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Brandon Quittem (Swan Bitcoin)
Brandon Quittem: [00:00:00] my name is Brandon Quittem and the title of my talk today is the "Mycelium of Money", and I'm going to take you on a little journey through the parallels between network organisms and network technologies. Looking at Bitcoin, it appears superficially simple at first glance. However, truly understanding the system is a daunting task.
[00:00:22] And to make things even more complicated, bitcoin appears to be a living system that's constantly changing based on environmental stimuli and true understanding is a moving target unlikely ever to be hit In attempting to answer the question "what is Bitcoin?" I found exploring parallels to the natural world to be particularly illuminating.
[00:00:44] In particular, some of Bitcoin's best characteristics are simply reflections of successful evolutionary strategies found in nature, specifically in the fungi kingdom. In the talk here today, I'm going to sort of summarize the four part series that I publish on Medium. And I've given versions of this talk in the past, but there's going to be a bunch of new stuff. So if you've heard me speak before, there'll be some new goodies in here for you, I promise. For those of you who are new to this concept, I promise you'll never look at my collegey or Bitcoin the same. All right, let's begin.
[00:01:19] Take a deep breath. 10 years ago, some guy released some software in a nine page white paper.
[00:01:25] The software bootstrapped itself into the most powerful computer network in history, and in the process it casually redefined money. It absorbed hundreds of billions of dollars in value. Absolutely no one's in charge. Oh, and by the way, it's a hundred percent self-funded. And of course what I'm talking about here is Bitcoin, but how is it possible that some anonymous founder can simply release software to the public and the software goes on to replicate itself and be used by tons of people in only just 10 or 11 years that it's been around. And not to mention it has a reasonable chance to replace the financial operating system that humanity uses to coordinate themselves. And the answer is because Bitcoin's alive, or at least it appears to be.
[00:02:13] I know some people ask, okay, Brandon, is it really alive and no, it's not. It's not alive or intelligent like you are. I would define it traditionally. But nature does follow certain laws of mathematics relating to search optimization and networks, things like that.
[00:02:30] This same set of laws manifested in many forms from the network of ants and neurons to the internet of servers, mycelium and the networks that define society. And the unique set of conditions and laws that gave birth to a self sustaining universe are the same ones that continue to drive physics, chemistry, biology, sociology, economic markets, and now Bitcoin.
[00:02:56] There's a famous quote here on the screen from Ralph Merkel, who is the inventor of public key cryptography. And he says, Bitcoin is the first example of a new form of life. It lives and breathes on the internet. And there's a few more things on that quote, but we'll stop there.
[00:03:11] So the next question is why? Like what, okay, there's some parallels. Who cares? Why do we even do this? Why do I explore nature? What am I hoping to get out of this?
[00:03:20]It's my belief that humanity faces many challenges today, and it's pretty obvious that we're going to continue to face new challenges in the future. And I believe that nature is intelligent. Obviously a different form of intelligence, but it's intelligence, none the less. Although nature's intelligence may be hard to measure, this does not belittle the natural world, but instead speaks to our own inadequacy. We simply lack the tools and the insight to understand the world around us.
[00:03:49] I love this example: if we combine all the intellectual horsepower on our planet, all the scientists and the mystics together, we still can't figure out how to make wood. Only trees know how.
[00:04:01] So why explore nature number one, nature already solved most of our design challenges. Nature has been iterating for billions of years, and humans are only at most 500,000 years old. These successful designs that are available today that we can observe today are successful because they work. Next is something like our duty here, which is to shape the technology that we have in front of us because our technology ends up shaping our humanity. So I believe it's our duty to steer technology towards a future that we believe in.
[00:04:36] A quick, on my background here, my super power is distilling complex information into simple actionable intelligence. Some of my personal interests include fungi, surfing, yoga, wilderness, backpacking, wild food, cooking, learning, traveling.
