Naval Ravikant thinks philosophically about the nature of networks and how they make decisions. A tweetstorm follows. twitter
Blockchains will replace networks with markets.
Humans are the networked species. The first species to network across genetic boundaries and thus seize the world.
Networks allow us to cooperate when we would otherwise go it alone. And networks allocate the fruits of our cooperation.
Overlapping networks create and organize our society. Physical, digital, and mental roads connecting us all.
Money is a network. Religion is a network. A corporation is a network. Roads are a network. Electricity is a network...
Networks must be organized according to rules. They require Rulers to enforce these rules. Against cheaters.
Networks have "network effects." Adding a new participant increases the value of the network for all existing participants.
Network effects thus create a winner-take-all dynamic. The leading network tends towards becoming the only network.
And the Rulers of these networks become the most powerful people in society.
Some are run by kings and priests who choose what is money and law, sacred and profane. Rule is closed to outsiders and based on power.
Many are run by corporations. The social network. The search network. The phone or cable network. Closed but initially
Some are run by elites. The university network. The medical network. The banking network. Somewhat open and somewhat meritocratic.
A few are run by the mob. Democracy. The Internet. The commons. Open, but not meritocratic. And very inefficient.
Dictatorships are more efficient in war than democracies. The Internet and physical commons are overloaded with abuse and spam.
The 20th century created a new kind of network - market networks. Open AND meritocratic.
Merit in markets is determined by a commitment of resources. The resource is money, a form of frozen and trade-able time.
The market networks are titans. The credit markets. The stock markets. The commodities markets. The money markets. They break
Market networks work where there is a commitment of money. Otherwise they are just mob networks. The applications are limited.
Blockchains are a new invention that allows meritorious participants in an open network to govern without a ruler and without money.
They are merit-based, tamper-proof, open, voting systems.
The meritorious are those who work to advance the network.
As society gives you money for giving society what it wants, blockchains give you coins for giving the network what it wants.
It's important to note that blockchains pay in their own coin, not the common (dollar) money of financial markets.
Blockchains pay in coin, but the coin just tracks the work done. And different blockchains demand different work.
Bitcoin pays for securing the ledger. Etherium pays for (executing and verifying) computation.
Blockchains combine the openness of democracy and the Internet with the merit of markets.
To a blockchain, merit can mean security, computation, prediction, attention, bandwidth, power, storage, distribution, content...
Blockchains port the market model into places where it couldn't go before.
Blockchains' open and merit based markets can replace networks previously run by kings, corporations, aristocracies, and mobs.
It's nonsensical to have a blockchain without a coin just like it's nonsensical to have a market without money.
It's nonsensical to have a blockchain controlled by a sovereign, a corporation, an elite, or a mob.
Blockchains give us new ways to govern networks. For banking. For voting. For search. For social media. For phone and energy grids.
Networks governed without kings, priests, elites, corporations and mobs. Networks governed by anyone with merit to the network.
Blockchain-based market networks will replace existing networks. Slowly, then suddenly. In one thing, then in many things.
Ultimately, the nation-state is just a network (of networks).
Thank you, Satoshi Nakomoto. And to all the shoulders that Satoshi stands upon.
The argument is that the robustness of the blockchain makes it the most likely candidate medium for the Genetic Takeover of human culture.