Bitcointingency: An Economics of Indeterminacy

This article originally appeared on the Weird
Economies website in February
2022. Many thanks to them for letting us republish it here.

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'House of Money Cards', Generated with VQGAN+CLIP, 2021

Introduction: Tragedy Of The Communications

"Information long ago broke through the truth barrier and moved into
the hyperspace where things are neither true nor false, since
everything in the realm of information depends on instantaneous
credibility. Or, to put it more accurately, information is truer than
true since it is true in real time --- this is why it is fundamentally
uncertain. Or again, to draw on Mandelbrot's recent theory we can say
that things in the information space or the historical space, like
those in fractal space, are no longer one-, two- or three-dimensional:
they float in some intermediate dimension. We no longer have any
standards of truth or objectivity, but a scale of probability."

J. Baudrillard (translated by Chris Turner), Information at the
Meteorological Stage, in Screened Out, Verso Books, 2002.

The present cultural moment is characterised by uncertainty,
intemperance and abstraction. It was only a matter of time before
a value form emerged that reflects the values of our accelerating
present. Cryptocurrencies may be approached conceptually as:
communication networks, scarcity-based economic systems, strange
attractors, externality engines, and time machines. A widely replicated,
append-only data structure sometimes known as a
'timechain'
(also referred to as a 'blockchain') affords a high degree of assurance
that the network will continue to respect a particular set of
transaction orderings. When these priorly ordained
ordinalities ('blocks')
are chained together, they collectively manifest a canonical
historicity. Bitcoin reaches network-wide agreement over the state of
its accounting ledger in
a peer-to-peer manner
by employing a thermoeconomic (thermodynamic-economic) mechanism known
as proof-of-work. 

As Bitcoin's usage increased over time, it became apparent that
protocol-mandated network specifications gave rise to technical,
socio-political, ecological, and economic constraints unintended by the
system design. In many ways, Bitcoin is a weird economy reified, with
features signalling notable onto-epistemic departures from all
antecedent financial systems. It is the aim of this article to explore a
number of these xenoeconomic characteristics using the lenses of
temporality, thermodynamicity, libidinity, and indeterminacy.

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'The Turing Shroud', Generated with VQGAN+CLIP, 2021.

Chronaissance: A Clock That Cannot Tell The Time

"Bitcoin is at its heart a distributed system whose goal is to
achieve a leaderless consensus as to the ordinality of a series of
occurrences. Bitcoin is a decentralised timestamping server, and the
transactions are simply messages changing the effective balances that
each network participant has access to. Bitcoin is an abstract
timekeeping daemon manifested from cryptography and thermodynamics.
Welcome to the chronaissance."
W. Z. Alsindi, Reminiscences of A Clock Operator (edited), Temporal
Secessionism Timezone#4
Sourcebook,
2021.

Bitcoin's timechain provides a quantised temporal framework with
which transcendental
idealists, physicists,
and network scientists alike
may propose and test grand speculations. Crucial, but often overlooked,
is the incommensurability of the dual temporalities extant within the
Bitcoin network: a continuous mode exists where nodes propose
transactions in 'real-time' and a discrete mode ticks to the
sequential rhythm of confirmed
blocks. Proof-of-work is
the transcendental mechanism which leaderlessly transmutes continuous
time into strictly sequenced batches of confirmed transactions. Despite
this bidurationality, Bitcoin does not possess an endogenous mechanism
to access the clock-time that humans live by. The network relies on
proof-of-work participants (also known as 'miners') including temporal
attestations inside their proposed blocks, embedding temporal
asymmetries in the heart of cryptocurrency system logics. Consequences
of this durational inequality include network vulnerabilities such
as 51% attacks and time-warp attacks, which are discussed below. For
more on temporal idiosyncrasies in Bitcoin, see the
recent Reminiscences of a Clock
Operator article. 

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The Bitlerian Jihad', Generated with VQGAN+CLIP, 2021.

