From control_principle to control_currency

Regime money is a currency to control, inseparable from employment/wage/job slavery. By the Maxwell demon control_principle from physics, loss of energy at the individual layer creates a caste_system above and entails accumulation of energy above. High energy above is high rate of change above, is regime_chaos, to the detriment of the individuals. Losing control is being a victim: obviously it backfires.

[control_principle]: All living systems and beyond are based on the Maxwell demon control_principle. Their structural complexity is a freezing of control/harvesting dependencies (cooling).

[control_currency] Money the control_currency: The enforced taxation (money_deletion) associated with all economic activities enforces labor for the regime, to acquire the money created by the regime (money_creation). The value of fiat money is based on the Monopoly_on_violence of the regime. Corporations are an unlimited extension of the regime’s limited intelligence to extract value_creation from its subjects. A regime’s ownership of its subjects is licensed to the corporation owner/s. Like the regime itself, corporations are no_limit wealth accumulation/extraction structures, overtaking the regime itself, becoming the regime (plutocracy). The loss of individual control due to enforced harvesting has evolutionary consequences for humanity as a whole.

[limiting_control] The way out of wealth accumulation can only be bottomup limiting_control from individuals. Victim or not is a matter of contract: The contract needs establish control and not money. Money is not fundamental, not important, but control is. limiting_control demands awareness of the majority, and can make a regime stable by statistical mass.

On wording:

locality_principle

Energy has local origin, but can get lost over time, freezing local activity (local structures).

control_principle

The use of energy lost from more local realities.

regime

Polity is a neutral word for a higher layer social control structures. But I prefer the word regime. It emphasizes the control structure. It also better separates those who control (elite) from those controlled (subjects). The word state in English has too many meanings, most outside politics. State as political entity also conflates people living in a state with the regime in that state.

control_currency

Enforcing demand for money allows the regime to control via money. Money is a tactics (softpower) to hide hardpower.

fiat_money

Enforcing taxes with all activities a subject does, the money becomes valuable for the subject.

money_deletion

Tax to delete money via economic activities and inflation to delete inactive money.

money_creation

By enforcing money_deletion the regime’s money becomes necessary, allowing continued control/usage of subjects by money_creation. While there are regulatory restrictions linking taxes/bonds with budget, money_creation and money_deletion conveys the basic idea.

value_creation

value means price. Value_creation from the standpoint of the regime is tax creation: more money_deletion allows for more money_creation.

theory_of_value

In valuation/pricing the control power manifests itself. Labor valuation (LTV) vs market valuation (STV) to harvest the difference (surplus) instead of Same_market_valuation.

surplus

Surplus is a euphemism for wage_slave harvesting. By separating labor valuation from market valuation instead of same_market_valuation, the regime/corporation can harvest the difference. This is the surplus.

same_market_valuation

Taking part in economic life requires both, consumption and contribution, to be valuated by the same market.

work_for_control

Work for control on same_market_valuation, not directly for regime money. You get regime money via your share on the market value of your joint product.

corporation

The popular term company is too general. Corporation being a legal person means that they are part of the regime.

wage_slave

Wage_slave for employee emphasizes the lack of control due to this role, even for long-time cooperations, the loss of the link to the market, and the associated no_limit accumulation of wealth/control.

caste_system

I use this name to emphasize that social layers of control are quite stable over many generations.

devide_and_conquer

Corporations divide people into a local communities, to decouple them from the market. Hiding market valuation and impose lower own valuation, allows the corporations to harvest the difference.

r_vs_g

$r > g$ return of investment (ROI) greater than growth of product and services (GDP, g) is due to labor pricing and value pricing not by the same market. Seeing money as a control_currency, growth g also including capital flow to the rich (like rent of flats owned by rich), this is not seeing the full extend of wealth driven wealth accumulation. It looks like an innocent whitewashing of actual harvesting.

no_limit

Accumulation of wealth via corporations is without limit because one can just add another wage_slave to harvest. This no_limit accumulative characteristic is also there for regimes. Those controlling don’t have any objective other than increase control: power_fixation, roi_fixation

power_fixation

regimes waging war just to increase the power of one or very view individuals

roi_fixation

ROI fixation leads to depletion and destruction of resources without actual need.

limiting_control

Individuals not limiting_control become victims of control (regime/corporations).

check_and_balances

limiting_control

intelligence_is_control

Intelligence is control. Curiosity is the generalist’s way to learn to control during lifetime. But not protected local control (farming, technology in general) will be harvested (warfare technology). limiting_control is as important as controlling.

wealth_inequality

By the control_principle control centralization is wealth accumulation. And vice versa wealth_inequality is control centralization (loss of democracy).

limits_of_control

Regime_chaos

Regime_chaos

Reality is local (locality_principle) and the regime has limited intelligence. Enforcement of money without responsibility or ability to distribute, at the end of the regime’s creativity to harvest individuals, use as cannonfodder is often the easiest way to maintain regime control.

hardpower

Regime’s are established by hardpower, but need softpower to become manageable.

softpower

Psychological tactics to make someone wanted to be controlled: psywar/informationasymmetry/gaslighting/brainwashing/propaganda/curryingfavor. A word not objected can quickly become reality.

keep_them_poor

The regime’s goal is not a good economy, but control. Keeping subjects poor produces a dependent on regime money.

keep_them_busy

Intelligence is control, but also needs time. Taking away the time from the subjects, their intelligence to counter regime control is reduced.

physics of control

Energy is rate of change. Action is accumulated change.

Here some synonyms of action:

Spacetime

Spacetime conveys that space (what changes) and time (the change) are physically one. Splitting spacetime into space and time is a mind thing and not physical.

variable

The values of the variable are changing, implying both the exclusive states and their change. A mind variable is physically happening/real in the mind but might not be mappable to an external world physical equivalent even if intended.

particle

Particle refers to one spacetime (the particle) among many similar (layer). “This spacetime consists of lower layer spacetimes” = “This particle consists by lower layer particles”.

Between layer’s: The lower layer’s action change is this layer’s step/quantum (Hamiltonian $H$) by which this layer’s spacetime emerges (Lagrangian). The Lagrangian is a 2D variable, the components being called potential energy $U$ and kinetic energy $T$

While there are more $q_{i}$ changes observable (collectively named just $q$), they are components of one change in a 2D deterministic spacetime $L = T - U$ line. Nature does not do a $q_{i}$ projecting to 2D, but rather relation between the many lowest layer 2D spacetimes produce the mental 3D world. With many independent localizations, layers of changes, the actual world around us is high-dimensional, with a 3D substrate.

The action $S = \int Ldt$ is the full spacetime extension of a potential-kinetic-cycle. In an independent cycle the action is constant. Constant action leads to the equation of motion (Euler-Lagrange Equation):

$$F = \frac{dp}{dt}$$

$$F ≔ \frac{\partial L}{\partial q}$$

$$p ≔ \frac{\partial L}{\partial\dot{q}}$$

Every spacetime particle is curved by $F \neq 0$. $F = 0$ corresponds to no change, which is synonymous to non-existence.

In the real world of layers, $S$ is not stationary. It changes in $H$-steps lost to the layer above: $\frac{\partial S}{\partial t} = - H$. The local Lagrangian becomes part of another change (dependent on another time) and its 2D curve is not a cycle any more, a spiral possibly, unless the loss is compensated by an equivalent gain from yet further down, keeping a particle busy with turnover from below to above.

