In this video I continue further into my Blockchain: The Big Picture series and this time look at Part 2 which covers the concepts of money, trade, and tokenization. As explained in Part 1, I had initially anticipated only making one Big Picture video but now it is becoming a video series. In Part 1 I had covered the notion of digital blockchain consensus which allows a network of computers to maintain a single ledger or history of transactions. This concept is a key factor in governing the current state of the world and the direction it is heading.
In this Part 2 video, I start with pondering philosophical questions such as why do we do the things we do and create the things we create. These questions require exploring the concepts of work and manufacturing as well as trade and money. The concept of money is an abstraction and only exists so long as there is a collective belief or consensus as to its use as a representation or “tokenization” of goods and services. This belief in money requires an entire system of governance to maintain trust in it and it is this very system which is getting an entire shakedown through the emergence of blockchain technology. The full implications of what this means will be explored in Part 3 so stay tuned!
The topics covered in this video are listed below as well as their timestamps:
Stay tuned for Part 3…
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In the earlier parts of my Blockchain video series, I had discussed more technical mathematical aspects of blockchain technology, and then transitioned to looking at the "Big Picture" in my last video.
https://www.youtube.com/playlist?list=PLai3U8-WIK0Fgp_lR0a0rscxWYrHARtkN
Short URL: https://mes.fm/blockchain-playlist
Retrieved: 3 November 2020
Archive: https://archive.vn/wip/lWJVx
I had meant to make just one "Big Picture" video but I felt the need to first illustrate the digital mechanism of "consensus", which is something that we take for granted in the physical world.
"Consensus" is merely a shared belief or agreed upon set of rules, data, information, balances, money, and "value".
If you have a piece of paper saying it is worth $100, the only way it is actually worth that much is if others think so too; i.e. we form a consensus as to the value of the piece of paper or piece of information.
Thus, value is just information that a consensus or collection of people agree to give relative attributes or magical powers, that is a piece of paper can be exchanged for a physical house.
Fundamentally, value and information are the agreed upon (i.e. consensus) rules of a game, be it Poker or Monopoly Deal.
To know who is winning in the game of life, we need to keep score, that is we need a "ledger".
If we are playing a board game, we can just agree to all keep track of the score on one piece of paper.
If we are playing a game of government "fiat" money printing to funnel all the world's resources into the hands of a few, then the regulated banking system will maintain score of who has how much money and assets.
In the digital world, blockchain technology, or more generally mathematical cryptography, allows consensus to be reached without a central bank or authority.
In this digital world, rules replace rulers and consensus is made based upon the number of computers that are constantly updating and ensuring their local ledger is the same as the majority of computers in the network.
Effectively, the digital ledger can be viewed as being everywhere, since the majority of computers in the network have a copy of the same ledger, and nowhere, since changing any one copy does not directly change the majority.
@mes/blockchain-the-big-picture-part-1-what-do-you-own
Retrieved: 3 November 2020
Archive: https://archive.vn/wip/E28Ft
The purpose of this video is to take a step back at reality in general to ponder the usual existential questions:
What is going on?
Where are we going?
What are we?
Why do we do the things we do?
What are we to do next?
Who is directing our lives?
Why do we work our entire lives?
What are we building?
And once again, what is going on?!
These questions are far too often shelved in the realm of "philosophy" and stored away for "academics" to explore because, for the most part, it too is their "job"; in other words, even the exploration of reality itself is viewed as "work".
Here at MES, these questions are the ultimate tools of exploration and discovery, and which I will use to get to the root of what is going on.
Technology can be viewed as the design of tools for a specific purpose.
An early example is just a sharp object, i.e. a knife, that can be used to cut objects for many different purposes.
In modern times, the "smartphone" is the tool of choice.
If we look beyond the obvious practical uses of such tools, let's ponder the following more "meta" questions:
Why are these specific types of tools made?
Are they truly needed?
Could other tools be made to fulfill these same purposes?
What was the driving force behind these tools?
How were they made?
Who made them?
Who directed the makers to make them?
Why did the makers agree to make them?
The last two questions are very intriguing, to say the least.
The knife and the phone are tools that differ in complexity of both creation and utility.
The knife could be made by just one person and its use will always be mainly of the cutting/slashing/robbing/attacking type.
The phone, however, requires a lot of computer, electrical, audio, electronic, software, and telecommunications engineers and scientists to design, create, and manufacture.
