“Gentlemen, you can’t fight in here” … After Bitcoin Replaces Fiat!

Bitcoin is the first example of a new form of life.
It lives and breathes on the internet.
It lives because it can pay people to keep it alive.
It lives because it performs a useful service that people will pay it to perform.
It lives because anyone, anywhere, can run a copy of its code.
It lives because all the running copies are constantly talking to each other.
It lives because if anyone copy is corrupted it’s discarded quickly without any fuss or muss
It lives because it’s radically transparent: anyone can see its code see exactly what it does . Ralph Merkle

The main reason I dedicated nearly two years (2015–17) to study how Bitcoin works was an intense mix of incredulity and curiosity. It was hard to believe that a mysterious hacker had found, implemented, and abandoned! Triple-Entry Bookkeeping* (“TEB”), the solution, I had found (accidentally) to Systemic Financial Risk. Or believing that, before vanishing, alias Nakamoto had left running the digital equivalent of a perpetual motion machine. Except, I had to admit that just as TEB had come along in 1979 (see bottom), microprocessors had already opened up a nonphysical reality where the absence of Newton’s “external unbalanced forces” could enable a digital perpetual motion machine to “live” on the internet, as Merkle put it. In essence, Satoshi had proven Newton right: “The laws of physics indicate that perpetual motion would occur if there were no external-unbalanced forces.”

A secondary, more mundane reason is that, although I had enough informal computer knowledge to understand the basics, it wasn’t enough to understand cryptography, without taking several months of online courses to scrutinize what Satoshi had actually achieved.

Simultaneously, I had been studying Systemic Financial Risk since 1989, when the SEC’s Paul Mulford unilaterally changed decades of FSAB regulations (and common sense) in order to allow banks to register Latin American Debt at FACE value, by just taking it out of our trading book and registering it into our maturity book (as if they were Treasury Bills or near maturity bonds).

Later, when Nicholas Brady came up with his nominal face value exchange plan (versus net present value logic), did it become clear to me why they had changed our mark-to-market rules entirely. An immoral scheme that left no doubts in my mind, that financial sector regulators were fully captured by the banking cartel, who knows since when.

Thus, Bitcoin was the first time I saw a functional application of TEB**, and since I considered it the final solution to global systemic financial risk, I had kept on searching for any meaningful implementation of it. Once I understood Bitcoin’s technological and historical significance, I could only wonder if Prof. Ijiri had ever seen his majestic invention at work, before he passed away.

To give you a sense of the vastness of information Satoshi handled better than others in many fields where they are experts, notice in the brief below, that just knowing the fundamentals of Prof. Ijiri’s invention would be a formidable feat for a non-financial professional, furthermore being so familiarized with its principles, as to be able to unequivocally encode them in an algorithm that has been flying solo, while interacting with millions of people and billions of transactions with a 99.98% uptime record for over 10 years. Let alone the depth of cybernetics know-how*** needed to master the interactions of the myriad scientific, logical, and behavioral principles that keep Bitcoin overcoming adversarial opponents of all sizes, both in the physical and digital realms, as if such an invention had already been maturing over several decades.

*I bumped into TEB in 1994, only because one of my professors (below) at Tepper School of Business (Carnegie Mellon) had invented it just 5 years earlier and nearly 500 years after Double Entry Bookkeeping.

** In Bitcoin’s case, Ian Grigg, one of the key geniuses behind the creation of the Ricardian Contract, derived the cryptographic version of TBE in 2005, by making the Bitcoin registry ledger, the third party between any two counterparts. A feat that cannot be achieved unless the ledger is immutable. That means the ledger must be created through a simultaneously secure and irreversible block signature issuance process, obtained by spending the necessary computer power to find Bitcoin Core’s unique hash vector answer to the hash query resulting from combining the last block’s Merkle root (summary hash signature) with the summary hash signature derived from all verified transactions posted and accepted over the past 10 minutes.

*** To illustrate, ignoring that Bitcoin is purposefully coded in Non Turing Complete language (NTC code), doomed ETH from the start.