The layer above has the same description, but with

• different action $S$
• different time extension $\tau = \frac{S}{H}$
• different space extension $\lambda = \frac{S}{p}$

Hamiltonian $H$ is the layer’s time unit. Momentum $p$ is the layer’s space unit. It follows a layer-specific speed $v = \frac{\lambda}{\tau}$ linking space and time via layer specific $\lambda = v\tau$.

Special relativity is basically the relationship between layers, totalling lowest layer spacetime creation speed to $c$: $\left( \frac{E}{c^{2}} \right)^{2} = \left( \frac{p}{c} \right)^{2} + \left( m_{0} \right)^{2}$. Total mass is $m = \frac{E}{c^{2}}$. $m_{0}$ is the masses from layers below.

$q$ is a parameter, an observable. It could be money/wealth.

• Force $F$ would depend on money $q$.
• Momentum $p$ would be due to money flow $\dot{q}$.
• The Euler-Lagrange equation then say: Change in money flow is (due to) force at that wealth state.

Where is the link to reality? The valuation/pricing. If the valuation is concentrated, there will be no cycles, but fast cooling: harvesting to exhaustion, then move on.

control_principle

The loss of energy/time up the layers is a cooling process, gradually, over many cycles. A Maxwell demon control_principle is the usage of the loss of lower layers. The evolution itself, every cell, every higher organism, the animal/human brain and social structures are Maxwell demons. Control is physically the work to channel change, energy flow, possibly creating cycles spanning layers, creating new layers, forming complex living organisms, possibly just harvesting lower layers to exhaustion.

Intelligence_is_control: By evolution, the intelligence of a control structure is measured by its ability to live longer. This principle is encoded in genes. Specifically for the animal/human intelligence line, changing environments favoured the generalist strategy requiring higher individual intelligence and curiosity to learn in an individual’s lifetime.

While the structures of control are called life, it is actually a process of energy loss and cooling and eventual death. Controlling is living, being controlled is dying. Control concentration (power) is thus the consequence of the individual’s inability to keep its living energy, falling prey to harvesting.

• control_principle: Old intelligence of control says: “In the beginning was the Word, and the Word was with God …” Ethics is a euphemism of regime propaganda: Centralized, dogmatic, softpower.
• locality_principle: The word is not reality.

Regarding money:

• Propaganda: money measures labor
• Reality: money measures control/leverage/ownership

locality_principle

The control_principle is linked to the locality_principle:

• locality_principle: Action is localized and involves time to produce space. Time and space are inseparable. There is no space existing unless local where some action happens.
• control_principle: harvesting of energy/time from layers below is loss of local energy. Energy lost from layers below creates layers above. Special relativity basically says, time lost is less local time.

locality_principle from a human individual:

• Reality is local.
• Try to verify/falsify a description, as description is not the real thing. verificationfalsification.
• Don’t confuse a word with reality.
• Everybody has its own brain to judge, valuate, plan.
• Evolutionary heritage of individual control: emotions (One feels better in a local world, having things under control).
• Local control for local matters.
• Respect for local matters requires protection for local matters.

Intelligence_is_control: farming, warfare, technology

Transitioning now from physics to human economy, the rise of harvesting techniques lead to the caste_system within human society (the layers above).

The big brain of humans compared to other animals developed before the neolithic revolution, putting them at the top of the food chain, within the larger and older control idea of evolution. In the https://en.wikipedia.org/wiki/Neolithic some realized that they did not have to follow herds, but could control them locally.

Large language families hint to a localized starts, with first examples about 12k BP (before present). These people lived without regimes for a long time. Without detail to local realities, actual empires emerged only 5k BP. That is 7k of prospering without empires. The age of empires since then is less. Empires prospered on slavery (meaning broadly controlled humans of various degrees): The high energy harvesting is reflected by the high range of change: We have had now 5k high rate change in the empires layer. It also had evolutionary consequences, the Y-chromosome bottleneck: those harvested could not reproduce.

The empires are linked to a new technology: bronze could produce better weapons. The farmers were not able to protect themselves. With empires farmers started to be harvested. There is no such thing as surplus. Farmers were forced to produce more.

The regime was mostly an individual king able to team up with warriors to have enough brute force (hardpower). With more control the regime’s continuation depended on the ability to organize the control, to record what is under control.

• The first scripts were invented
• Money was invented

Intelligence_is_control means all kind of intelligence from control processes within cells, to plant, to animals with brains, emotional control, rational control of animals, including humans. This information processing technology is what a lot understand as intelligence in a more specific comparative sense. Also the purpose of this information processing intelligence is to control (intelligence_is_control).

softpower/propaganda/diplomacy: A regime is a thinktank: word/writing/money is necessary

• to align the understanding within the elite, within the bureaucracy
• and to be consistent over time
• to influence the subjects, especially via religion
• keep_them_busy (wagesslave/games/social media/information distraction/overloading)

New technologies:

• farming
• machines/massproduction
• books/media/computers/internet/artificialintelligence

New harvesting:

• hardpower/warfare/oppression/coercion
• softpower/writing/money/propaganda/diplomacy/media

Neolithic revolution, industrial revolution, information revolution is harvesting by central design. The technology grew locally, by ingenious tech people, scientists, but was then mass-exploited, allowing the controlling class, the elite, to grow, producing layers above, with slow freezing of control/use structures. Nowadays basic value work needs to support a big control hierarchy above (caste_system).

No_limit harvesting as a game: Writing, money, mathematics are optimizations of control, be it technical control or political. It allowed to build on previous generations, becoming accumulative. Politically the power accumulation led to big empires. no_limit refers to the fact that the control does not aim to maintain an individual or local family. The no_limit accumulation characteristic is inherited to corporations, a regime’s control extension ([no_limit]).

regime_chaos

Written history was unstable, disrupting individual matters by catastrophic events like wars, revolutions, famines, economic chaos, in summary, inflicted by control from above: regime_chaos.

The regimes harvest the individuals and thus have a lot of energy, energy being equivalent to change/variability. The energy is used to increase control:

• hardpower/expansion/wars
• softpower/propaganda
• surveillance/consolidation of power

The leader/regime has little risk, because the risk is delegated to the subjects. The subjects fight the wars.

Regime_chaos is not a decision of the regime, it is rather the conflict between control_principle and locality_principle (limits_of_control):

• The regime has its own locality: The Regime does not know about the plans of its subjects. The result is chaos.
• Subjects have their own locality, because not harvested to death. The regime does not harvest to death, but wants to continue harvesting. Fighting the regime is very risky. Subjects might lose the little life they have.
• Subjects being harvested have little energy/time. Subjects are busy serving their regime. Subjects cannot muster unite force to counter the central thinktank.
• Softpower: The majority of subjects can be programmed by propaganda.
• Hardpower/violence: There is also surveillance and violent oppression to nip resistance in the bud.

Softpower

Religion showed how to do softpower:

• carefully select the narrative
• repeat phrases without much meaning every week in the Sunday mass. People will continue cycling the words in their heads as if they were reality, as if they were their own words.

Regimes do the same via Olympic games, or song contests, or national days, to keep an idea of political states in the heads of the subjects. Tribal in-group/out-of-group thinking from the time before the neolithic revolution can be put to use by the regime. This softpower is a lot less effort for the regime than hardpower. Being harvested, people have no time to think things through and are victims of softpower.

The thinktank intelligence power of the intelligence service of a regime is hard to compete with, unless uniting to compete with it. Keeping people busy with games or social media reduces intelligence: less time to learn, less time to plan alternatives.

