In old security models, you tried to lock out all of the greedy, dishonest people. Bitcoin, on the other hand, welcomes everyone, fully expecting them to act in their own self-interest, and then it uses their greed to secure the network.

In many of my lectures, I try to explain the following to highlight the key civilisational breakthrough that p2p systems represent in terms of dealing with ‘human nature’.

Premodern class systems assumed that people could be good if they followed the precepts of divine law, it assumed humanity could only be civilized through alignment with a transcendent power that had laid down the rules. The result was a hypocritical society where those that believed the right things were assumed to be good, and those that disbelieved were assumed to be bad. It didn’t end well especially in the European context, with three centuries of religious civil war.

I believe that the reaction of liberalism / modernity etc … was essentially to recognize that all humans were motivated by self-interest (hiding by religious motives to justify this), and that if this was recognized, society would be well. Everyone’s recognized self-interest automatically leads to the augmentation of the common good. It’s the famous theory of the invisible hand, attributed to Adam Smith.

We today know that it doesn’t work and that the invisible hand destroys our biosphere, and creates increasing social inequality, while massively privatising essential human knowledge. But we can’t go back to the moralising past either. So what to do.

The answer is to recognize motivational pluralism, i.e. to recognize self-interest and many other motives, including altruism and the practice of cooperation. And to create social systems that are based on the conscious convergence of these motives, to the creation of a common good. In other words, we are moving from the worship of the invisible hand, to the conscious creation of a ‘visible hand’, i.e. the building of social systems that allow anyone to contribute to common projects, whatever their motives. Hence, whatever your motive is to contribute to the Wikipedia, you are still co-constructing a universal encyclopedia.

It is sometimes difficult to see this in all systems that claim to be peer to peer. Bitcoin is a case in point, since the currency part is based on a rent-extraction mechanism, which is designed to increase its value, and hence appeals essentially to self-interest and greed. And the result is known, Bitcoin’s spread is more unequal than sovereign currencies.

Yet the blockchain part has a genuine peer to peer aspect built in. It creates a visible hand to steer self-interested behaviour to the creation of the common good of the blockchain, while it also allows any other motivation to participate.

Here is the significant quote, from Morgan Peck:

“A Nakamoto blockchain, then, becomes more secure as more people participate in the network. But why would they? In the case of Bitcoin, it’s because they are paid to do it. Every time a block gets solved, a virgin transaction is created with a handful of newly minted bitcoins signed over to the first miner who completed the work.

In old security models, you tried to lock out all of the greedy, dishonest people. Bitcoin, on the other hand, welcomes everyone, fully expecting them to act in their own self-interest, and then it uses their greed to secure the network.

“This is, I think, the main contribution,” says Ittay Eyal, a computer scientist at Cornell who studies Bitcoin along with other decentralized networks. “Bitcoin causes an attacker to be better off by playing along than by attacking it. The incentive system leads a lot of people to contribute resources toward the welfare of the system.”