And to make its use complete, an entire ecosystem of internet telecommunications must be first constructed.
The creation of the knife involved just one person directing their energy towards sharping a material for cutting.
The creation of the phone involved many people directing the energy of many more people overall a long period of time to first construct the infrastructure of telecommunication systems before even the concept of a phone was (publicly) conceptualized.
In this context "energy" is the potential to create or manifest change and directing energy is the literal directing of change itself.
In creating a knife, one can simply direct their mental and physical energy towards changing a piece of stone by sharping it against another stone and then inserting it into a softer material as a handle.
In this case, the tool of directing change upon physical objects to produce a knife is mainly the individual's mental intellect which directs the physical body to cause change to the physical objects.
The mind envisions and directs the body to create.
The example of creating the individual knife involved the individual mind controlling the individual body.
But the case of the complex phone requires the control of many minds to be lockstep in their pursuits of a singular goal, which is to create a pocket sized super computer that can communicate to anyone around the world.
This concept of "collective mind control" in directing a vast amount of people to produce a specific object is the same that produced ancient giant sand castles.
An individual that has control of their own mind can freely direct their body to create a simple object like a knife.
If, however, that person wants someone else to make them a knife, then they can either ask nicely, offer a trade, or "mind control" them to create it for them.
At first glance, only the first two scenarios seem plausible but the last one seems like magic (or suppressed technology).
But is it really?
Do you work for someone?
Do you produce products for them in exchange for a few numbers to be incremented in your bank account?
Do you produce knives at a knife factory just to pay the bills?
Fundamentally, each scenario is a "trade", including the exchange of a "nice request" for a knife.
Scaling this up so that we control many people to produce many knives requires exchanging "something" that many people would want to exchange their mental and physical energy for.
Similarly, we would need to offer "something" to many people to get our phones made.
Likewise, something needs to be offered to get modern giant steel reinforced sand castles or obelisks made.
Same thing with speeding up and colliding particles together.
Likewise, something's gotta give to create a giant highly polluting firecracker launched.
To get the world sitting in cubes 6 feet across also requires something.
Turning humans into mindless killing machines also requires something…
And weaponizing space with Directed Energy Weapons (DEW) requires a whole lot of this magical world-controlling "something"…
@mes/usa-secretary-of-defense-in-1997-bio-terrorism-and-electromagnetic-earthquakes-volcanoes
Retrieved: 19 November 2020
Archive: https://archive.vn/wip/7LwQy
In all of the above illustrations of collective mind control, there was "something" that each individual agreed to trade their mind and body for.
What is this "something"?
The basic need for trade is the basic needs of life, that is food, shelter, sanitation, etc.
In a world of one person, this can be met by "trading" one's mental and physical energy directly into providing for the basic needs.
In a world of more than one person, then one can meet their basic needs indirectly by trading something of value to other people.
The amount of mental or physical labor that an individual can produce is dependent on the amount of time they have available and the available skills they have or are willing to develop.
Someone that has developed the skills of creating a mud hut can rent it out or create a new one in exchange for a stockpile of food which was gathered by someone that, likewise, had focused their time on developing their food-gathering skills.
Trade allows each individual to specialize and focus on one particular task and then trade what they have for what they don't have.
We can organize and compare the two types of trades in the flow chart below.
https://1drv.ms/x/s!As32ynv0LoaIiMFRrlfTcZ4dc6nlTA?e=ZLUqHp
Retrieved: 7 November 2020
Archive: Not available.
Visually the level 0 trade can be viewed as manufacturing an object directly, while the Level 1 trade is an indirect obtainment of another object through "barter", that is trade without money.
This is a key point in understanding the economics of life.
The direct trade or barter of an object directly produced to obtain a object someone else produced is a mechanism of obtaining something that individual efforts alone could not achieve.
The issue, however, of trading one object for another is that individuals may only want to trade for some objects and not others, that is an individual may be only willing to trade their mud hut for oranges and not apples.
In this case, the apple seller could increase the amount of apples they're willing to sell or look for another mud hutter; likewise if there are no orange sellers around the mud hutter now has the disadvantage of either accepting the apples or searching for an orange seller.
Note again that for all the individuals involved, they are pursuing an indirect or "abstract" mechanism of obtainment.
Each individual is putting effort directly into producing something they don't want to obtain something indirectly that they do want.