Tech people want to control tech out of pure curiosity. “Look, what I can do?” “Wow. I’m impressed. Then you can help me” There are those folks, who have developed the intelligence to live on tech folks a long time before the start of civilization. Tech folks, living in a their tech focused mindset, succeeding to harvest lower level very well, were caught by surprise to see themselves being harvested to such extend.

In the meantime those who control have developed their own technology, the psychology of control. Tech folks are harvested to burn-out, became the providers for a huge caste_system above, and all they get is more and more demanding masters, competing with each other for more control. Tech folks, scientists, never intended a social benefit (propaganda term of those controlling). They were harvested for control and power. “Knowledge is power” for those who’s only goal is power, and that power turns out to have no social benefit at all: just a game to harvest more. If someone talks about social benefit, social contract, ethics, it is a central figure’s propaganda to become more powerful.

The laws, in principle applying for all, do allow registering as corporation. By providing corporation as ownable legal entities, you have the choice, whether you like to be controlled or control. Intelligence is control, so it is natural selection

• wanting to be controlled (the slave, the henchmen, the minions)
• controlling (the master, the villain)

So regarding wealth_inequality the regime is saying: it is not us to blame if some want to control and others want to be controlled.

It is not just George Orwell’s 1984 big brother, it is also the happiness of the Brave New World of Aldous Huxley, and the psychohistory of Asimov and, on the controlled side ,the Zombies and the Morlocks. Now the control psychology has its own infrastructure, with the channels to almost all via social media, combined with AI, they target the fast amygdala, suppressing the cerebral cortex (keep_them_busy).

Propaganda is all that is not in your local world. A regime name, i.e. a nationality, is a just a word producing links between unknown people where there is no reason to, or produces discrimination, where there is no reason to. It is all just a central narrative, and all the zombies follow, and even kill unknown people in wars, because of a word.

Money

Money is the most important instrument of control or a regime. That is also why its usage is enforced. One needs the regime money to survive.

Money can be considered softpower due to its technicality: an instrument allowing unfair valuation/pricing discrepancies (informationasymmetry). Money has also the hardpower backing of the regime’s Monopoly_on_violence.

Money goes back to the first regimes at the end of the neolithic revolution, beginning bronze age, as bookkeeping records of the elite. Money is central to control, since the beginning of civilization. Money measures control/leverage. Money is a control_currency.

money_creation, money_deletion; value_creation

After having established and consolidated the control structures, money becomes the perfect means of control by the regime. It is unlike other assets by the fact that the regime can create it so easily, just a command, just a word, just a number. Zero effort to create money but so much control in using it. Money is an order of the regime.

Money has no inherent value. Actual value_creation is by activities, by work, by labor. The regime must make sure it can buy labor with the money it creates. How does the regime motivate/enforce labor with money? The regime associates taxes to all activities individuals depend on. In order to do these activities people need to labor. This way people associate money with value (fiat_money).

These are inseparable:

• regime
• money
• wageslavery

Regarding taxes: A transaction between buyer and seller could use any currency. They could use their own “IOU” note. There would be no need for a third party, the bank, as the agent of the regime. But that is not allowed. The regime enforces the use of its money, by associating a tax based on a price in the regime’s currency. This way every transaction does need the regime’s currency.

If taxes are enforced to impose a valuation via its money, to then provide that money in exchange for work based on central valuation, one sees the shift from hardpower to softpower. If the taxes and the wages are undisputed because of hardpower, what is disputed is the how much: theory_of_value.

• Labor theory of value (LTV): Regime fixes the labor price and other prices will adapt.
• Subjective theory of value (STV): the valuation is local, to keep one’s control or the surviving. Valuation market: decentralized valuation by many, using their local contexts.

Wealth_inequality, no_limit accumulation, is due to not fully transitioning to market economy. Regimes/Corporations still split individuals into local groups

• with imposed lower than market valuation
• with the purpose to harvest them

The regime imposing valuation by wage makes money measure control (control_currency). The actual valuation by the market results in the no_limit accumulation characteristic.

Same_market_valuation: If the product market were to valuate both, the contribution/work and the product, then the individual would be part of the market and not a wage_slave. Such distribution of valuation control would produces a more fair wealth distribution. Control distribution = wealth distribution.

The fact that fair cooperations are rather rare hints to regime softpower suppression. Regimes and subsequently their corporations oppose contracts involving profit sharing, because they want to keep control.

In valuation/pricing the control power manifests itself, money outs itself as currency of control (control_currency). Pricing is not a fair seller-buyer agreement, but rather an enforcement by title/power, and very subjective (STV = subjective theory of value). Boss pricing of labor, pricing local in space and time, price discrimination by buyer, predatory pricing to eliminate competition, informationasymmetry, lock-in leverage, political price making by leverage, without alternative, without competition. Central regime labor valuation (LTV = labor theory of value) is linked to money_creation. The regime tries to control both. STV to LTV is like locality_principle to control_principle.

Officially though in an otherwise non-coercive, non-violence society, the valuation is by agreement, by contract, assuming everybody valuates to keep its local word running.

Understanding topdown control and limiting_control bottomup depends very much on independent thinking and valuation.

A regime controls a big part of the economy with its money, on the average about 50%, especially in sectors that are key for control.

Historically, only a lot of time after the idea of money by regimes, private money lending emerged, e.g. in ancient Rome. Although money is a very essential part of the regime’s power, it demands expertise to avoid hyper-inflation, which would equate to loss of power to the regime. A regime delegates the money guarding to the central or federal bank, with some independence to keep the inflation at about 2%. The central bank controls the commercial banks.

With private loans, money_creation is not any more a regime privilege:

• Vertical/exogenous money is created by the central bank on regime instruction, and deleted by taxes. The deletion of the money is associated with every economic activity, buying food, having a place to live, … The imposed deletion of the money is essential in forcing people to labor for new money.
• Horizontal/endogenous money is created by a commercial bank loans and deleted by repayment. The value/asset is given by the promise of the debtor: the creditor (commercial bank) must verify credit-worthiness. Horizontal money generation is 2 to 5 times the regime budget. The regime uses it, too, to some extend, as liability in addition to bonds.

value_creation vs money_creation: Price arbitraging, while creating money for an individual, is money circulation/value_creation, not money_creation.

The technicalities of money_creation vary. In the Eurozone vertical money_creation is:

• ECB lending to commercial banks with key interest requires bank securities based on assets. Commercial banks create horizontal money, i.e. loans to individuals or corporations (debtors). The promises of repayment of the debtors are assets.
• ECB buying state bonds directly (called quantitative Easing)

Bonds are tradable loans.

• Government bonds: in the secondary market, not directly from the member state.
• Corporate bonds

Inflation

Taxation of economic activities would not delete inactive money, saved money sitting in private accounts. Inflation is the devaluation of money to tax/delete also unused money. This should drive private money usage but more importantly it allows regime money_creation and thus control, even though there is enough money around. An inflation of about 2% is wanted by the regime.

The inflation drives economic activity (keep_them_busy)

• by consumerism, and thus creates more money_deletion than just the 2% of inflation. Money_deletion allows the regime to do more money_creation, to do more control: money_deletion is value_creation.
• by active investment into scarce asset, driving their prices up

Neither product demand no product supply do change that much in a year. Rather inflation is the result of

• regime extra money_creation and
• market pricevolatility

The regime drives inflation by extra money_creation per year (money_creation - money_deletion).