[00:04:51] Some of my work history involves enterprise software at Oracle. Now I'm an entrepreneur writer, speaker. I've published over a hundred articles, read online by more than 2 million people. You can check out my medium blog or BrandonQuittem.com for a sample of those articles. Currently I work with Bitcoin companies, helping them with email marketing and content marketing. I advise Swan and any free time I have, I try to write and speak as much as possible.
[00:05:19]Let's get into the meat of the presentation here, which I'm going to go through about a dozen parallels between Bitcoin and mycelium and wrap it up. So first, this is a picture of mycelium, which you can kind of think of as a decentralized brain or Earth's natural internet.
[00:05:34] This is the primary form that fungi existed, and they live underground and they're connecting trees and exchanging resources and information. There is millions of little end points searching for food, defending their territory. Together this, this greater network forms a decentralized consensus on how to use resources, when to produce and what strategy best defends the organism.
[00:05:57]This decentralized intelligence mirrors the intelligence of the Bitcoin network, or some call it an inner subjective consensus or a social contract or just individual actors aggregated to create the network.
[00:06:10] The nodes in the Bitcoin network determine what software they was to run, which enforces consensus rules. The miners play the role of security and accountants in the system. They choose what blocks that they want to include independently. And the companies and the ecosystem interact with Bitcoin such as exchanges, wallets and merchants. They steward the users. You add all this up together and together it creates the aggregate consensus, which we call the Bitcoin network.
[00:06:39] Next let's talk about the mycelium archetype and this network archetype is Lindy. It's sort of an archetype that we see in the very big scales and things like dark energy or dark matter, and also at the very tiny scale, like things like neurons. So it's a fractal pattern that persists throughout nature and this tells us that this self organizing principle is important, it's useful, it works. Otherwise, we wouldn't see it still around. When you look at it through the timescale of evolutionary history, bitcoin doesn't seem like a coincidence, bitcoin seems inevitable.
[00:07:17]There's no central point of control within mycelial mat. It's just a network and individual part can be removed and it's no problem. The system survives and Bitcoin is the same way. Developers, nodes, miners, exchanges, et cetera they all may be vulnerable individually, and if they get co-opted or shut down, that's okay. They're not crucial to the system. You know, there's no one to jail, no one to shut down, no essential hardwar - the system will persist.
[00:07:45] Nassim Talib has a concept called antifragile. And this is sort of the opposite of fragile. You can think of a wineglass that hits the ground and breaks, it shatters. Obviously that's fragile and antifragile is a system that gains from chaos. So , every time you attack Bitcoin, it gets stronger.
[00:08:05]Let's look at this with the mycelium analogy: mycelium lives underground and it's budding up against different forms of mycelium, different bacteria, and they're constantly fighting little underground battles. One of my psyllium observes an enemy nearby it says, "okay, we have an invader", sends information throughout the network to the little mushroom scientists. They create a custom enzyme through their superior chemistry skills. And then they distribute that custom enzyme to deal with the invader.
[00:08:34]Over time, the system learns and it stores that new molecule into its chemical library. That chemical library is then used in the future for similar invaders, so over time it learns. ,And in the same way the Bitcoin system, if there's a bug or a vulnerability through government or something like that, information travels throughout the network, eventually find its way to the developers who then create a custom enzyme or software patch, which then gets propagated throughout the network. It repairs the system and just like the mycelium, Bitcoin learns.
[00:09:06] This compounding effect is what makes it anti-fragile. Every time you attack it, it gets stronger.
[00:09:13] Famously, our congressmen in the U S here, Patrick McHenry, said, Bitcoin can't be killed, and he probably doesn't know how right he was.
[00:09:22]Next, let's talk about competition and how Bitcoin deals with competition.
[00:09:27] But in order to illustrate this point, we have to do a quick genetics 101. On the left side here we have vertical tree gene transmission, which is the standard way that genes are passed on. You have a mother and a father. They together create a single offspring that's vertical gene transfer.
[00:09:43] And then we also have something observed in the fungi kingdom called horizontal gene transfer, which is essentially two organisms coexisting in the same ecosystem. And one of the fungi essentially absorbs genetic information from a neighboring fungi, sort of in a " take what works from your neighbors" and hopefully it will help you survive sort of a last ditch effort.
