0.1 What is Moloch?

“Imagine a country with two rules: first, every person must spend eight hours a day giving themselves strong electric shocks. Second, if anyone fails to follow a rule (including this one), or speaks out against it, or fails to enforce it, all citizens must unite to kill that person. Suppose these rules were well-enough established by tradition that everyone expected them to be enforced.

Figure 1: Rules of Moloch

So you shock yourself for eight hours a day, because you know if you don’t everyone else will kill you, because if they don’t, everyone else will kill them, and so on. Every single citizen hates the system, but for lack of a good coordination mechanism, it endures. From a god’s-eye-view, we can optimize the system to “everyone agrees to stop doing this at once”, but no one within the system is able to effect the transition without great risk to themselves.

This example while contrived can easily be applied to The Prisoner’s Dilemma, as played by two [participants] who keep ending up on defect-defect. There’s a much better outcome available if they could figure out the coordination, but coordination is hard. From a god’s-eye-view, we can agree that cooperate-cooperate is a better outcome than defect-defect, but neither prisoner within the system can make it happen.” [1]

Figure 2: Rules of Moloch presented as prisoner’s dilemma construct

Bitcoin has successfully demonstrated the concept of trust minimized, decentralized trade networks through working software technology. A growing ecosystem of trade networks with new configurations has been enabled by the Bitcoin solution. Some hypothesize that blockchain based governance and contract technology provides a cooperate-cooperate solution for many open trade network designs.

The prisoner’s dilemma construct is often used to model economic trade structures and concomitant incentive design choices in game theory frameworks. The two previous solutions for providing trust to enable trade between strangers have been (a) Reputation and (b) the Third Party Enforcement Rule, each formed due to the existing constraints of the geometries of the costs of coordination. The introduction of a third category of solutions means the supply and demand equation for the creation and operation of global trade networks and monetary systems has changed at a fundamental level.

Figure 3: Different solutions to enable trade between strangers

0.2 Why Moloch Wins

Figure 4: Various mental setups that give rise to the Moloch[2]

It did not escape our attention that the system design of the prevailing nation network model relies on the use of a bank credit custody framework that is globally coordinated and unipolar. This bank credit custody framework is presented to network users as money in the form of bank deposits and physical bank notes. Trade network contracts, including financial instruments, rely on the supply and demand equation for these bank credits to (a) measure approximations of units of value and (b) establish relative price signaling for goods and services. From another angle, this bank credit custody framework can also be expressed and studied as a highly optimized, rent-seeking, co-evolving Moloch memeplex called Fiat. The Fiat memeplex causes network users over time to adhere to a Schelling point corresponding to a cognitive language of:

- Third-Party Enforcement Rule geometry

- Zero-Sum economic and social arrangements

Fiat incentive design makes the system self-perpetuate even though the design is bad for users. The reason for that is the costs of coordination required to effect a change. Thus, transitioning into a new category of solutions presents a socially scalable coordination problem of overcoming the incentive design of the incumbent Moloch.

The costs of coordination then comprise the logical economic primitive that undergirds the ontology of the prisoner’s dilemma construct. Incentive design is about adjusting the costs of coordination to achieve a goal. The Bitcoin solution has made it possible to lower the costs of coordination by orders of magnitude. As a result, the costs of decentralization (or cooperate-cooperate open source consensus states) can now be far less than the costs of centralization (or defect-defect third-party enforcement rule states).

Figure 5: Costs of coordination

User created incentive design choices that are socially scalable for trade and cooperation may now be introduced into adversarial environments at relatively low cost. This can be achieved without necessary reliance on the geometry of the third-party enforcement rule for successful meme replication. Furthermore, in contrast to Moloch systems, the cognitive language of Mutual Respect and Open Source / Open Architecture frameworks correspond to the geometry of Non-Zero-Sum economic and social arrangements.

Chapter 1: The Coordination Problem

1.1 Non-Zero Sumness [3]

To proceed methodically, it is important to note that:

“A non-zero-sum is not a relationship in which cooperation is necessarily taking place. It is a relationship in which if the cooperation were to take place, it would benefit both parties.”

We again consider the prisoner’s dilemma where two players are being interrogated.

Figure 6: Prisoner’s dilemma construct

The cooperate-cooperate condition is the ideal solution leading to non-zero-sum gain. It remains in the best interest of each player to not betray the other one. There are two barriers, however, that prevent them from doing so thereby resulting in the obtainment of the defect-defect condition. The following two logical primitives can be described together as the Coordination Problem.

Lack of Communication Lack of Trust

Figure 7: Non-Zero Sumness visualized

The players cannot agree on a joint strategy if there exists a wall of separation between them that prevents them from communicating. And if this first barrier, the great wall, were to be broken, there still exists a fear that your accomplice must cheat after all and betray you, and therefore you are better off betraying them instead. As a result, this fear of being cheated must also be addressed along with the barrier to communicate.

1.2 The Moloch of Current Money

The barriers at the network user level incentivize network users to adhere to the Schelling point that corresponds to the geometry of the third party enforcement rule. This enables the formation of centralized governance layers to provide trust solutions that are frequently abused and manipulated by vested interests.

Lack of channels to communicate information and establish trust between strangers thus allows for the mimetic persistence of the cognition of the Third Party Enforcement Rule (TPE) or the proverbial Leviathan of Hobbes at all levels of the nation network. The cognitive language of TPE allows the governance layers to increasingly push Forced Network Updates (FNU) at the levels of user cognition, behavior, and contract.

Figure 8: Solutions for various prisoner’s dilemma constructs

For instance, current TPE governance has pushed a global nation network FNU called Fiat, which encodes a Debt-Based Incentive Design (DBID) where the solution for the network users is that of defect-defect.

TPE + FNU + DBID is the hidden architecture of zero-sumness at the level of nation network distributed incentive design. The abstract Moloch made concrete.