Thermocapitalism: Cryptography, Energy & Desire

The cryptography that
undergirds Bitcoin's security --- and, therefore, its value proposition
--- is little more than brute-force mathematics. Large numbers and small
probabilities can never provide complete assurance as to the safety of
secrets over time. A faster computer can bring an 'intractable'
calculation within reach, in essence making cryptography a continually
escalating dark forest
scenario between
attackers and defenders with no status quo possible.
This probabilistic deniability is the basis of Bitcoin's technical
construction: public-key
cryptography, elliptic
curve signature
algorithms,
and hash
functions generate
public keys (addresses) from private keys (passwords), and create the
strings of data that miners generate when searching for candidate blocks
(hashing). Though still in its infancy, quantum
computing advances
may soon produce devices sufficiently sophisticated to perform quantum
search functions such
as Shor's and Grover's algorithms.
These operations provide exponential speed improvements over their
classical counterparts, possibly emperiling some hitherto 'safe'
cryptographic systems. If 'one-way' cryptographic functions can be
reversed, attackers would be able to derive private keys (passwords)
from public keys (addresses), leading to the collapse of Bitcoin's
security model.  

"Proof-of-Burnt-Offerings for an Indifferent Ergod, $ME"
CPRU x R&D Labs, The Necroprimitivist Manifesto
Pt.1, 2021.

Proof-of-work is
primarily a Sybil-resistance
mechanism:
preventing malicious actors from flooding the network with spam by
making block creation costly. Proof-of-work resembles both a lottery due
to its probabilistic nature, and a bingo game as the first valid
candidate block to be accepted by the network is made canon and added to
the timechain. This process famously requires enormous quantities of
electricity and specialised equipment to participate in, incentivising
participants with a mixture of protocol-determined subsidies / rewards
as well as user-paid transaction fees. Due to the periodic difficulty
adjustment of
proof-of-work success probabilities, which keeps the rhythm of confirmed
blocks steady as the network's overall computational resource scales up
and down, Bitcoin's thirst for computational resources
is insatiable by design. Furthermore, the protocol is insensitive to
the environmental consequences of the externalities arising from the
undesirable byproducts of proof-of-work, principally heat and e-waste. 

To invoke Lyotard vis-a-vis the question of alchemising computational
power into other forms of power, a libidinal question can be posed: what
does the Bitcoin network desire? One answer is security over time,
which proof-of-work clinically reduces to a constant need for energy ---
as much as possible --- with no discrimination as to the source.
Proof-of-work may be thought of as a kind of 'Google Death
Drive':
a distributed system collating and archiving history, as it slowly
poisons its external environment due to a mismatch of incentives inside
and outside the network. The mechano-vampiric
paradigm of
proof-of-work is a growing threat to planetary ecology. The Faustian
reality of proof-of-work is that Bitcoin exists in competition with
natural life for the harvestable energy this side of the Sun, and it
will continue to outbid nature as time and capital accumulate in its
ledger.

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'Exiting The Mechano-Vampire Castle', Generated with VQGAN+CLIP, 2021.

51% Lyfe: Determinacy-As-A-Service

Cryptocurrencies employing Bitcoin-style proof-of-work are eternally
contingent systems, as network participants can always expend more
effort to rewrite the priorly canonical history. This is, in
essence, determinacy-as-a-service: certainty comes at a price that
only few can truly pay. The price must be paid in perpetuity, as an
adversary can always raise their effective bid at any moment. In a twist
on 'technological
determinism',
which can be traced back to McLuhan and Veblen, Bitcoin
manifests technoindeterminism: there are no certainties on a timechain
vulnerable to capital manipulation. Due to the rigid formalisms encoded
by the protocol's chain selection
ruleset,
the Bitcoin ledger is a collective technofinancial hallucination where
capital and energy, applied over time, dictate reality. This is 51%
Lyfe: the set of network rules that determine that the canonical
timechain --- and, thus, the latest network state including account
balances --- may be rewritten by any extant or emergent 'tyranny of the
thermodynamic majority' in a process known as a '51% (or majority)
attack'. This type
of attack can occur when a nefarious entity manages to take control of
the majority of mining power and is able to modify the order of
transactions or reverse the transactions that they themselves have made,
resulting in the spending the same digital coins twice, and the negation
of Bitcoin's primary value proposition. 