[00:10:04] Bitcoin does horizontal gene transfer. It can absorb good ideas displayed by other actors in the ecosystem. So, for example, the lightning network on Bitcoin sort of obsoletes any coin that tried to differentiate with quote "fast transactions". So the creator of Bitcoin, Satoshi, I think he understood horizontal gene transfer because when building the Bitcoin system, it didn't really invent any of these technologies. He more or less just put together a Franken system based on different technologies that already existed. And so through that lens, it's my belief that Satoshi was in my colleges.
[00:10:43] And if we zoom out here quick and ask the question, what role this fungi play in our ecosystem? the two main roles that it plays is the immune system and it performs the recycling function.
[00:10:53] So first, let's talk about the immune system. Underground the trees have roots and those tree roots connect into these mycelial networks, which improves the tree's immune system. The mycelium networks store water in case there's a drought, they share information, coordinate the transfer and trade of resources, all that kind of stuff. And together that sort of forms an immune system for the forest. They all trade. They all work together, they share risk, et cetera.
[00:11:21]Bitcoin, in a sense, is humanity's immune system. It protects people from overarching governments, cancerous central banks, rent seeking businesses. in a sense, it creates a parallel financial system that's not easily corrupted and pretty much anyone can use.
[00:11:40] Let's talk about the proof of work function in Bitcoin, which is probably the most misunderstood aspect. So what fungi do to start is in their ecosystem, they're the grand molecular disassemblers. They essentially decompose organic matter, and for example, a tree drops a leaf on the ground. What happens to that leaf. Well, the fungi leap out of the ground and they externally digest that leaf and they break it down into their base constituents. Things like carbon, nitrogen, oxygen, et cetera. And these base elements are then traded throughout the ecosystem with nearby organisms. Effectively, the fungi is unlocking stranded resources.
[00:12:22] They can eat radiation found in Chernobyl. They can break apart hydrocarbon bonds, which is the reason why oil is hard to break down. Those hydrocarbon bonds are really strong, and Bitcoin has a reputation for consuming a lot of energy, right? But the reality is that the majority of this energy is stranded or wasted energy. You can look to remote geothermal or hydro with no nearby supply, or most recently we're seeing a lot of natural gas market is pretty gluttonous right now. So there's an excess supply, not enough demand. And so we're seeing these portable miners move to wherever there's shale oil, like the Bakken Field, Permian Basin, et cetera, and they're plugging in miners and burning off that excess gas and turn it into money.
[00:13:07] So Bitcoin is turning wasted energy into money. That's pretty powerful.
[00:13:12]Next let's talk about the life cycle of a mushroom. So in the gif here, you can sort of see how fast they grow. So most of the mushrooms life or the fungi is life is spent underground. It's in the mycelia form. And when the conditions are absolutely perfect, it concentrates its energy right beneath the soil. eAnd then when the conditions hit, that perfect moment, they explode into life and a mushrooms produce. And as soon as it hits this peak form, it releases little spores, which are tiny, tiny little mushroom seeds that fly around and land nearby, hopefully colonizing a new territory, going underground and building a new mycelial network so then it can reproduce and the cycle continues.
[00:13:54] Interestingly, this maps perfectly with how Bitcoin's hype cycles have gone over time. And so in the Bitcoin land, most of its time is spent underground and it's mycelial form. People aren't really paying attention, the price action's boring, it's just us nerds on Twitter talking, and then all of a sudden the conditions are perfect and it feels like they're perfect right now. And all the world's starts paying attention to Bitcoin. Again, the price goes crazy, just like the mushroom grows, and as soon as the hype cycle hits its crescendo, the price plummets. But in that process, tons of new new hodlers came and they're building little colonies underground, forming connections, communicating, waiting for the next hype cycle.
