Buterin’s Proof Of Stake and the political philosophy of crypto

(This was going to be a review of Vitalik Buterin’s book Proof Of Stake but reality kept getting in the way of my writing it so rather than nothing I just wrote this up which is what I took from the book. I certainly think anyone interested in the problem of internet politics should read the book — it has a ton of really interesting ideas. Hopefully — but I’m not sure — this isn’t completely unintelligible to the lay reader.)

How should we live together online? That’s a question so vague as to be basically useless — to be philosophical, in a word. We need a philosophy of the internet, but a political philosophy, one that tells us what the institutions should be like, how power is allocated, how decisions are made, and so on.

The problem is that assbackwardsly we’ve walked into a sort of Neal Stephenson set up — space on the internet is all commercial and structured in accordance with economic rather than social goals. One can of course try to defend this — some might think that commercial entities lead to better outcomes than non-commercial ones, and so it’s not to be complained about if Twitter gives us a free platform to read the news and socialize, or Google gives us basically everything we’d want to do our jobs (and much more). Maybe the cost to us — however we want to conceptualize it, in terms of the data we give away, in terms of the consequences that arise from the misalignment between our and platforms’ goals , or whatever — is worth it. Maybe. But surely only maybe. A better internet is surely possible, and worth exploring.

Probably you like what I just said. The next thing I’m going to say is when at least 90% of you will tab away: blockchains, cryptocurrencies, web3.0 — it’s in these little segments of the internet that the original thinking about how the internet ought to be is happening and so anyone concerned with how the internet ought to be ought to be interested in those things.

There’s many reasons to balk at that claim. One might think that crypto is just solving sudoku in a planet-destroying way to buy heroin. More seriously put, one might observe the real-world climactic costs of crypto up to now and think that that makes it a sort of unclean idea. Even if we could learn from it, we shouldn’t, because it’s inextricably tangled with climate change.

One might think that my implicit claim that crypto could lead us away from a commercialized and towards a social good-maximising net is a silly mistake. Crypto is money (or would like to be, and money is the root of all evil). It’s used for ponzis. It’s backed by hardcore Austrian economic theories.

Or, you might be more sympathetic to it but think that crypto is an interesting but failed experiment. It’s an interesting bit of 21st century intellectual history, an offshoot of the cheap money era that succeeded, when it did, the way most things succeed these day, by regulatory arbitrage, and when times get hard its claim to be a risk-off asset was revealed to be just wrong. And let’s not even mention the meth-fueled sex cauldron in the Bahamas.

Fair enough. I think some of those things too. I care about the climate. I see the failures. I notice the ‘crypto space’ seldom (not never) crowning itself in glory. But still it seems to me, just as a matter of fact, if I want to find people thinking about what the internet should be like for us, it’s the crypto people I turn to. The crypto people, when they’re not using their slurp juices in the efficient way the creator meant, speak directly and constantly to my concerns about the internet, and provide pictures — ideal, perhaps fatally unideal! — of how the internet could work, of how we could be together in what wouldn’t be the equivalent of an online mall. And the value of that talk and those pictures makes me reluctant to quit crypto.

That’s a very long and overly autobiographical preface. My aim in the rest is to make good on the claim lurking above:

We can learn about the future politics of the internet by following developments in crypto.

And I’ll do so by discussing the views of one of the stand out figures in crypto, Vitalik Buterin. He is a co-creator of the blockchain Ethereum, and recently published a collection of his blogs from an almost ten year period. What they reveal is that the problems of crypto are the problems of politics on the internet, and so the solutions to crypto problems might be solutions to those problems. This was meant to be more of a review than it turned out, so I’ll just go ahead and recommend this book already — you’ll learn a ton from it, especially if you’re only a partial observer of crypto. (Also, all the articles are on his website so you could read it now if you like reading online.)

In order to get some of his views on the table we need a bit of backstory about Bitcoin, Ethereum, and the difference, because one can only understand the stakes of Buterin’s thinking if one understands these internicine and fiercely argued-over debates. And let me just note: I write for the general reader and as much as possible without perspective; if you know the below and think it misrepresents the debate for my purposes, let me know. And if you’re not a general reader note that I’m literally just some guy, and this is a somewhat impressionistic take that both ignores important details and despite my attempts does take a perspective. So if you’re interested, you need to read other things too.

Money is a social construct, which is about as helpful as saying that meaning is compositional semantic value: an equation with a lofty word on the left and unhelpful jargon on the right.

Social constructs are what and how they are by virtue of things we do. One story one could tell is that we decided one day that bits of metal could be used to pay taxes and trade, and that was that: those bits of metal, by those decisions, became money.

This skirts a lot of both history and theory, but perhaps suffices. And if it’s a bit abstract, consider Bitcoin’s origin story: in its ‘genesis block’, roughly the start of the system, as a way of sort of syncing what was happening, the creator of Bitcoin included a headline from the UK papers about how the Bank of England — the deciders, in the above sketch — was about to bail out a too big to fail bank.

