Price is Truth | Bitcoin is Venice Series | Episode 2 (WiM382)
Oct 23, 2023
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"Bitcoin is Venice" co-authors, Allen Farrington and Sacha Meyers, discuss the power of prices, subjective vs objective, social morality and technology, and whether Bitcoin can reduce violence.
Distorted prices disrupt the truth that prices communicate, leading to misallocation of resources and dissatisfaction.
Accepting the truth of prices in a marketplace is crucial for rational decision-making based on accurate information.
Coercive manipulation of prices creates a situation where decisions are based on false signals, misallocating resources and suppressing dissenting voices.
Deep dives
The Importance of Price Discovery
Price discovery is a vital process that allows individuals to make informed decisions about their actions. It reflects the collective preferences and valuations of individuals in the marketplace. Coercing or distorting prices can lead to misallocation of resources and disrupt the truth that prices communicate. When prices are manipulated or distorted, individuals may make decisions based on false information, resulting in dissatisfaction and inefficiency.
Respecting Social Truth
Price discovery is a reflection of social truth arrived at through decentralized experimentation. The collective preferences and actions of individuals shape prices. Distorting prices ignores the subjective valuations of individuals and imposes one's own preferences, leading to misalignment and confusion. Accepting the truth of prices is crucial for a functioning and efficient marketplace where individuals can make rational decisions based on accurate information.
Price Distortion as a Lie
When prices are coercively manipulated or distorted, it can be compared to spreading a lie in the marketplace. It disregards the preferences and valuations of individuals, creating a situation where decisions are based on false signals. Coercion disrupts the decentralized truth-seeking process and misallocates resources. Treating prices as objective reflections of social truth is essential for preserving fairness and efficiency in the marketplace.
Paradox of Tolerance
The paradox of tolerance arises when society tolerates intolerance. A society that tolerates coercive or violent behavior undermines the truth-seeking process and the peaceful coordination of individuals. Allowing intolerance can lead to the rule of the intolerant and the suppression of dissenting voices. Upholding the importance of non-coercive means of communication and persuasion is crucial to maintain a fair and functioning society.
Bitcoin's role in reducing coercion and violence in social affairs
Bitcoin provides a system where there is a cost to lying or manipulation, resulting in financial consequences. Unlike governments, which can suspend economic laws for their benefit, Bitcoin creates a mechanism to correct dishonesty or mistakes in the marketplace. By removing the ability to alter the rules without consequence, Bitcoin ensures that those who engage in lying or manipulation suffer the financial repercussions. This shifts the cost calculus and makes violence or coercion less appealing compared to creative and cooperative endeavors.
Bitcoin as a tool and its potential impact on human social organization
Bitcoin is a tool rather than an ideology. It offers a solution to societal problems caused by debased money and corrupt regimes. As a tool, Bitcoin functions based on its merits, such as its usefulness and monetary properties. Its success does not solely rely on selling an ideology, but rather on its practical benefits. Bitcoin's adoption has transformative potential in terms of capital accumulation and societal outcomes, as it provides a superior incentive structure compared to fiat systems. Its long-term effect on morality and social organization remains to be seen, but its ability to reinforce social capital and reshape economic dynamics holds promise.
Allen Farrington and Sacha Meyers join me for a multi-episode conversation exploring their book "Bitcoin is Venice." In this episode, we discuss the power of prices, the difference between subjective and objective, social morality and technology, and whether Bitcoin can reduce violence.
Allen Farrington and Sacha Meyers co-authored the book "Bitcoin is Venice."
// OUTLINE // 00:00:00 - Coming up 00:00:40 - Intro 00:02:12 - Helping Lightning Startups with In Wolf's Clothing 00:02:59 - The Power of Prices 00:06:48 - Prices as Decentralized Social Truth 00:12:04 - Free Markets vs. Manipulation of Prices 00:16:05 - Participating in Price Discovery 00:19:19 - Compromise and Communication 00:22:52 - Run Your Business From Anywhere with NetSuite 00:23:57 - Secure Your Bitcoin Stash with the iCoin Hardware Wallet 00:24:54 - Literal Comprehension of Economy 00:29:13 - Exchange Ratios of Writing and Pricing 00:31:41 - Price Discovery: From Subjective to Objective 00:35:53 - In-Between Subjective and Objective 00:38:54 - Distinguishing Subjective from Objective 00:41:33 - The Material Engagement Theory 00:44:55 - Human Action Relevance 00:48:42 - Idea for the Next Book 00:50:30 - Take Control of Your Healthcare with CrowdHealth 00:51:32 - A Bitcoin Wallet with Privacy Built-In: Wasabi Wallet 00:52:23 - Coercion is Destructive to Price Discovery 00:55:23 - Price Distortion is the Omission of Truth 00:56:43 - Consequences of Price Distortion 01:00:05 - Paradox of Tolerance 01:03:33 - Bringing Bitcoin into the Equation 01:07:51 - Can Bitcoin Reduce Violence? 01:12:35 - How Bitcoin Changes the Incentives 01:17:01 - Social Morality and Technology 01:21:23 - Is Bitcoin a Tool or Ideology? 01:25:49 - Is Capitalism an Ideology? 01:27:22 - The Line Between Ideology and Technology 01:31:10 - Success Depends on Outcome 01:33:46 - Where to Find Allen and Sacha on the Internet