Thus trade has effectively added separation between the effort put in and the objects obtained.
The main issue of bartering is that individuals require planning out who and what they can trade for before putting any effort into producing their specific objects.
And things can get complicated really quick as everyone tries to mix and match and weigh the available options.
To address this unorganized issue of bartering, we can add yet another abstraction to the obtainment of desired objects: money.
Instead of each individual bartering to each other in hopes of securing a desired trade, this process can be more organized if the individuals could agree upon a mechanism of "capturing" or "tokenizing" the "value" of each object.
That is, instead of trading object to object, each object first gets traded or converted into a token that represents its relative value and then this token can be traded directly for other objects.
This "token" is just an agreed upon object called "money" and serves as a medium of exchange that facilitates trade between objects.
Thus the concept of money is just a further abstraction from the individual effort to the desired object.
We can see this abstraction or further separation through our trade flow chart.
The abstraction of money directs the energy of each individual towards the obtainment of money first and foremost since it can then be traded for any desired object.
Our previous unorganized barter trade chart can now be replaced with a more organized and simpler money trade chart.
And the amount of money for each object depends on the basic Economics 101 concepts of supply and demand:
In order for this abstraction of money to serve its purpose as a facilitator of the exchange of objects, everyone involved must be in agreement as to what constitutes money.
In other words, there needs to be a consensus.
The abstraction of money is just that, an abstraction, a shared belief that a specific object or token can be exchanged for any other object.
Quite literally, the concept of money used in the financial world is fundamentally the same as that in a board game such as Monopoly Deal.
Each board game has its own set of rules that each person has to agree upon, otherwise there would be no game and certainly no trust in the token used for money; that is we revert back to barter.
This collective agreement or "consensus" in the rules of the game and the specified tokens of money requires trust that the rules are being followed.
From our earlier starting point of individual effort to produce a desired object to barter, and now to "tokenizing" the "value" of objects into "money", we have traversed from simple object creation to now designing an efficient system for general object exchange.
To facilitate our abstract collective belief in the concept of money in our board game of life, each individual needs to trust that no one is cheating such as by counterfeiting money, or in the case of digital banking that the bank is properly keeping track of all transactions.
In simple terms, we need to ensure that a proper score card is kept of all money transactions so the rules of the game are followed and the flow of money is known for the proper supply-demand economics of trade to operate.
In the typical centralized trust mechanism, trust is placed into institutions, that is into a specific collection of people.
In the digital cryptography world, trust is moved towards a collection of decentralized computers that follow a specific set of rules that ensure a consensus of one ledger is maintained.
The notion of decentralized trust should not be understated in importance and magnitude of scale, which is why I dedicated Part 1 to elaborating on this concept.
Since money is an abstraction, it is not "real" in the same sense that an ordinary object is.
For example, a crowbar is a crowbar regardless of whether you believe it or not.
But money requires belief to "exist", and if you don't "believe" in a specific currency, such as the Vietnamese Dong, then you don’t have to accept it; others may still accept it but you don't have to.
The current dominant world currency is the United States Dollar (USD) simply because more people believe in it than they do other currencies.
The reason that the USD maintains a strong belief in it is because it has the biggest, most robust, and secure "infrastructure" that ensures trust and belief is maintained.
The United States also has a giant military "defense" budget to ensure the rest of the world believes in the USD or else…
The infrastructure is all of the institutions, people, and technology in place to ensure money flows securely from point A to point B.
In a typical poker game, the infrastructure of money is the responsibility of the dealer for ensuring enough poker chips or tokens of money are always available and that all players are following the rules of the game.
In the financial world, the infrastructure involves governments and central banks printing money and loaning out to banks which then loan out to the public all at increasing interest rates.
This infrastructure for money "printing" requires literally printing money.
Further infrastructure is required for spotting and removing counterfeit money.
For banks to store large amounts of money they would also need to build secure vaults.
To enforce the rules of the money game, an entire infrastructure of prisons or "internment camps" are also required.
In other words, the simple concept of money requires an entire system of governance to be first constructed.
An infrastructure of symbology is also required to ensure all governments are in sync with each other.
An infrastructure of rituals is also required to form and maintain a cohesive bond between government leaders.
The simple concept of money requires a complex infrastructure to uphold the trust, security, and belief in the tokens that are considered "money".
