#129 Moloch

Good Morning Everyone,

As we have discussed many times, incentives are everything, and most people given the choice will follow the path of least resistance. This is culturally impressioned upon us from a young age, and perhaps we’re even biologically configured to do so.

In listening to a conversation between Liv Boeree and Tim Ferris, Liv introduced me to the ficticious character named Moloch.

Moloch according to the now highly questionable wikipedia is:

“a name or a term which appears in the Hebrew Bible several times, primarily in the book of Leviticus. The Bible strongly condemns practices which are associated with Moloch, practices which appear to have included child sacrifice.“

I have followed the rabbit hole to a paper she recommended which goes deeper on the idea titled: Inadequate Equilibria: Where and How Civilizations Get Stuck (Chapter 3: Moloch’s Toolbox). It’s a relatively short read, and highly recommended for anyone interested. Liv explains an easy way to think of Moloch is as the god of unhealthy competition. Moloch is referred to as a fictitious character due to its historical origins as a God or a diety, but i think it is less valuable thinking within the frame of a god and simply paying more attention to what the actual characteristics are, that are associated with this thing called Moloch.

From what I’ve managed to ascertain so far; Moloch is a dynamic that can manifest within a system and is built upon bad incentives; and these incentives create a feedback loop which creates compounding sup-optimal, or negative outcomes which then create a new set of sub-optimal incentives and subsequent outcomes. These incentives lead to behaviours being expressed by humans that are typically short cited and obsessed with winning and and they infect the very systems of which they are a part.

This flywheel of bad incentives creates a stream of negative-sum games and ultimately leads civilizations to become stuck in an extremely low Nash Equilibria.

Nash equilibria is a concept within game theory defined by John Nash and is defined as the combination of strategies in a game, one for each player, where there is no incentive for players to deviate from their current strategy.

So a civilization becoming stuck in a bad Nash Equilibria is to become stuck within the grooves of a system of bad incentives, whereby noone can win by changing their strategy and thus everyone remains playing bad games and remaining within a system that continues to assure sub-optimal results.

Jeff Booth has talked about this conundrum of being stuck in a system of bad incentives in relation specifically to fiat and central banking and he frames it as a system level issue. One that cannot be solved from inside of a system; rather only an entirely new system that replaces the previous can break the cycle and free us from Moloch’s trap.

Bitcoin is this systems level change. It is the mechanism that resolves this feedback loop. It is the mechanism that defeats the ficticious god of bad incentives, and allows humanity - us - to reach an entirely new Nash Equilibrium.

It is a complete reimagining of what the technology of money is, and what it can be in the future. It dissolves all the existing power structures that have been errected, and provides us with an entirely novel system that not only breaks us out of the negative feedback loop of negative-sum games, but thrusts us into an entirely new dynamic. Not only one that supports long-term positive sum games, but a system that directly incentives such pursuits and compounds the positive-sum outputs creating new incentives to continue to play positive-sum games.

This is a complete and fundamental reorienting of the human spirit and the way in which we orient ourselves in the world. Both individually and also how we organise ourselves collectively as part of the larger whole. Bitcoin not only defeats Moloch; bitcoin turns Moloch upside down and does the complete opposite. Bitcoin is the anti-Moloch device. A system of optimal incentives built upon a system of pure informational clarity.

Grateful as ever to be here to witness it.

Hope you all have a powerful start to your week. Wishing you well, and look forward to talking to you tomorrow.

AK

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