[00:14:38]Next, let's talk about social scalability which is a "Szabo-term" I'll define here as "the ability to cooperate flexibly over long distances and across time". What this essentially does is enables humans to build more complex societies. And the point of Bitcoin and other public protocols like TCP/IP is to extend trust, essentially exceed Dunbar's number as far as possible.
[00:15:06] So if you look in a forest, the fungi there also increased social scalability. They enable cooperation, specialization, trade. They allow other organisms to form symbiotic relationships. And in the same way Bitcoin, increases our social scalability as a species. The Bitcoin system fundamentally understands that trust is expensive, so Bitcoin pays a very large upfront cost of decentralization in order to decrease the cost of trust. Pretty much specially built to be money.
[00:15:40] I believe that this has the ability to take humans to the next stage of social scalability. From that Dunbar number, 150 roughly people of Hunter gatherers to feudal society to what we have now, which is large democracies worrying over resources.
[00:15:57]It kind of feels like we fit a glass ceiling in our progress, and it's my belief that Bitcoin allows us to transcend that glass ceiling. It increases cooperation through trusted money, which will lead to increase trade, specialization, communication, and more or less unlocking some latent human potential. And I think that's a mandatory thing. I think it's a cause for fighting or, and I'm honored to be a part of that, even though I am a very small part of that.
[00:16:21] So next, let's talk about the slime mold, which is technically not a fungi, but close enough. And this is a story about decentralized decision making in the information age.
[00:16:32] So looking at the chart here, you see essentially a map of Tokyo. So some scientists in Japan, they created a artificial map of Tokyo and they put little oat flakes in each of the major subway stops in Japan, which is the slime mold's favorite food. And over roughly a 24 hour period that slime mold grew and engulfed the entire city. And then to eat its food, it was hungry and then it reorganized itself in the most efficient network possible in order to consume that food, which is what you see in the final square in this chart here. And so, essentially what happened was the slimeball created a more efficient and, also more redundant network than what the Japanese engineering team built, which is a pretty sobering thought.
[00:17:18]But what does that tell us? It tells us that in the information age, decentralized decision making or pushing complexity to the edge has a role to play. And traditionally, organizations have been centrally planned, think central banks, large corporations, the federal reserve, et cetera. And that's because information was really expensive. So essentially you funnel all the information through the org up to the top where you hopefully put the smart guys to make decisions.
[00:17:44] However, in the information age, information is cheap and it moves very quickly. So you get less efficiencies through vertical hierarchy, so instead we're looking at flat organizations and pushing complexity to the edge, which essentially resists corruption, minimize the bureaucracy.
[00:18:01] I think Satoshi understood the power of the slime mold here because the Bitcoin network is built with complexity at the edge . Individual users are free to take risks and fail, and no matter what, they can't change the rules of the system. So if the lightning network fails, the defi boys would be excited, but Bitcoin lives on unaffected and something better it will take its place.
[00:18:24] Interestingly, early man, eoking back through our evolutionary history, we have evidence that early man partnered with fungi for food, medicine, tools, seeking novelty. There's been many religions and cults based on mushrooms. And Bitcoin often gets called a cult, which it kind of is, but I think that's needed to bootstrap the network.
[00:18:44] And this is just one example of humans living in symbiosis with the mushroom. And let's talk about symbiosis next.
[00:18:51]Symbiosis [00:18:51] These next few ideas are some of the newer stuff that I developed writing part for and symbiosis is essentially two or more organisms working together. You can think one plus one equals three.
[00:19:02] A common example is the clownfish and the sea anemone. And what we know about ecology now is that most organisms are actually cooperating rather than competing. What Bitcoin is doing is it's sort of nestling its way into our human ecology, into a position where we need it, right? It's doing so much to benefit us that eventually it will be really hard to remove, like think of how hard it would be to remove TCP/IP or SMTP or the English language, for example.
[00:19:30]It all starts with the individual and how can individuals form symbiosis with Bitcoin? A couple quick things: one, Bitcoin is a deflationary asset and so this teaches us to delay consumption, essentially lowering our time preference. And in an uncertain world, Bitcoin provides optimism, sort of a parallel system.