These tokens are objects whose sole purpose is to represent other objects, and the process by which we can turn objects into tokens may be called "representationizing" or "abstractification" or "tokenization".
The physical infrastructure can be visualized as a food grinder or "object tokenizer" that abstractly turns goods and services into tokens.
This exact process of tokenization can continue as far as the human imagination can take it since, after all, it is an abstraction or idea agreed upon to represent other objects of physical existence.
Tokenization allows large objects such as a house to be abstractly condensed into a small pile of cash or several wheelbarrows of coins.
Some of these tokens are inconvenient for most purchases, such as paying a fine with pennies.
Retrieved: 13 November 2020
Archive: https://archive.vn/wip/0GOXR
One way of overcoming this inconvenience is to include tokens of higher value, such as large numbered bank notes.
The main issue with large bank notes is that the risk of counterfeit outweighs the convenience, that is, no one will sell there house for a million dollar bill.
Another way of condensing large value is by using specific objects whose portability makes it convenient to use as cash directly.
Such examples include naturally rare metals such as Gold and Silver.
Gold is currently trading at $60,000+ USD for 1 kg.
Silver is currently trading at $800+ USD for 1 kg.
Silver and Gold have the property of money in that they "represent" a large value in a condensed "token" form, but this value is not just a representation but the actual value it is being traded at.
But holding on to rare metals has the same security issues as holding large bank notes or holding large amounts of cash in general, namely risks of counterfeits and theft.
Banks and other large companies can afford to store large amounts of gold and cash but the average local retail store can't and nor would they want to since they then would have to trade it for cash if they were to spend it.
Another issue is in the need for many relatively small payments, such as purchasing a pack of gum, that would require to break up the gold bar into fine dust to get the equivalent value or request $59,999 USD in change if you were to pay with a whole gold bar.
This scenario is not going to happen (yet)!
Instead of using an object that has value of its own as money, i.e. gold, a more logical approach is to keep taking the path of abstractions and tokenize our tokens of money.
This is "logical" because we already have the infrastructure of money and trust already built into place, thus we can add yet another layer of "trust".
One such way is by using a "cheque" or "check" which is merely a piece of paper issued by our trusted bank to allow us to pay others by simply writing how much we would like to pay.
In such a case, we have to trust that our bank has the amount specified on the cheque and others have to trust that they can indeed exchange the cheque for cash at their trusted bank.
Updating our abstraction table we now have to add several more steps or abstractions between the individual effort and the desired object.
Our corresponding trade level flow chart now has a lot more parts!
We are effectively building complex contraptions to facilitate a simple trade between individuals that don't trust each other.
This lack of trust among humanity is the driving force between all of life's contraventions, especially the inevitable concept of taxation which follows directly from the concept of money.
Five volumes of contraptions that serve to entrap reality.
Going back to the concept of cheques, practically this is just about as far as the abstraction of money can be taken when speaking in purely physical terms.
To go above and beyond simple pieces of paper, we need to go digital!
The infrastructure of the internet has allowed for the inevitable digital tokenization of money.
The internet and telecommunications in general is the literal transfer of light or more generally electromagnetic radiation or more accurately aether sound propagation.
The world is wrapped in endless fibre optic cables that extend across oceans.
The Earth is also being more and more engulfed with satellites to allow for wireless telecommunications.
https://theconversation.com/space-debris-what-can-we-do-with-unwanted-satellites-40736
Retrieved: 15 November 2020
Archive: https://archive.vn/wip/osbRg
This infrastructure allows for tokenizing money as just digital numbers in a bank account.
This type of digital tokenization requires entrusting our money to a bank and then trusting that the bank accurately keeps track of our money by maintaining the corresponding digital numbers on our bank account.
This is fundamentally the same concept as with cheques, since both involve depositing money to a bank account, but with digital communications no physical cheques are necessary!
Our abstraction and trade flow charts now involve replacing cheques with the "internet".
The "internet" represents any application or mechanism for communication via the internet and general telecommunications infrastructure.
The simplest mechanism is an email E-transfer.
The more common mechanism is using debit and credit cards that serve as physical identification of your online bank accounts, which then can be processed by merchants.
Even physical cheques can be deposited through the internet.
The internet speeds up the rate of communications between banks, that is an email replaces the physical hand delivered cheque, but the speed of money flow has not directly changed.