• In calm times the extra money_creation corresponds to the key interest: Having to pay back more than is circulated per year due to the key interest, demands a corresponding extra money_creation per year.
• If inflation is driven by the market, the regime cannot do the extra money_creation, to make the key interest take money out of circulation. So unwanted inflation reduces the control power of the regime.

Key interest is about 2%:

• EU: ECBDFR, lending ceiling and floor
• US: IORB

Inflation beyond the wanted 2% is subdivided into demand-pull and supply-push.

• Supply-push inflation: Regulatory volatility/chaos from many regimes in a global market produce pricevolatility (tax changes, tariff changes, regulation changes for various sectors, etc). To avoid loss in the supply chain the maximum price is used for calculations.
• Demand-pull: Higher employment, more equal distribution, but also inflation driven consumerism and driving asset prices up as alternative to inflationary money

Both are due to too fast changes in supply and/or demand. Fast changes can only happen due to regimes, inter-regime instability, natural catastrophes, as people by themselves, uncoordinated, have too much statistical mass to be unstable.

Wages of the nocontrol wage_slave society normally do not catch up to inflation. So a very large portion of population gradually falls below subsistence even with a job. Inflation increases the harvesting.

Over a longer period gradually the part of the population that cannot take part in the economy gets bigger. The economy shrinks.

Unemployment

Unemployment is inherent to the regime harvesting system, even if a regime aims at full usage / full employment of its subjects. The regime must keep a certain percentage of unemployment. New or growing businesses could not grow without labor availability. Unemployment money is to keep individuals alive to be harvested when needed.

Reasons for unemployment beyond the wanted percentage:

• topdown control means high churn at the corporation layer due to no_limit accumulation
• over-harvesting/under-valuation. A big portion of low income society reduces demand and slows the economy.
• More wealth concentration also reduces investor intelligence, making an economy incapable to innovate

Unemployment is a symptom of regime chaos, of its limit of control, of its lack of responsibility. In some regimes unemployed people get homeless people: that is harvesting to death. Some regimes admit their responsibility and provide a universal basic income (UBI). An UBI can help to keep essential sectors of the economy alive, alleviating the lost demand due to wealth_inequality. An UBI also alleviates social unhappiness due to over-harvesting, which might lead to political turmoil.

Regime_chaos: Since plutocracy is high accumulate power of regime money by private owners and high influence on regime to save the money from taxation, the regime loses control on money_creation and thus becomes unable to maintain people between corporation havesting cycles. The regime might lose its stable cycling and spiral to a collapse.

Accumulation without limit

Regime money can be used by everybody that owns it, to buy labor and the products of labor. By currency exchange, businessmen and even other regimes, can buy labor in other countries. So the money acquired a value for everybody by the control of a regime.

A new world of control emerges, using the regime’s control_currency to control.

The few in the regime could not think of all things that can be done with the wage slaves. That’s where corporations as legal entities step in. The regime delegates control, simply because it could not control so many activities. A corporation embodies a purpose wage slaves can be used for. A corporation is a control-by-wage license from the state.

• The regime owns its subjects.
• A corporation ownership of wage slaves as an extension of the regime’s ownership of its subjects. Regime ownership titles are not all equal. Private corporation ownership has its own regulations to comply to.

Ownership of land was a question of survival since the neolithic revolution, but was probably not that important earlier. Ownership did involve time, that limits the ownership, that limits the control. Ownership of other people’s labor is quite another thing: There is no_limit any more, as everything is forwarded to wage slaves. Coordination work, working out ideas, can all be delegated to wage slaves.

Maxwell demon control_principle is profitable.

• Distributing control would be distributing wealth.
• More control concentration is more wealth accumulation.

By giving to some control and making others controlled (wage slave), corporations are the regime’s design of accumulation to those who control. The accumulation is without limits and thus an instability by design.

Corporation ownership is a title, a tag, that entitles to harvest the wageslaves. Value_creation is by labor, but harvesting profit is by title, controlled/protected by the regime. This produces a caste_system of control, by design of the regime, on top of which sits the regime itself.

More general, ownership on all kind of so called assets, not just corporations, but also on contracts, on mortgages, on insurances, on pieces of art, on apartments, …, indirectly are also harvesting licences.

• Higher castes acquire money by ownership, characterized also by higher yield, higher return of investment (ROI)
• The lowest caste acquires money by work, characterized by menial drudging with low yield. To unite to have leverage on their valuation would help them, because money is leverage, not labor. There is nothing wrong with physical and mental work. The problem is just the loss of control on their valuation to roles by central title (ownership title).

To the regime all money acquisition types are value_creation. Value_creation is defined by pricing/valuation, and not by actual usefulness. To maximize pricing one needs to maximize leverage. For the regime all value_creation is useful, even non-labor money acquisition methods, as they help the regime in money_deletion via taxes, giving the regime more control power because allowing a bigger budget, and thus allowing bigger control on the working class/caste.

Evolutionary consequences

Being a living organism is being a control system with gene mixes corresponding to kinds/species of control. Individual trajectories in the current environment are linked to the gene trajectories via reproductive success. Genes encode an individual as well as the environment.

Control that has local benefit, like the curiosity to learn one’s environment, or sexual desire, allowing a woman to control a man, was encoded in genes. Evolutionary encoding of fairness behavior (limiting_control) was a co-evolution with the tribal environment. Our psychology of control and limiting_control is still tribal, while the reality has shifted to central intelligence, making people being harvested like farmers harvest animals.

Post-neolithic harvesting of farmers led to a Y-chromosome bottleneck, starting about 5k BP and lasting almost 3k. Marriage as top-down reproduction regulation was probably to keep the caste going, as the elite depended on them. Female dispersal and hypergamy combined with male selection by beauty rather than status, allowed for some gene flow up the caste_system, just not those in the Y-chromosome. Force from the elite, e.g. Rape_of_the_Sabine_women, allowed for some gene flow down the caste_system.

Being just harvested, being just an employee/wage_slave has at stake more than personal survival. Wage slaves have an evolutionary disadvantage. Nowadays this also includes women.

• A female wage_slave has no time and energy to engage and to raise kids. The society raising kids leads to hospitalism.
• Why engage with an employee, with low wage, and unstable job.
• Reproduction with rich (hypergamy) is not possible, because marriage restricts polygyny, although sperm banks circumvent that.
• A rich female corporation owner has a hard time for hypergamy, with so many wageslaves.
• And the risk of losing income is high, if victim of the whim of bosses, with the churn between corporations striving for world domination.

Lower fertility of a society is a symptom of economic over-harvesting. Centrally controlled reproduction through marriage is not helping any more, especially not for women.

Control/power concentration has dire implications, of evolutionary scale, for the majority are being controlled, are losing living energy. Y-chromosome bottleneck is evolutionary example. The development started with farming in the neolithic (neolithic revolution) and continues with exponential dynamics. Regimes, corporations, wage slavery, are and were the biggest danger for every generation and its evolutionary lines. High wealth concentration means high dependence. A sudden change in central thinking and the dependence leads to death, via famines or wars. Centralized suppression of individual control equates to suppression of the evolution of human intelligence on the long run. It is true that the highly complex organization led to a lot more evolutionary lines surviving than among other species. But one war can end many lines very quickly. There is no statistical stability over evolutionary time, if a few individuals can control according their whims. The link to actual local genes gets lost in regime_chaos. From the evolutionary perspective, accumulation of control over evolutionary time, is equivalent to end of humankind.

limiting_control

The problem since empires, since regimes, since corporations, is the no_limit growth of structures. Regimes have reached unbelievable scale, world dominations, several times already in written history. Corporations now grow beyond the size of regimes. The no_limit characteristic is there for both, regimes and corporations.

