the gaps replaced by science of the gaps,” and “a metaphysical wank job.” Rather than assuming free will, those who talk of a solid-state, deterministic multiverse take the lazy option of saying that anything that could possibly happen, does happen, and leaves it at that.

Expect a kind of cliffhanger at the end of this episode, since Wright and Charles run out of time and promise to return next week to apply this discussion to Bitcoin.

Law, unfortunately doesn’t get discussed enough in Bitcoin—or at least, it didn’t in the past. But as much as our universe and daily lives are affected by the laws of nature, it’s human law that plays an equal part in determining our fates. It’s important to understand that our society is human, and Bitcoin is also a product of humans. Anyone who underestimates the law’s role in Bitcoin cannot understand Bitcoin. It’s best to learn this the easy way rather than the hard way.

To watch previous episodes of the Theory of Bitcoin, check the Theory of Bitcoin YouTube playlist here.

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.