This is mainly because multiple intermediators or "middle men" have to audit and ensure all trade is tracked and following government regulations; not to mention that any physical money exchange between banks aren't sped up either.
https://www.bankgirot.se/en/about-bankgirot/our-offer/clearing-house1/
Retrieved: 19 November 2020
Archive: https://archive.vn/wip/bwnWA
Banks give the end users the illusion of quick payments by updating their bank balances in real time and then auditing the payment at a later time; so don't be surprised if your payment was later found incomplete 3 months later because the merchant was deemed to have tweeted "extremist" thoughts….
To truly speed up banking, we need to remove the need for traditional physical banks, and one such way is with blockchain technology.
A typical "bank" is just an institution that we trust to maintain a ledger or balance of all of our financial transactions.
The physical bank needs physical security.
Or semi-physical internet controlled holographic security.
https://japantoday.com/category/features/lifestyle/anime-style-security-guard-will-be-protecting-home-and-offices-in-japan
Retrieved: 17 November 2020
Archive: https://archive.vn/wip/j8HM1
The transition to digital bank accounts require digital security.
To prove who you are in the digital world, be prepared to answer a lot of security questions.
In the physical world the security required is relatively basic because there are only a few ways of entering and thus just a few doors to provide security for.
But once the bank goes digital and connects to the internet they then become a mere fish in a giant interconnected sea of billions of computers.
Thus, anyone from anywhere is just a few clicks away from hacking into the bank's online accounts.
To mitigate against this widespread threat, banks build a network of trusted banks and institutions which is akin to a closed, private, permissioned internet.
Banks also have to follow local government laws and regulations, which further restricts whom they can operate with it, and sometimes purely for political purposes.
Thus, even though the internet is light speed fast and generally borderless, banks are still forced to slowdown and limit themselves down for security and regulatory purposes.
To speed up traditional banking, the logical step would be to not just use the internet but merge directly with it.
This is the basis of blockchain technology discussed in Part 1.
A bank is fundamentally just a ledger of transactions, thus we can focus instead on the ledger itself and forget about the bank.
Now we just need a consensus of computers in a network to copy, update, and maintain an exact copy of the ledger.
Digital consensus was first formed through the bitcoin blockchain and combines the mathematics of cryptography with the communications network of the internet to follow a rule based approach to ensure the network is incentivized to maintain one single ledger.
Thus, our blockchain ledger, or other similar consensus mechanisms, can be viewed as a single ledger or record of events but maintained by a network of computers.
Unlike traditional centralized banking, the decentralized nature of the blockchain network means that if any one computer is compromised, the network can just recalculate consensus and continue without stopping a beat.
Blockchain and similar consensus technologies represents a merger of banking with the internet.
The internet is a network of interconnected computers using the same common language and the blockchain ledger can be viewed just a specific language on the internet that all computers must use to be able to communicate and interact with the ledger.
Each blockchain can be viewed as an internet language of its own and is as global as the network is.
Our new abstraction and trade charts now has the banks removed.
Note that these are the same as the "Level 2: Money" charts except Blockchain has replaced Money.
And with the removal of traditional money, so too does the traditional infrastructure of money get removed also.
The rulers get replaced with rules.
And the tokens of money are now condensed into a string of alphanumeric numbers that represent your wallet or blockchain bank and your private key or password.
Convert your goods and services into tokens and donate to MES! :) https://mes.fm/donate
And securing large amounts of money on the blockchain can be done with a specialized USB stick or "hard wallet" that stores your private key.
If you want to buy one, please use my Ledger referral link:
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You can also store your wallet on a piece of paper.
Although blockchain tokenization removes the need for traditional banking, it does not mean that the old infrastructure disappears, but rather it too will have to adapt and merge with the blockchain infrastructure.
One such example is in the physical security infrastructure and overall insurance packages that banks can provide which the average user is not currently knowledgeable of on their own, especially in the current transition phase.
Thus far we have mainly discussed the concepts of trade and its evolution and tokenization, but have yet to address the starting question:
What is going on?!
I was planning on discussing this question in this video, but the concepts of trade and tokenization was taking up more space than I had anticipated, so we will have to discuss this question in Part 3.
And this is a question that deserves proper attention because it is the question that every individual has to tackle for their entire lives, and especially in the current fast moving (and long planned) digital and physical merger that the world is being pushed towards…