Tribal evolution has instilled mechanisms of limiting_control: Emotions in group animals, like envy and jealousy, serve as limiting_control (inequity aversion, fairness emotion). Those who did not do limiting_control died out. That emphasizes the importance of limiting_control.

topdown

History of regimes and history of economy has shown that no_limit control is unstable.

Wage slavery, being a harvested labor, produces wealth accumulation at corporation owners. Thus the regime aims at wealth accumulation. But wealth accumulation reduces economic activity and thus taxes. Since regimes try to avoid deficit budgets, to keep inflation at 2%, wealth accumulation reduces the budget and thus the control of the regime. Why does the regime want to reduce its control? It does not, if one sees the wealthy as the regime: a plutocracy.

• Political representatives are made by the wealthy, party-internal, or via campaign support.
• Laws are made by the wealthy: lobbying.
• Jurisdiction is expensive, accessible only to the wealthy.

The little bid of democracy that is left (elections) is just a show of public mood. But that mood is also shaped by the wealthy, more so via social media.

Plutocracy is a state toward regime collapse (regime_chaos), because the regime cannot maintain a long-living cycle.

Plutocracy want people at their disposal, to work for their corporations, so keep_them_poor. Plutocracy non-goals: Economic growth by distributing wealth is not an objective, as that would take away control. Rather economic growth means wealth accumulation growth, control growth to those already in control.

To mitigate the inequality’s effect on growth a regime could do:

• Wealth taxes. How would that fit to the regime wealth accumulation by design (employment = wage_slave)? The original goal of the regime money is to control its subjects. Licensing the same harvesting to privately owned corporations takes away control from the regime to some of its subjects. This wealth concentration is like a money issuer right, without the cohesion within the regime, without responsibility to keep the value of the control_currency. If the wealthy started to spend all of their money it would lead to a huge inflation. But wealth taxes mitigate the harvesting license to corporations only if the associated additional regime spending goes to the victims of the harvesting, i.e. wealth taxes to finance UBI. The regime could do higher deficit budget based on wealth_inequality, like Gini index, without wealth taxes. But that would make the wealthy spend and drive inflation further than wanted.
• Control mitigation spending to reduce control, should
  • financing competition in high yield sectors
  • by a universal basic income (UBI) to allow people to care for local things, renovate, care for children, etc. Sectors of economy of basic importance could be kept from shrinking by an UBI.
  • spending in recreational sectors
  • spending for science and science popularization.

Due to the no_limit accumulation characteristic a corporation inherits from the regime, anti-trust, anti-collusion, no-monopoly competition laws have little effect: A corporation controlling by wageslavery bypasses anti-trust laws: It makes sense to buy the competition.

• On the production side, with mass production, not cooperating would just be plain stupid. Why not minimize costs? Let’s make a (new) corporation we own and control together.
• On the selling side, if the purpose of a corporation is to just make different packaging, different pricing for the same product? Customers hate that, see it as fraud.

Further:

• Local monopoly. There is no competition in my shop.
• Wage standards: Control is for profit, no matter what wage cost. Higher wage cost just goes into the product price and my accumulation is adjusted to meet it. Wage standards are not for the wage slaves, but to avoid an advantage of competing corporations.
• There are other regimes with lower wages, where the local regime’s standards do not apply. A corporation does not need to do human trafficking if the regimes are human traffickers already.

Inter-regime competition: Human trafficking is arbitraging regime wageslavery. Many types of labor can be outsourced to other regimes with worse wagesslave standards. The coercion to use wageslaves or to become a wage_slave comes from the use of wageslaves by the regime itself. Wage slavery is by softpower, actual slavery was by hardpower. That is the only difference. But what does it help, if the survival depends on it in both cases. Inter-regime competition are quite hard limits_of_control of the regime.

Money concentrating

• is control concentration
• is harvesting concentration
• is energy concentration
• is central change rate increase
• is instability
• is a path to economic collapse, regime collapse, wars, destructions.

Structural collapse is synonymous to civilization collapse. The sudden loss of complexity means a sudden loss of many individuals due to their dependencies. To avoid collapses one mast avoid sudden changes, one must avoid power concentration, one must avoid wealth concentration, one must avoid regimes. All change must be motivated bottomup. This makes big changes very slow. Very slow global changes are very important to avoid a civilization collapse. To transition from a regime to a stable state, organization must go bottomup.

Words are easy. Are they reality? Wealth_inequality is regularly measured and turns out to be real. Since wealth_inequality is due to controlinequality, continuing with names like “democracy” is like denying reality.

No_limit control/wealth accumulation will eventually reach a limit by collapse, unless corrected. A corrective adjustment to avoid collapse can happen only bottomup, limiting_control. The more becoming aware of the necessity

• to actively safeguard control/money and/or
• to reconquer control/money and/or
• limiting_control

the more control distribution, the better for the society as a whole, producing a natural stability. The more linking cooperation with co-controlling money distribution, the more economic link to local realities.

bottomup

Without bottomup limiting_control individuals are victims of control. Control_principle is basic and essential: basically all work is control. Regarding money, I refer to the valuation power, pricing power, over control work. Pricing by leverage destroys the value of money as a control_currency, because de-localizing money remove necessary local money (local control).

Whether a political structure is democratic or not is not linked to election, but rather on how much limiting_control comes from individuals.

• If a constitution gives power to control to those elected, it is NOT democratic.
• If a constitution restricts elected individuals to just coordinate control coming bottomup, then it is democratic.

Competing structures sometimes demand fast change, because of some new bottomup technology revolutionizing from below. An elected individual needs to observe the competition and make the local base aware. Change still must happen bottomup. Maxwell control_principle has variants:

• Slow bottomup control is placing the benefit of the individual at the center. Bottomup fits to our tribal psychology: we want to be in control, which includes agreeing to necessary changes, adapting bottomup.
• Wage slavery has not the idea of bottomup and is thus destructive to the individuals.

Energy/money lost to layers above creates structures above in many layers, a rise of complexity above, a caste_system, adding load to the value creating individuals, backfiring via the churn in the higher layers. Big inert complex dependency structures demand very stable control structures, very slow changes.

The actual competition must be on the individual level. The individual has limited time, limited intelligence, there is real competition. But individuals competing with wageslaves is making the individual a slave, too. The imposed regime wageslavery sets the standard, a no_limit wealth accumulation standard.

work_for_control tributecompany: redefining wages as tributes

In a free society cooperation offers are subject to competition, which should actually favor fair cooperations. There should be a sharing of contracts and a fairness rating between them. There are online platforms that compare product prices, but there are no such platforms for working contracts. So one can see the regime’s intention to decouple wages from market value. same_market_valuation is not practiced due to regime’s control hierarchy. Valuation is inherently part of controlling: Controll power means valuation power, means wealth_inequality.

A major step out of control accumulation would be to move from centrally controlled pricing of labor, to pricing of labor by the same market that prices the products of labor: work_for_control of profit distribution rather than for wage.

Long-time cooperation contracts should have the work_for_control principle: The control on the distribution on the market valuation (the profit). Work_for_control could also be called workfor_ownership.

