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Techno-Communism and the Desire for Socialism through Code

By Craig Wright | 22 Jun 2020 | Bitcoin & Blockchain Tech

One of the primary arguments made over and over throughout ‘blockchain communities’ comes with the concept of being owed a living. Inefficient developers, who through a small amount of moderately hard work are obviously not earning enough, seek to bypass the entire concept of having to demonstrate that they produce something.

None of it is new. Well before the developer tax and the idea of ‘pre-mining’, many developers have sought to ‘get rich quick’, by simply making a broken copy of my original code and convincing people that having a new blockchain presents a road to riches. Fairly much so is the definition of a Ponzi scheme or fraud.

But today, I’m going to discuss in detail how the concept of a distributed developer reward presents simply a form of techno-socialism.

The incentives in Bitcoin do not require that developers be paid. The only party that requires payment and the only party that can be validly paid is made up of the nodes (aka miners). They present the only party that is incentivised to create a system that scales, without forming a developer sandbox for a bunch of amateur cowboys to play in or creating changes that will simply stifle business.

Some people sit there arguing that the scenario will lead to miner centralisation. So what. Bitcoin is not designed as a system where everyone runs a node. It is simply designed to allow new entrants to attempt to compete with the incumbents. It simply stops monopolisation. There will never be thousands of Bitcoin nodes; the system is not designed to allow more than 2000 nodes, and even that is not possible under the current circumstances. At present, there are 32 nodes in the BTC network, while the all-time maximum throughout history sits at 98 nodes, having existed in the last five years. If you are not creating blocks, you are not part of the consensus mechanism—and you are not a node in the Bitcoin or a related system network (such as BTC).

So, the fact is, Bitcoin operates in the manner I described in 2008. It evolves into a system of commercial data centres. Corporations compete to validate, settle, and clear transactions and post them in the form of blocks.

Developers can earn money not with their endless desire to experiment with the protocol and change it, but rather by working for organisations. They can work for an organisation that creates code and sells it to miners, or they can work for the node operators (aka miners) themselves.

If developers do not wish to work for another entity, nothing stops them from setting up their own organisation, from being entrepreneurial and founding a new organisation, with either their own money or money from capital that they manage to raise.

But here is the problem: such individuals don’t want to be beholden to another party. Mostly, they don’t want to be beholden to the market. They are hypocritical: they call out as if they wanted capitalism, and yet the first thing they do is run from any entrepreneurial opportunity that presents itself. Nothing stops them from forming an organisation designed to create APIs that may be sold to wallets or businesses. Nothing stops them from creating companies that would sell to individual nodes (miners). But to do so, they need to place themselves in the judgement of the market. They need to make a product that produces a result that is demonstrably better than any of the competition’s. They need to be good. Not just now, but continuously.

And here lies the rub: such developers do not seek to work hard and do not seek to create; they’re arguing that they deserve to be paid because they had been involved with Bitcoin or related systems earlier than some other person was. That it does not matter that another person is a better coder than them. And that it does not matter that another person has sunk weekends and long hours of study into understanding the system and creating something that may be better. Like all socialists, they believe that they are owed a living.

But isn’t this a communist take-over? Well, not really. Technically, this conforms to Libertarian principles since all participation in this is system is 100% voluntary. Any party is free to split at any time, just as they are now. The only difference is that now all parties are incentivized to not split, which is not currently the case.

Their argument is perverted and addressed as a rather rancid strawman. They twist the concept of libertarian principles, and say that something is “100% voluntary” and hence right, as if something being voluntary is all that is necessary for it to be right.

The libertarian argument was based not on removing all rules but on not having a government that would arbitrarily change them. At the same time, such disingenuous individuals seek to change the rules at a whim. To change the rules for all other people, without a say.

The users do not benefit; a stable system benefits the users. Bitcoin, or any other blockchain system, is not designed as a system for endless Ponzi schemes and speculative gambling; it is designed to deliver micropayments and secure token exchanges. Neither are possible if the system is not stable. Yet, they seek to create a playground, where they can speculate on changes—not because the market needs to use the system, but because a developer thinks it’s a good idea.

This twisted idea of the market has become a zombie version of itself. Markets are simply testing grounds for ideas and products. Allowing developers to introduce ideas without cost, where they are not exposed to risks, is the exact opposite of what a market is most efficient at solving.

When a developer creates a business that creates code and has to struggle to develop a company, it is a valid use of the market. Yet, it is the very thing that such people want to remove.

So yes, it is just an attempt at a communist takeover. It is removing risk from themselves and putting it onto everyone else. It is subsidising their own existence, by placing the cost of their income on everyone else. It serves not in the development of more efficient systems associated with free choice. Rather, it presents the mandatory introduction of a cabal derived from the technocratic elite—not those who are elite because of meritocratic competition, but those who promote a means of removing risk and allowing the incumbent parties to remain funded and in charge.

The ideal means of funding developers is the same as every other means of funding developers, corporations, and competition. If a developer is better than his peers, he can earn more. If a developer is entrepreneurial, the individual may be capable of creating a new corporation and creating jobs for many new people. There are no protocol changes that are necessary to make Bitcoin scale.

When I released Bitcoin, I created a system that was not altruistic. There is no reward necessary for developers, and to incorporate such a system skews the entire incentive system, adding a group of technocrats that are not necessary in any manner.

Nodes were not designed to be altruistic; they are commercial entities, and commercial entities compete. As nodes are commercial entities, they will hire people or pay for better code. Developers who can code better, faster, more efficiently will present value, just as they do right now when they are competing for jobs in algorithmic-trading environments. In such areas, individuals who have suitable development skills can earn £2 million a year.

Since no cryptocurrency can yet support a global adoption scenario, it’s clear that development is still required in order to achieve the global adoption vision.

Bitcoin supported growth and the ability to scale from its inception. Bitcoin was capable of scaling to a level exceeding Visa in 2010. The fundamentals of how Bitcoin scaled and the ability to do so had existed prior to the launch of Bitcoin, publicly, in 2008. No developer needs to add anything to save Bitcoin.

What is true is that the code was highly inefficient. Which, in itself, is not an issue. If every single node (miner) runs the same code, none of them gain a competitive advantage. By hiring good developers, companies can develop code that gives them a competitive advantage. They can add value. If a developer has enough ideas and is entrepreneurial in nature, they can form a corporation that sells to not only one node operator but many.

The consequence and the result are simple: developers who run projects such as Bitcoin and are not as good as they claim to be, in publicly touting their projects, end up seeking to capture their positions. It amounts to rent-seeking.

The incentive system inherent in Bitcoin does not require developers to be paid through a mining tax or any other convoluted scheme. The incentive system inherent in Bitcoin uses market competition, which is all that is required.

Communists need not apply.