The point is, there are today entities that are responsible for the creation of money. And this is important: how they economy goes is often dependent on their decisions. Those decisions are wildly opaque and complicated for the normal person, and even if you read textbooks on the financial system you’ll probably not get the whole story.

And that opacity is arguably a problem. Some think that decisions of such economic importance should be things we can all speak about — objects of political discussion. Some, both on the left and the right, think that this distribution of power is undesirable, either because it regressively pumps the stockmarket (say) or because it inferes with the efficient running of the economy.

Zoomed out a bit, there’s a good way to describe these worries: they are worries about legitimacy. And that brings us to politics. A central concept of political philosophy, intertwined probably inextricably with other core concepts, legitimacy is what any theory of the political or perhaps the social in general needs. We decide to act a certain way. What makes that decision binding on me, given I personally might be against it? Legitimacy is what you want in return for not getting your way (and if you do get your way, you want it so that the people don’t get mad).

One way of viewing the history of political thought is in terms of legitimacy, and ways of understanding how we act together. For Hobbes, for example, who we return to below, the solution to the problem is for us each to agree to accept the decision of some one central entity, his leviathan. Only with such agreement can he prevent us from anarchically tearing each other apart. For Rousseu, more pleasantly, legitimacy arises through a “general will” that we as citizens are thought to share, and the desires of which are how we as a state ought to act. For Nozick, legitimacy arises from from rational agents game-theoretically or homo economicusally selling some of their natural rights for the right price, that being the security offered by the minimal state.

And so on. The point isn’t so much the details (which I’m shaky on) but the fact, the thing we need to account for: what makes a decision each of ours, binding us. And then one might think that central bank monetary policy binding is illegitimate, and one might look elsewhere.

The role of central banking in a modern state is, then, an important and deep and difficult question. Bitcoin purports to speak to it. Before getting (at last) to what it speaks, we really need to say something about the internet.

If money harbours legitimacy worries, so does the internet. And it does so even more fundamentally. Legitimacy makes a genuine unum out of plures — a one from a many. We might object that monetary policy lacks legitimacy. On the internet, it’s worse: we don’t have a sense of the we, the many, that gets the whole thing started: we don’t have a sense of the social because we don’t have a sense of the individual.

Identity is cheap on the internet. A new identity is as simple as making a new account. Moreover, cheap identity is necessary. I’m happy for you to find me @mittmattmutt all across the internet but there are of course places I’m not happy for you to find me, and so: new identities (these split lives could go further: I might not want my friends at [redacted] to know of my ghastly hobby of [redacted] and so my pseudonyms might sprout pseudonyms).

So now we have two problems. We’re a bit concerned that our monetary policy is dictated to us; that it is rendered apolitical. And we’re concerned that we can’t get together an us on the internet because we can never know, for any given us, how many are sockpuppets. Any plurality on the internet runs the theoretical risk of being a unity in the trivial sense of just one person with a lot of accounts.

Bitcoin’s wildly lofty aim (an aim which, even if you hate everything about it, I don’t see how it can fail to cause admiration) is to solve both problems at once. It aims to prevent identities proliferating and aims for a legitimate monetary policy.

And the monetary policy, I hope it’s reasonable to say, is Hobbesian. A bit more on him: the standard story you’ll read is that, living in Civil War 17th century England, he was very worried about anarchy. In a theory that, as far as I know, still gets the respect of contemporaries who think about difficult group decision making, he proposes that each us foreswear murdering and robbing each other, vesting all such power in an other authority. There isn’t democracy in that society, but there’s still a sort of equality: we’ve each given our rights up and stand equal before this super-entity who deals with it.

Bitcoin arguably preserves these twin features of us divesting of power but doing so in an equality-preserving manner by having code be law. There is no decisions to be made about monetary policy for bitcoin: it is pre-ordained and out of our control. Nevertheless, anyone (in theory, not in practice) who so chooses can join the Bitcoin Leviathan by ensuring that the code that is law continues to work. Bitcoin is democratically undemocratic; one freely chooses that one can’t freely choose how bitcoin should be issued, and one can provably tell that everyone is like you in that respect.

But in order to explain exactly how it works, we need a second concept Buterin refers to: collusion. Think about where we are in the most abstract terms: a group of people on the internet is deciding to join a monetary Leviathan, a form of money that can’t, as a matter of logic, change as the political winds blow.

But … I said ‘group’. And earlier I said that there are no groups on the internet. So there can be no legimitate monetary leviathan.

Bitcoin makes identity expensive on the internet. Roughly, as we’ve described it, the thing one wants to do is contract with people to mutually agree to divest oneself of the right to create money with the assurance that others will. So one needs to know there are others. Bitcoin makes it so that the running of the Leviathan — which is just a piece of computer software — necessitates (in theory, not in practice!) a plurality of people. Its mere existence guarantees the plurality it requires.