Localizing control also means that central proposals of how that could be done need to be regarded as remote ideas not considering local realities.

Nevertheless here a rudimentary fantasy for a for-profit long-time cooperation:

tributecompany

Market valuation attributed to one’s contribution by the principle of same_market_valuation. You acquire ownership share by work. Ownership share is a local control_currency per company, that is exchanged with the profit shares in regime money. An easy transition is to rename and repurpose regular contribution-based payments (tributes), to not be transactional for labor, but to be ownership shares. The tributes in regime money are accounted to the partners. The ownership share is the balance relative to the sum of balances of the partner accounts. The profit in regime money from the market is distributed according ownership share at the end of the fiscal year, to all currently working and all former partners of a company. Ownership share means your share on the profit, not technical or managerial coordination. A tributecompany has a public registry of tributes and profit allowing current and former partners to verify their profit share. A good profit attracts new partners, keeping the business running, even when founders decide to move on. They can move on without suddenly losing their profit share, although over time it will get diluted.

Cryptocurrencies as Money

A free economy can be compared to statistical physics. There are many actors. Independent comparisons, information processing, produce local transactions, but level out into a collective valuation, collective prices, until a global market establishes in time (more or less stable) and space (over countries, continents and the planet), until the number of transaction are maximal, i.e. fulfill all needs in all remote corners of the planet. Maximum entropy is maximum information (processing) is maximum energy consumption. Limits/setbacks of growth are reached with energy limitation/exhaustion, but new sources, automation and finally AI help out.

Cryptocurrencies (short crypto, fungible and non-fungible tokens) are a very accessible interface and infrastructure for the bookkeeping of real assets by humans and/or trading bots. Cryptos can be the money of the future. What is missing yet, is the widespread adoption, which would make valuation statistical and thus stable.

Introduction

If you have a key to a lock (of a house), then you have access (to the house). The same key-lock principle is behind the private-public cryptographic key. Instead of a physical key-lock we deal with two sequences of bytes.

• The private part is the "key"
• The public part is the "lock" (but normally called "address")

In ECDSA keys, the public key can be generated from the private key. So by "key" mostly the private part is meant.

Having the key gives you ownership. Locks can be combined to produce shared ownership, where more keys are needed to unlock.

In general a token is a hash of some data. The hash of the public key(s) states ownership, either of an addable number (fungible) or of another token (non-fungible). The ownership can be redeemed using the private key(s), by creating a signature, that can be checked against the public key and thus verified by everybody.

In general a transaction has more inputs and more outputs.

Each node in the network has its own interpreter to check the signatures and do other tasks like executing smart contracts. This applies to EVM (Ethereum Virtual Machine), but also to bitcoin and its forks, like bitcoin-cash,

The private keys are stored in wallets. The wallet also cares to make new keys (HD Wallets).

The unspent transaction output (UTXO, Coin) is first created as the first transaction of a block (coinbase), as reward for mining the block. This numeric value is kept limited by network consensus thus can be used to temporarily replace other limited assets, i.e. it can function as money, as long as the network is online. To keep the network running, nodes are motivated to join and stay by block reward and fees.

A small change in data, and the hash is completely different. The network of miners accepts only blocks with a hash less than a certain number (difficulty). For that only (all) values nonce number is tried.

The difficulty avoids that one can provide all the blocks and thus have control over a chain.

Blocks are chained together by the previous block hash (hashPrevBlock). The blockchain forms a public decentralized ledger, secure, because it cannot be changed unless one is able to redo the difficulty of all blocks following the changed one and overtake the network.

The network nodes check that the difficulty is met and wouldn't accept a block otherwise. Nodes build on the longest chain.

The difficulty is adjusted regularly (every 14 days or $14*24*6 = 2016$ blocks for bitcoin) such that the network can produce no more than about one block per 10 minutes.

Money is a collective product. The consensus rules and validation are a collective product. The joint usage of the network are a collective product. Together they make a collective value, they make money (= fiat money).

Time = Value = Transaction

Value can mean:

• an element of a variable: most elementary
• a number: mostly the result of counting values in variables (information)
• human valuation/pricing: this considers human needs
• ethical value: considering human needs, but eluding pricing

The values of a variable are exclusive. The value implies the variable.

The values of the variable must occur for a variable to exist. Selection of values of the variable cycles. Every value takes time or better is a time step of the variable. One cycle is one variable, is one time.

Every variable is also an independent time.

Information is the number of values of a variable. As such information is a quantity characterizing a variable, not a value. But since variables are values for higher level, the information (extension) is an extensive value. It motivates addition and ultimately all other operations.

Most values consist of internal variables. Internal communication produces inertia, because a level has a more or less fixed speed of communication, with a maximum speed for the lowest level.

When one variable separates into more independent variables they also form independent times. The variables get out of sync without communication.

Independent times make their value combinations random. Such a system of independent variables forms an exponential number of value combinations. If $S$ is the number of identical and independent variables of size $n$, $n^S$ is the number of value combinations.

The information speed comes into play when comparing to another variable. Information/Information = time/time = information/time = energy (see earlier blog). While information is conserved, energy is not. The information stays constant even if it spreads to more variables, in the same level or vertically in the hierarchy. $pV = ST + U$ becomes $pV=ST$, if the internal information (energy) $U$ is ignored, because locked up, anyway, i.e. not spreading vertically.

A transaction is the movement of a packet to new coordinates (value = location = selection = owner). In physics, the packet is internal physical information, internal variables/times. In human economy, it is valuated/priced considering human needs. The transactions by themselves form values, a variable, in the observed level. The packet is transacted based on a price agreement. As the transaction is also with information/price (food, gas, fee, VAT), the internal value of the packet (rest mass) is lower.

• Physics: For a variable to exist, the values must occur.
• Economics: For a valuation/price to exist and persist, transactions must occur.

Note

• A transaction is a time step of economy and it has a price.
• Transactions are needed to maintain value.
• The transactions of a product represent a cycle, a variable.
• A product has inner cycles (those of components).
• Products of higher level move slower and have a higher price (mass).
• The economic pricing hierarchy builds on top of basic living cost.

Money, Pricing

In human economics, transaction of physical resources are associated with a (numerical) value through the valuation/pricing process, that takes into account the demand/need of a resource and their limited availability specific to a person or a group of people.

Valuation of a product is a comparison with other products. If one person would do that, it would create its own valuation scale. The major products an individual compares to are due to its basic needs: food, housing, clothing, ... To compare, the person simulates having the product. A product needs to be personally used to have personal value. As the person has limited time values (.e.g seconds per life), a person's total valuation is limited.

Individuals averaged over a large population, or better a large number of transactions, produces money.

We don't use gold coins any more, we are on the verge of not using paper bills any more, either. We are left with only numbers. But the numbers have a value through the trust in each other that they will redeem the number with same valuation. Like, if you helped me for a day, I give you a bill or text you a message, which remembers you, that I Owe yoU (IOU) a day of help, too.

We collect such IOU's, so we don't need to stash food ourselves, because others do it for us. We can redeem our IOU's, when we are hungry.

Money is collective trust in the promises made by others, by the society. The valuation of money rises and falls with honorable and trustworthy behavior.

