The truth is the best schelling point
What that means for Crypto, Bitcoin and Ethereum
“All happy families are alike; each unhappy family is unhappy in its own way.” - Leo Tolstoy
What is a Schelling Point?
A Schelling point is any place, person, or thing that people default to without communication. For example, imagine I want you to pick a square in the photo below. If we both pick the same square, I'll reward you with an imaginary $5. However, if I don't pick the same square as you, you get nothing.
I pick the black square. Did we pick the same square?
This black square is a Schelling point because even without any communication, we would reliably coordinate at that point.
Other examples include:
In a desert with a lost partner: The Schelling point would be the closest body of water.
In war: The rendezvous point.
Amongst rivals: A neutral site.
After a crisis: The city's capital.
In a negotiation of inheritance: If we don't both agree on how to split something, no one gets anything; the Schelling point is 50/50.
Why are Schelling Points Important?
Schelling points reveal the defaults of our society, how parties move towards these defaults, and can be used to determine the balance of power or reveal what is valued most.
Is Bitcoin a Schelling Point?
Imagine two countries needing to store their wealth. It wouldn't be wise to store your wealth in an enemy's country, a poor developing country, or even your own denomination. Enemies might steal, poor countries lack the rule of law, and storing wealth domestically doubles your risk.
The Schelling point for wealth storage is a system that most effectively safeguards your wealth. Nations typically achieve this through diversification and controlling their own money supply. However, in a world of increasing inflation, relying solely on the money printer is not feasible.
The Schelling point would be an asset outside the existing system, something tamper-proof – like Bitcoin!
Ethereum as a Schelling Point
While Bitcoin has properties that make it a good Schelling point (upholding sovereignty and monetary soundness), there is another cryptocurrency that possess more of these qualities. Ethereum, for example, offers users greater sovereignty through programmability, decentralization, and utility. This makes it a stronger contender for the ultimate Schelling point.
The Truth as a Schelling Point
Why is truth a Schelling point? Because objective reality is the only objective thing in the universe. And therefore it makes it the safest place to coordinate.
Viewing Schelling points through this lens provides new meaning to our earlier examples.
Duration and Schelling Points
You can categorize Schelling point examples based on their duration. For short-term situations, the Schelling point will be more idiosyncratic. For example, parents tell their kids that if they get lost in a store, they should stay where they are. This is because parents generally believe they will quickly notice their child is missing and return to the last store visited.
However, if parents were told their child had been lost for two hours (assuming they were still in the store), they would likely want the child to go to the most crowded or highest-leverage place (like security). This is because, after careful consideration, it's the best place to be found.
Similarly, in the desert problem, the best place to be found is the nearest body of water because it has the highest traffic. Scarcest resources act as beacons. And what's scarcer than truth in a scenario where you don't know what to do and can't communicate?
Liberty as the Ultimate Schelling Point
So, what is the scarcest thing in modern life? Liberty, life, and the pursuit of happiness. These may not seem scarce, but throughout history, true freedom has been an anomaly. Even in democracies where it's most prevalent, the slow creep of government control has eroded the rights of the largest and smallest minority: the individual.
"The smallest minority on earth is the individual. Those who deny individual rights, cannot claim to be defenders of minorities." - Ayn Rand
This is because there's no inherent truth in government. As governments grow larger, trust diminishes. It's easy to trust your neighbor's dad who runs the local PTA, but impossible to trust faceless officials in distant lands. Trust doesn't scale!
However, if you trust a single system where everyone operating within it must behave in a way that doesn't harm others (as it would ultimately harm themselves), you don't need to worry about trusting faceless people. You only need to trust that people respond to incentives. The system that can facilitate this becomes the ultimate Schelling point. This system would have to maximize freedom or else become an attack vector like today's governments.
That freedom maximizing system is Ethereum and that thesis will become increasingly apparent over the next tens years as Ethereum becomes a safe harbor for the tired, the poor, the huddled masses yearning to be free, the wretched refusing their teeming, the builders, and the most tortured minority of them all; the individual.
Let the beacon chain guide you.
Atlas Aristotle
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Atlas Aristotle
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