Bitcoin And The Elegance of Simplicity

The simplest elements, the fewest moving parts, the most well-aligned incentives. Designing systems that deliver the desired outcomes with efficiency has elegance to it: to build something well where the pieces fit together. As there is an appreciable aesthetic to a deftly mitered wooden box whose lid closes with a smooth and snug fit, that same quality is domain independent.

The Enlightenment was a rebellion on the authority of knowledge encapsulated by the motto of the Royal Society of London, 1660, 'Nullius in verba' -- "Take nobody’s word for it" (1). Similarly, Bitcoin, emerging during the 2008 Financial Crisis, stands in contrast to authority of money with an implicit first principle -- 'Don’t trust, verify'. Bitcoin is a software protocol enabling users to securely store and transfer scarce digital “coins”. Instead of requiring good faith from those users the protocol was designed to incentivize them such that they are better rewarded by behaving, contributing, rather than cheating. Instead of building thick walls around the treasure, make the treasure itself the fortress--now to swing at the walls successfully is to ensure there is nothing left to steal--and at the cost of a large hammer. That’s elegance.

Compare that to one of our most important institutions, the medical system. It was not designed to prevent illness. There’s a lack of incentives to learn the latest standards in nutrition and preventative care and to apply them with the greatest efficacy. Companies in the healthcare industry at times offer bonuses if their product is prescribed (2). Doctors are paid by quantity of patient visits. Medical error is the third leading cause of death (3). The poor user experience of misaligned incentives, efforts, and outcomes, in this case, is the increased suffering of a patient.

Civilization prospers when we build systems that reward contributive efforts. With deceptive simplicity, Bitcoin empowers the individual. By building upon a foundation of users being able to prove the veracity of transactions, the protocol facilitates direct, trust-less interaction. We can now reach across borders and political ideologies, free from time zones, rent-seekers, and third party constraints, and simply transact securely with another human.

Our systems and institutions are made more robust when we build upon thoughtfully designed foundations. The groundwork to a system with the incentives of all the users well-aligned has been laid. Bitcoin and its minimal yet effective design codifies efficacious first principles into the protocol and results in a showcase of manifested elegance. Nothing more is needed, nothing less will do.

1. History of the Royal Society. Link
2. Financial Incentives for Doctors. NCBI
3. Medical error—the third leading cause of death in the US. BMJ

Tom StewartComment