Thinking of Bitcoin like chess

Every once in a while I’ll play a game of chess on chess.com.

I’m an average player, but I know enough to appreciate the long-range thought and planning that is required of great chess players. The best of them think dozens of moves into the future, considering all the different possible moves by their opponents and the different strategies they have to deal with them.

It is an incredible mental achievement which I think is best explained in the brilliant open letter Ayn Rand wrote to the great chess champion, Boris Spasky.

I was struck by the realization that the game itself and the players’ exercise of mental virtuosity are made possible by the metaphysical absolutism of the reality with which they deal. The game is ruled by the Law of Identity and its corollary, the Law of Causality. Each piece is what it is: a queen is a queen, a bishop is a bishop–and the actions each can perform are determined by its nature: a queen can move any distance in any open line, straight or diagonal, a bishop cannot; a rook can move from one side of the board to the other, a pawn cannot; etc. Their identities and the rules of their movements are immutable–and this enables the player’s mind to devise a complex, long-range strategy, so that the game depends on nothing but the power of his (and his opponent’s) ingenuity.

According to Rand, the long-range planning and strategy that makes chess so interesting is only possible because the rules of a chess game are set in stone. A player in a game can trust that a bishop will not suddenly be made to move like a knight. He knows that in ten moves his rook will not suddenly move like pawn. He knows that the same rules apply to his opponent that apply to him and that no council will decree otherwise during the game.

If you don’t agree with her, try to imagine playing a game of chess differently, one in which all the rules could change at random, whim or caprice of some known or unknown third party. Rand did, and she asked this question to Spasky.

Would you be able to play if, at a crucial moment–when, after hours of brain-wrenching effort, you had succeeded in cornering your opponent–an unknown, arbitrary power suddenly changed the rules of the game in his favor, allowing, say, his bishops to move like queens?

Maybe you would try to play. Maybe you could try to finish the game quickly enough, neuortically praying the ruleset didn’t change before you finished, or wishing the rules changed only when your opponent was about to move. But a game like this would be impossible to master. There would be no Bobby Fischers or Boris Spaskys. Everyone would be reduced to a common denominator relying on luck and chance to help them win in the game of chess.

Bitcoin like chess

I like to think of the Bitcoin protocol in a similar way to how Ayn Rand thought about chess.

Like chess, success in the Bitcoin economy (or the economy as whole) requires an incredible amount of mental effort about not just the immediate moment, but all possible futures.

Like chess, if the rules of Bitcoin are not immutable, if they are subject to constant change by some committee of developers adding changes to the software, people in the Bitcoin economy will not be able to make rational, long-range plans using Bitcoin.

You might sign a transaction one year and realise it is no longer able to be broadcast the next year because some council of developers decreed that a change was necessary.

You might try to build a project based on a particular script function only to have it removed in a hard fork six months later after somebody decided it was an improper use of the blockchain.

Maybe you run a business based on micropayments but the developers impose limits on Bitcoin that break the entire business model because they have decided that is inefficient.

Like chess, mastery is difficult in the Bitcoin economy if the rules are not set in stone. An economic actor needs to be able to trust that the decisions he makes now will be valid tomorrow if he is going to be able to think at all beyond the immediate moment. The decade-long planning that is necessary for economic success is predicated upon a largely stable economic system and rulebook that is made impossible by regular forks and protocol tinkering in Bitcoin.

But at least in chess, rule changes only harm the players. In Bitcoin, rule changes harm almost everyone in the Bitcoin economy.

Set in stone

But, what if I have a really great idea that will make Bitcoin more useful?

Maybe you do, but in the same way regulatory uncertainty is often worse than regulations themselves (which are awful too), uncertainty in the Bitcoin protocol is worse than theoretical imperfections in the Bitcoin protocol.

This is why Satoshi wrote that ‘the nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime.’ It’s not a declaration that Bitcoin is perfect in all ways, it is a recognition that Bitcoin, as an economic system, must be predictable so that the Bobby Fischers and Boris Spaskys of the Bitcoin economy can work and plan.

In the kind of world where Bitcoin is subject to constant change, you have a few options.

You can take the Blockstream approach and buy favor with developers, censor and propagandise so that the rule changes always favor you at the expense of most everyone else in the Bitcoin economy. You can take the more noble Bitpay and SatoshiDice approach and try to work within it and hope and pray that whatever changes are made don’t break what you’re doing, knowing all the while it is just a matter of time. You can ‘hodl’, and never use Bitcoin, hoping one day the madness stops. Or you can opt out of that version Bitcoin entirely and find a better one.

I suspect most people and businesses will choose the fourth option. They will find a Bitcoin that simply removes any artificial limits and then tries to lock its protocol down so that economic actors in Bitcoin can get to work building on foundations that they can rely upon for the next 5, 10, 20, 50 and 100 years.

Relevant Books

Philosophy: Who Needs It by Ayn Rand

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