Valuation varies between people, space and time. Traders calculate with the valuation of other people, and especially use the valuation differences between people (arbitrage). In order to exploit the valuation difference, the trader relies on secrecy:

• that the valuation of one party stays unknown to the other party and
• that the calculations leading to the price offered by the trader stays secret

Secrecy and trust do not go well together,

• Valuation differences, i.e. lucrative business ideas, do not stay secret long, but attract competitors.
• Companies are short-lived, if their products that don't live up to the promises.
• Outright lies, fake it till you make it, regularly lead to gigantic crashes in the finances.

Secrecy exists, but it does actually not matter so much. Even without it there is division of labor (including mental work) due to the expertise necessary and the limited time of one to do all alone. Sharing information without limit, nowadays so easy, boosts the economy.

Traders are like Maxwell demons, like are biological cells, plants, herbivores, carnivores, ..., farmers, traders, engineers, businessmen, investors, ... They all process information in a successively higher level, and can have a positive energy balance from it. Energy is information/time, the higher the level, the slower. But the information packets matter. A scientist has a long curriculum on its shoulder, like a complex protein has a long chemical pathway.

An important criterion in valuation is the marginal profit/loss ($MP = MR-MC$), i.e. profit change by one more/less customer, product or whatever other unit, because it tells in which direction to go to maximize profit.

All this comparison in an economy creates stable prices (more global prices in space as well as time).

The collective comparison produces a common currency. Although just a number, that currency is limited, because also input channels, e.g. via work, is compared to the same scale.

Pricing is not solely based on calculations or statistics, though. Also power hierarchies or human relations play a role. Sometimes prices can even be dictated.

Comparing is work and many people don't spend too much effort on it, also because the effort very quickly surpasses the value of the product. Sharing information, the rating of other people, reduces the effort considerably.

The scarcity (limited supply and demand) is an essential feature of money, just like of every other product.

Scarcity could be named stability of valuation in a statistical sense. It does not refer to one person or one product. It does not mean that an individual should suffer of scarcity. It just means that sudden collective changes of valuation through a change in trust or supply and demand brings some disruption, with winners and losers, and needs time to stabilize again.

For a (stable) valuation there need to be (many) transactions. Transactions need consensus of more people to use the currency. The currency needs to be well distributed over a large basis of users to maximize transactions.

Money, despite varying prices, still represents real resources. In accounting, the real resources are assets, while the money is equity+liability. Assets = money. But it is a local assumption, because the pricing changes. There need to be regular currency adaptations.

The price can change because of more demand of a real resource (assets), but it can also change because the money supply changes.

A sudden change in money supply will change the demand on assets, which will change their prices. The same happens when the asset supply changes. Also both supplies can change. After one-sided changes it takes some time for prices to stabilize again.

If a money supply change reflects the resource/asset supply change, then the price stays stable.

Often there is one currency but many assets. But more generally there are different types of assets, as well as different types of currencies. One can make a currency per product. The currencies have their exchange rates. To compare, one needs to convert to one currency (valuation/pricing). One common currency stays relatively stable, because averaged over many transactions.

A countries legal tender is kept stable by adapting the supply,

• either by issuing new money or
• by buying up money of its currency

A central organization has control by issuing or withholding money. The control is exerted via parameters like interest rate. More money will be issued,

• if the central bank interest is low
• if the state's public spending is high

It is not just the political authority that control the money supply. Basically, those who own, do control. So centrally owned money means central control of money supply, and so indirectly central control of average pricing of products, i.e. the inflation.

General inflation is not just due to money supply, but also by the change in pricing of important products, which are ingredients of a large portion of all products, like energy and work force.

• by central pricing agreements like that for work force
• by change of taxes
• by a change in supply, e.g. by deciding to get out of fossil energy supply
• by a change in demand

Every product is its own currency. A currency is a product like every other. But a central currency is a special product, because it is more centrally controlled than any other product.

Central control would need a lot of information to make a good control. Normally central control is associated with inadequate reaction to changes.

A transaction needs a compromise between the parties. First, the compromise was quite local to a transaction and was done through bargaining. But with more bookkeeping and calculations, larger chains of transactions are taken into account. They lead to narrower price ranges of buyers and sellers. Transactions happen if the price ranges overlap. The bookkeeping and other kind of communication over space and time, like collective price agreements or dictation, make prices more global in space and time, i.e. more stable.

Many local independent decisions normally produce a better stable result via the law of large numbers than by central control. A globally used independent, not centrally controlled, exchange currency would become stable after some time and stay stable unless disruptive events occur.

Note

• A currency is like every product.
• Transactions (supply and demand) are needed for valuation/pricing, of money as well as of real assets.
• Difference in valuation above fee produce transactions.
• Many transactions produce a stable currency in the absense of disruption.

Traditional Money Compared to Crypto

Crypto has all the qualities of traditional money:

• the paper bill number corresponds to a crypto key hash (number), but that bill/number is just the carrier of value and can be exchanged by another paper bill or crypto key (fungible)
• like the paper bill, a crypto-key has a value associated to it
• instead of putting the bill into your physical wallet, you put the crypto key into a digital wallet
• the crypto key is the record of your belonging, like the paper bill you own
• Your physical wallet or your bank account is your bookkeeping, just like the digital wallet is your bookkeeping. The wallet is like an account.

The role of money is to allow bookkeeping.

But for global/long-term bookkeeping, money needs to be stable, else one better considers it as an asset, a product.

Since crypto is not widely adopted yet, it is unstable, because not averaged over a large number of diverse transactions.

Wide adoption needs and produces stability.

Currently crypto is better considered an asset, like a physical product or like shares on a company.

Governments regard a crypto as an asset, like shares.

Shares do get quite independent from the company that issued them. Their price is rather dominated by supply and demand. Only occasionally good or bad news from the company change the behavior of traders. If the link to the company is removed then we basically are equivalent to a crypto, meaning that then both have no links to real assets other then through the valuation via supply and demand.

On the other hand many cryptos are driven by ads and influencers, with a company behind it that organizes that, and also controls the consensus centrally. This is very much like traditional shares.

Cryptos can replace traditional shares: Instead of issuing shares, a company can issue a crypto to finance itself.

• The manufacturer can have its own fungible token to express the market valuation (EIP-20) of its products.
• Or every product item can get its own non-fungible token (NFT, EIP-721, deed). It does not matter how the token is generated. It points to metadata via tokenURI that has more asset information. Ownership is not encoded in the token hash, but with separate addresses, like for fungible tokens.

Market

Market cap(italization) is coin supply times current price of one coin with respect to a FIAT currency.

Cryptos can be bought and sold in exchanges or privately.

The crypto's exchange rate, i.e. its price, depends on the limited supply and demand.

For the demand it must satisfy needs.

• Provide a money infrastructure easily usable via smartphones (or other computers)
• Keep the coin supply limited
• Serve as an exchange currency between other currencies over time or space
• Represent bookkeeping, possibly local for a product or a company
• Trade and exploit valuation differences

For supply, block reward and fee keep the network running:

• Crypto is created as reward for mining blocks: The coinbase is the first transaction of a block and it creates new output without input, i.e. new coin.
• The output can be sold for other currencies, which gives the coin a price.
• Transaction within the network do have a fee to account for the physical resources involved (electricity, computers) to reward the block miner and to avoid DoS attacks.
• Fee burning reduces the supply more, when demand is more, thus working against inflation, and possibly producing deflation.
• Buy back and burn by sending to an unusable address, is also used to reduce the supply.

All cryptos fulfill basically the same goal. That some are valued more than others is to some extend irrational speculation, to some extend limited support from wallets and crypto exchanges, to some extend lack of trust.