As new participants join a cryptocurrency network, they must find a way
of discriminating the canonical 'true'
timechain from
all other permutations: be they honest but inferior timelines, or
malicious histories seeded by adversarial actors. The way that Bitcoin
achieves this is through a simple heuristic: the timeline with the most
accumulated work is canon. There is a basis of justification for this.
It is the simplest --- and perhaps the only --- way that such a network
can be truly leaderless and trust-minimised. In the parlance
of Meillassoux, Bitcoin
is after finitude. Since there can only be one block with a particular
height in a blockchain, should multiple candidates emerge, the prospect
of a persistent network partition known as a (hard)
fork can
arise if subsets of the population of validating nodes do not
overwhelmingly agree on the latest block. Such partitions may be
short-lived, as in the case of stale blocks such as "orphans" and
"uncles" which
represent timelines discarded when the canonical chain builds upon
another candidate block at the same height. In other cases, a fork can
happen due to malicious behaviour, for example via a 51% attack. Forks
--- as scorched earth
governance ---
provide a mechanism
for exit-with-voice from
a protocol regime: if some nodes change the parameters of what is
accepted as a valid transaction, or a valid block, an incompatibility
with other members of the network community manifests, and the network
fragments will diverge into independent descendant networks. 

One can think of these schismatic network partitions that hard forks
create as parallel timelines, as schizochronologies. Analogies with
well-known literary and cinematic storylines involving time-travel are
illustratively helpful, if not fully explanatory, but there are
situations in which temporal violations such as replay
attacks allow
one timeline to affect another. Proponents of Bitcoin often say things
like 'Bitcoin is
objective',
or 'Bitcoin is
truth'.
This is not correct from a thermodynamic or information-theoretic
perspective. Should a network participant (incumbent, or otherwise)
arrive with sufficient energy and computational resources at their
disposal, they may rewrite the history of the Bitcoin ledger at their
leisure. One may speculate as to whether the protocol's chain selection
ruleset will maintain its ideological grip over the humans of Bitcoin in
what would likely be seen as an unfair, force majeure circumstance.
Alternatively, is the Bitcoin ledger --- like most monetary systems past
and present --- merely a substrate for communal sense-making for
historicity and record-keeping? There may be yet another juncture for
network schisms in such an eventuality for a collective resolution over
this tension between rules and norms.

There have been numerous examples of 51% attacks 'in the wild' on other
cryptocurrencies;
the Forkonomy project
detailed and predicted many in 2018-9. Though the canonical Bitcoin
network has not suffered one, numerous others have. I predicted in
2018 that the
minority fork of Ethereum known as ETC --- created during the schism
resulting from the catastrophic failure
of TheDAO in
2016 --- would become increasingly susceptible to 51% attacks the longer
that the hegemonic Ethereum network delayed its '2.0
upgrade' away from proof-of-work.
When the inevitable happened, this was no cause for joy; however it was
certainly illuminating to be not only a fly on the wall, but an esteemed
sage as a small community of smart contract libertarians surveyed the
wreckage of their bombed-out network.

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'Bias Bifurcations', Generated with VQGAN+CLIP, 2021

Time-Warp Attacks: Faking Time To Print Money

As mentioned earlier, Bitcoin cannot trustlessly access human
clock-time, and therefore cannot verify the accuracy of miner-submitted
timestamps. To mitigate, the network
uses median-time-past (a
trailing average of recent timestamps) to avoid significant
discrepancies. There is a long-known theoretical vulnerability in
Bitcoin --- and Bitcoin-like systems also employing proof-of-work ---
which uses false timestamps to maliciously game the network. This has
come to be known as a 'time-warp
attack'.
Despite having never been knowingly observed on Bitcoin itself, examples
of the attack have been observed elsewhere: on
Bitcoin testnets, and on
other proof-of-work cryptocurrencies. 