That’s rough, and Bitcoin people might balk at this presentation which doesn’t so much as discuss things like Cybil attacks. But hopefully even such reader can recognise the twin and initially hard to reconcile claims that bitcoin is as a piece of monetary policy apolitical or ademocratic while, as a decision among people coming together to enact it, is democratic. And these twin things make its (as far as I’m aware unique) form of legitimaticy. And they also show how, if one thinks hard enough, one can find ways to try and solve very difficult problems, like identity on the internet.

In the end I think the Leviathan metaphor is genuinely helpful: freely coming together to limit one’s freedom, and let some entity with a status other than the ruled over make decisions. And if this is so, Bitcoin is well understood in terms of the history of political thought; and if either identity narrowly or legitimacy broadly is desirable for the internet, the package of Bitcoin and political philosophy is something we all should try to learn from.

But that’s not all. There’s more to crypto than Bitcoin, and what Buterin’s book does it make the best case for a different model for both magic internet money, for internet identity, and for internet legitimacy.

Philosophers distinguish ideal and non-ideal political philosophy. The former assumes that the problems of politics can and should be posed in terms of societies very different from ours. If the problem of legitimacy is how to make a we from each of us, the ideal theorists assume things about each of us: that we’re rational, well educated, not subject to systemic maltreatment, and so on. Bitcoin, alas, is a wildly idealised theory. Its inspiring vision just hasn’t realised itself. Instead, we’ve got something undemocratically undemocratic, where the problem of identity is only somewhat solved. The ideal of “one cpu one vote”, that was used to describe how Bitcoin solved the problem of the many, is overturned by the reality that one can …. buy more than one cpu. Moreover, the magic fix that simultaneously guarantees the legitimacy of the Bitcoin system and the plurality required for it is exactly the thing that up to now has made Bitcoin so terrible for the environment.

The way to read Buterin, his alternative philosophy of internet money, and therefore, I claim, his alternative theory of internet politics, is as a pragmatist. But also as a humanist.

For the Bitcoiner, in theory, we need to prove plurality; in certain high-stakes domains, it’s important that one can make evident one isn’t a dog. But it’s also very important that one only prove plurality: we don’t want any facts about the individuals to come together to make up the network weaselling in. Bitcoin is built on bare individuals.

Buterin’s alternative ‘proof of stake’ model, currently in progress for the Ethereum network, takes as a starting point that we can’t all be equal on the internet. We can’t neatly prove our identity and thence begin politicing. We can’t come together knowing nothing but that we are many and make a decision (about money, say) that will bind us. We need to give up on that aspiration.

His reasoning is disarmingly simple. Imagine we’re in Bitcoin world; imagine we solved the identity problem and so knew that we were acting in concert with genuinely other people, and only so many as we thought. If we think we’re making our magic internet money with 20, it is with 20, and only with them.

Again, I’ve skirted the details, but Buterin’s thought is: well, what happens if you learn that through some trickery the network has been taken over by malign interests. In the easiest case, someone has managed, just being one person, to pretend to be, say, 10. Then they attempt to change the code of Bitcoin to benefit themselves. What happens?

Well, the honest 10 just say, fuck this, I’m out. They leave the system, and make their own without the bad actor, and people just come to ignore the bad actor’s one. We shun them. Even in the wilds of the anonymous internet, as I understand it, Buterin’s idea is that these sort of social punishments and behaviour are primitive and not to be ignored. And if that’s so, if we treat the social group act of shunning as performable in absence of a guarantee of individuality, then so is its opposite: agreement (that’s not the opposite of shun; I don’t know what is).

But it is in the absence of the guarantee. In Buterin’s model, to shun means to take your money elsewhere; your money goes where your values go, and so i) you need money to participate as in theory (in theory!) Bitcoin doesn’t and ii) you don’t know that your co-shuners are in fact many and not one.

For the proof of stake alternative to Bitcoin, the primitive is not cpu power hypothetically functioning as proof of persons; it’s blobs of cash which may or may not represent separate persons.

And so if Bitcoin is ironically democratically undemocratic when it comes to monetary policy, the ether network is ironically undemocratically democratic: in the interests of consensus, of getting one from many, it gives up the hope of guaranteeing the existence of the many.

I haven’t talked about internet politics for a while! But, I kind of think I have. We need to build collective resources; we can’t leave it to Elon. But we need to think really hard about what those collective resources are going to be. How are we going to get past trolls, a very serious problem which in my view makes it so we can never really know if we’re with people on the internet? Should we try to solve it or should we rely on an inherently social backbone on these new services? How should decisions be taken?

What just can’t be denied is that these questions have been at the forefront of the crypto community’s mind since day one, and offer arguably some possible directions. And at the worst, they show us avenues not to take. But most of all they show us the hardness of the problem.