[00:19:50]Bitcoin also forces personal responsibility with our wealth. And I think that forcing personal responsibility in one area, so to serves as a wake up call for personal responsibility in other areas like health or family or things like that. And so clearly Bitcoin has benefits for the individual, but let's take a look at how Bitcoin will benefit mankind or if it will.
[00:20:14] So on the left here we have the monocrop, which I'm relating to on the right, we have the rainforest, which is Bitcoin. And so fiat money is an inorganic system similar to the monocrop industrial farm, essentially planned. It's susceptible to disease. It's unsustainable, and it's very fragile. And so what this gives us an a fiat system, like an industrial farm, is that it gives us short term price stability at the expense of longterm systemic risk.
[00:20:42] And so the Fiat system, essentially, it doesn't account for a fat tail risk, such as the banks boiling up or golden pandemics. And unfortunately, in our current system, those events turn into wealth transfer events, which furthers the wealth gap.
[00:20:56] Bitcoin, on the other hand, is an organic system similar to an old growth rain forest. It's built from fierce competition, incremental growth; its sustainable, its anti-fragile, and so a Bitcoin system accept short term price volatility in exchange for longterm systemic stability, which is a huge win for humanity.
[00:21:16]A fun example here is "Gall's Law", which is essentially that all complex systems that work evolved from simpler systems that worked. So if you want to build a complex system, you got to start with a simple system.
[00:21:28] And if you think about the old growth forest, you can't plan that. You can't plant an old growth forest. Instead, it's, it's hundreds or thousands of years of competition, each organism individually taking risks and together that forms the complexity.
[00:21:44] If you think about the base layer of Bitcoin, now we have lightning network labs, et cetera. But again, those are separate systems bolted onto other that form the complexity over time.
[00:21:56]Economic Darwinism [00:21:56]
[00:21:56] Next, let's talk about economic Darwinism and economic Darwinism is kind of a fun concept.
[00:22:03] So first, Darwinian evolution by natural selection. I like to see this as a biological engine designed to reward successful organisms and eliminate unsuccessful organisms. And so when the antelope gets eaten by a lion, the dies, right? No one bales out the antelope because nature has skin in the game, and this feedback loop is crucial.
[00:22:23] The individual antelope is fragile in order for the entire system to remain anti-fragile, right? So we think about this in a human sense: individuals take risks, most fail, but those that succeed benefit everyone. And in market based economics, the engine is designed to seek more efficient uses of capital by rewarding successful ventures and punishing the unsuccessful.
[00:22:46]Although our current form of capitalism is more like cronyism, or as Travis Kling said "socialism for the rich", instead of letting the failed companies fail, we bailed them out. And this results in broken incentives, which create a moral hazard, making the entire system more fragile. It's kind of a "heads I win, tails you lose" situation.
[00:23:08] Sound money system like Bitcoin would improve this economic engine by tightening the feedback loop that rewards value creation, punishes failure. So in a Bitcoin world, bailouts aren't really possible because monetary expansion is restrained by a fixed monetary base.
[00:23:23] Bitcoin ensures that individual people and companies are fragile. This is the entrepreneurs taking risks, shooting the moon, and they do this to ensure that the system as a whole remains anti-fragile. In other words, Bitcoin increases skin in the game, which proves a feedback loop and leads to economic evolution by natural selection. And humans need to strive for a free market for money because it's the most beneficial arrangement for our species. End of story.
[00:23:54]So who's driving the ship here? Like what's going on? Who's in charge? From my perspective, it appears that network base archetype that we continue to keep bringing up here, it keeps showing up throughout history, it's everywhere. And it appears to be embedded into our species as humans because we built the internet and we built Bitcoin in the image of this archetype.
[00:24:15] Now you hear many people claim that we discovered Bitcoin, which is a pretty enlightened thought, although I think it's more accurate to say that we rediscovered Bitcoin because that mycelium archetype is an emergent property of biology and chemistry and sociology, et cetera, which means that Bitcoin was inevitable.
[00:24:35] Thank you.