The attack starts with a miner submitting blocks with timestamps which
are inaccurate, but still within network tolerance: the Bitcoin protocol
allows submitted timestamps to deviate up to 120 minutes before
rejecting a candidate block as invalid. False (early) timestamps can
potentially affect the difficulty
adjustment, increasing
proof-of-work success probabilities for all mining participants. An
attacker may potentially build an alternative chain with more
accumulated work than the current one in private, only broadcasting
found blocks when they are able to claim canonicity for their timeline.
As the accumulated work would be lower on the time-warp chain than the
honest chain at a given block height (chain length), the time-warp chain
would have to be longer than the honest chain to claim canonicity, but
the mining subsidy included in each block would offset much of the
costs. On Bitcoin, a time-warp attack would also necessarily require 51%
of the mining resource --- also known as hashrate --- which presents its
own issues for the security of the network (see above). 

That this attack has not been observed in the wild on the Bitcoin
network suggests that would-be exploiters --- despite economic and/or
ideological motivations --- consider this strategy impractical, or
unprofitable, compared to rational modes of mining. Any attempt to
conduct a time-warp attack would be immediately apparent to those
monitoring Bitcoin mining, either from studying inaccuracies in the
timestamps themselves, or by noticing the divergence
of median-time-past versus
clock-time. Miners who do not wish to collude with such an attack can
also take action, by refusing to build upon blocks with inaccurate
timestamps. It is conceivable that users and economic stakeholders in
the Bitcoin network might apply pressure to large mining constituencies
(such as pool
operators) to boycott
suspected time-warp blocks.

Nevertheless, these behaviours have been documented on other networks.
Firstly, Bitcoin testnet3 --- which is a clone of the Bitcoin protocol
network with valueless tokens intended for R&D purposes --- uses the
same SHA-256d proof-of-work
algorithm as Bitcoin but has a very low network hashrate. As a result,
an entity desiring a large quantity of testnet-Bitcoin tokens could
direct hashrate to the network. This would ordinarily increase the
difficulty, but, by using inaccurate timestamps, the difficulty can be
kept low. There have been cases where a time-warp attack has
incapacitated testnet3 until a rival miner provides sufficient
computational resources to increase the network difficulty. Testnet3
also has some quirks related to mining difficulty which make it easier
to game. More than one circumstance (such as a long period without
blocks) allows miners to create a block with the lowest difficulty
possible.

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'Manifesto Destiny: The Future That Necroprimitivists Want', Generated
with VQGAN+CLIP, 2021

More salaciously, the small proof-of-work
network Verge (formerly
DogecoinDark) was subject to multiple time-warp
attacks in
early 2018. The exploit approach mirrored that outlined above, but with
important additions that enabled them to conduct the exploit, claiming
several million USD worth of XVG tokens at time of attack. The critical
vulnerability resulted from additional complexity present in Verge
relative to Bitcoin. Verge employed a mechanism intended to
engineer ASIC-resistance ---
now considered a largely futile way to ensure that no specialised mining
equipment can be created for a proof-of-work network --- consisting of a
naïvely-constructed sequence of five different hashing algorithms, each
with their own difficulty parameter. As some of the five algorithms
already had specialised mining hardware, the time-warp attacker focused
their efforts on one algorithm in particular called Scrypt, effectively
reducing the '51% condition' to ~0.5-10% of the network hashrate.
Further, Verge's network difficulty adjusted rapidly: roughly every 30
minutes as compared to Bitcoin's ~14 day window. This allowed the
attack to commence quickly, allowing the perpetrators to cement total
control over the network's block creation for a period of time. The
attacker achieved a difficulty reduction of 99.999999%, making it
approximately one hundred million times easier to create blocks ---
mostly low difficulty and empty --- and claim the mining rewards on many
more blocks than would normally be found under typical network
conditions. Lastly, due to further inheritance of code and
characteristics from a legacy network (Peercoin) with a completely
different architecture
(proof-of-stake and
slow blocks), Verge's consensus mechanism determined the canonical
timeline by chain length without discriminating for the amount of work
accumulated. This meant that the timewarp attacker could enduringly
maintain the canonicity of their timeline, despite much less work going
into it than an honest miner's rival timeline.

Such a sophisticated attack would only be possible to successfully carry
out with a detailed and intimate knowledge of the inner workings of
Verge's proof-of-work mechanism. Therefore the attacker would either be
presumed to be a network insider, a well-resourced proof-of-work expert,
or both. The time-warp attacks on Verge were a striking example of
durational inequality and proof-of-work's perpetual contingency being
leveraged in the wild, for the gain of a few and to the detriment of
many.

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'The Black Hole of Money', Generated with VQGAN+CLIP, 2021

Conclusion: An Infernal Return

Unfortunately (or fortunately), we are unable to chronicle the
conclusion of this particular tale just yet, as Bitcoin's temporal,
thermodynamic, and determinate perversions render all confident
proclamations suspect. However, there are some lessons to heed,
predictions to be made, trajectories to note, and signs to be wary of.

Bitcoin's arrow of time will maintain its inexorable continuation,
monetary black hole that it is, sucking capital and energy into its
ever-accreting centre of thermoeconomic gravity (a clockless arrow of
time that points both ways). The indifference and repetition of
proof-of-work will endure in the near term: Bitcoin's economic security
is largely assured until most of the final two million BTC are
mined.
Once the protocol-level 'subsidy' bribes are exhausted, it remains to be
seen how the Bitcoin's thermoeconomic mafia of proof-of-work shadow
conglomerates will respond. Bitcoin is vulnerable at its margins, as
technological paradigms and energy sources shift. Whether this is by
means of ascendant modes of computation or incremental upgrades to
hardware matters less than the fact that a shift occurs, in an
inevitably heterogeneous manner. Entrenched polities will continue to
exercise temporal privilege in various ways in the Bitcoin network,
mostly by way of miners' affordances in deciding the possible futures of
the network's ledger.

Bitcoin's is contingent by design, and the risk of attacks permitted by
the protocol will never be completely neutralised. Fittingly enough,
despite being teenage
software,
the reference Bitcoin client (Bitcoin
Core) is still beta
software that has yet to move beyond v0.X nomenclature. The ability for
factions to voice-through-exit from Bitcoin through
forking will
continue to embolden social engineers, legal trolls, and grifters to
weaponise their messiah complexes. Would-be usurper forks of Bitcoin
have little impact on the hegemonic
timeline today,
and are expected to have even less influence going forwards ceteris
paribus.

Finally, I offer speculations around two possible endgames for Bitcoin's
thermocapital singularity: one is a blessed timeline where proof-of-work
provides the necessary incentives to bootstrap Earth's clean energy
generation into a boundless --- but incredibly unequal --- post-scarcity
future. One might think of this as a Childhood's
End timeline.
The other is less rosy, insofar as Bitcoin would lock capital and
ecology into a zero-sum game where resource scarcity tips the balance in
favour of competition as opposed to cooperation, and machines become
direct antagonists of nature. Perhaps this might be
the Stalker/Roadside
Picnic timeline,
or a Bitlerian
Jihad invoking
Frank Herbert's prehistory of Dune. In such a case, rather than being a
new form of artificial
life as zealots
proclaim, Bitcoin appears more akin to anti-life, or even a form of
'artificial death'. Bitcoin's proof-of-work does not --- and cannot ---
care about life, other than in its need for intelligent agents to
continue to provide it with energy. For now, Bitcoin's useful idiots
are necroprimitivist
humans, but someday
non-human agents may meet all its needs and render humans superfluous:
or as adversaries in need of destruction. Is Bitcoin a Nakamoto's
Basilisk,
an Immaculate Misconception which is destined to kill all planetary
life, or die trying? Remember the all-important fact about
proof-of-work: it works, and works, and works, and works...

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The Immaculate Misconception', Generated with VQGAN+CLIP, 2021.

I'm grateful to William Kherbek for helpful feedback during the
preparation of this article, and to Weird
Economies team for publishing
it. Huge thanks to Laura Cugusi for making it happen, and to Bahar
Noorizadeh for patience and encouragement as it dawned upon me that it
wasn't possible to quickly write a simple article about this thorny
topic.