Currently, speculation is the major motive. This leads to unstable coins, if there are only big players, because big players decide slowly and keep a trend going, trying to drag others along and win from their movements. There are not enough independent actors to keep the coin stable.

A crypto cannot produce coin forever,

• because computers work with limited width numbers
• because any real resource is also limited
• because a unique consensus does not cover all needs
• because for scalability more networks are more efficient

Bitcoin, for example, reduces block subsidy gradually to 0. The assumption is that fee and valuation can keep the nodes online.

Scalability

The independent movements of a large population to fulfill their daily needs would make a crypto stable. That is the case for large fiat currencies.

No current crypto currency network can process that many transactions, therefore they rise the fee to keep away the masses.

Ethereum can process around 7-15 transactions per second, Bitcoin around 3-7. Second layer networks like Lightning for Bitcoin and Raiden for Ethereum, or sharding (partitioning of the database) are efforts to increase scalability, maintaining security and decentralization.

Second-layer networks reduce fees, because some communication is done off-chain.

Bitcoin has about 13000 listening nodes. A high node count produces more load for transactions, because every node needs to process them.

The fee is an important criterion to choose a crypto.

Exponential growth is a consequence of independent times/actors (Boltzmann statistics). Current exponential fees make the fee market "exponential-exponential". The fee rate should be constant. A fee competition between cryptos can help. But there is also the network competition for more hash power that asks for more reward.

Many different cryptos can be a remedy to the scalability problem. Each crypto can represent a local usage (can even be pegged to a local asset). The coins stabilize each other by exchange sites. Some exchange sites have a site-specific exchange coin as intermediary.

Trading bots can exploit valuation differences of various cryptos, level them out and thus produce a stable coin that can work as money.

Trust

A currency is an IOU. The amount of currency a person possesses, is a promise of society to redeem later with same assets.

A currency is stable if people trust in it, and they trust in it if it is stable.

You cannot trust anybody but the statistics of large number.

Individual decisions should not be made due to currency value, because it ruins statistics.

A Currency must be stable.

• A deflationary currency is bad, because it postpones transactions, and loses the link to real economy
• An inflationary currency is bad, because it prevents long-term planning.

Large fiat currencies are rather stable through the sheer amount of transactions. Stablecoin is normally pegged to to important fiat currencies like the Dollar (Tether), Euro or Yen.

Cryptos need to be trustworthy

• the network needs to be reliable and stay online all the time
• the link to real assets (NFT) must be correct
• The way programming decisions are made, whether centralized or via enhancement proposal publicly scrutinized

Trading Bot

Stability is relative, though. Just as intermediary to an exchange, a short term stability is already enough. A bot can quickly react on changes, exploit them and produce stability, for people to use.

For a valuation to be stable its supply must change according to its demand. The bot can swap falling cryptos with rising ones, leveling them out. This swapping is the result of many bots buying low and selling high, but for them small amounts already matter.

Note

speculation on trends

The principle of speculation is to act before others and gain from others.

If one is first to buy in an upward trend, and first to sell in a downward trend, one earns most. If one is first in the game, one earns most.

• By convincing others their behavior is a result and thus is of course later.
• Otherwise one observes and anticipates the actions of others before they actually happen. Predictable behavior is always losing in speculation.

Buy when price is minimum, sell when price is maximum.

With slow competition:

• buy, when the price starts to increase and
• sell, when it starts to decrease

But, with fast competition, a minimum in local time, is already beyond the minimum, when the exchange serializes independent requests. Then

• buying, when the price falls and
• sell when the price rises

Fast bot competition produces so small and fast vibrations that the currency seems stable for the human eye.

Let's envision a future time where every person has its own avatar bot and their are additional bots in several levels. The ultimate demand is from humans, though. The avatar must see the human demand. For that, currencies must be pegged to real assets.

• Let's assume a currency pegged to a local electricity power station (LOCTRO).
• The demand increases locally in space and time, due to cold weather and electric heating.
• The power station decides to increase the price of LOCTRO to gain on the demand.
• A local consumer bot on electricity (BOTTRO) sees changes in LOCTRO. It exchanges LOCTRO for FARTRO (farther away power station).
• The bot is fast and humans will actually see no change in price in BOTTRO. BOTTRO is a stable mix.
• When all use more electricity, because suddenly everybody charges its electric car, a personal consumption avatar can swap BOTTRO's for other cryptos, telling the person to reduce electricity consumption, to use the bike instead of the EV.
• Investors see BOTTRO increase, such that a larger local investments makes sense. They build a new power station and power storage.
• After the investment has been payed off, competition makes BOTTRO fall and become stable again.

Bots can help stabilize local changes. Speculative human changes are local changes. Bots can help to merge the many cryptos into a stable global money.

Note

• The role of money is to allow bookkeeping.
• A crypto is like money, but the public ledger/network brings along the full infrastructure for bookkeeping.
• More cryptos with (automatic) trading between them are a remedy to the scalability problem.

DEFI and DAO

DEFI: decentralized finance

DAO: decentralized autonomous organization

Cryptos are public ledgers. This does not yet make them decentralized finance, if the consensus rules are centrally dictated. Rather it also needs organizational decentralization that distribute control over the programming of the consensus rules.

The ledger only records transactions. For transactions to increase and become statistical the coin must be distributed. Only in combination with fair organizational rules, that care for a good distribution, transactions and thus valuation of the coin becomes decentralized.

Decentralized finance usually just refers to the public ledger, and the avoidance of a third person in transactions via smart contracts. It does not refer to a fair distribution. For fair distribution the participants in transactions must care for fairness. Fairness is an ethical value of humans, but often cannot unfold due to lack of information, centrally imposed to keep the advantage and power.

The distribution of information is the first step to fairness. The following crypto properties help towards fairness:

• The ledger is public.
• Smart contracts are programmed and can be reviewed before adoption.
• Neither can be modified afterwards.
• Smart contracts can be done without the need to trust a third party.

Extra fairness effort on top of the public ledger is still needed, though. The DAO needs its own purpose, its own constitution, local consensus rules, The data for a specific DAO needs to be made conveniently manageable for its members according to the DAO's constitution.

Bitcoin is a public ledger, but it is yet mostly used by rich people that have money to speculate on ups and downs of its exchange rate. The bitcoin capital is in the hands of a few and therefore not stable.

Everything develops by proposal and acceptance/adoption. So someone needs to (centrally) develop a proposition. If others accept the proposal a consensus has been reached.

A new crypto/blockchain/DAO needs someone to start it. If it gets adopted a consensus has been reached.

But people should also verify that the further governance is decentralized else their investment is laid into the hands of a few, which is not decentralized finance any more.

Source Code

bitcoin-core was the first and is now reference implementation to many forks. The forks, like bitcoin-cash-node, share much code with bitcoin-core and regularly take over changes from bitcoin-core.

Here some central identifiers. Initial v means vector, i.e. many:

CBlock(Header): vtx (nVersion hashPrevBlock hashMerkleRoot nTime nBits nNonce)
CTransaction: vin vout nVersion nLockTime hash
CTxIn: prevout scriptSig nSequence
CTxOut: nValue scriptPubKey
COutPoint: txid n
CChain: vChain of CBlockIndex
CScriptCheck: scriptPubKey amount ptxTo nIn nFlags cacheStore txdata pTxLimitSigChecks pBlockLimitSigChecks
CTxMemPool: mapTx
CConnMan: vNodes
CNode: hSocket, vRecvMsg

Note

hash

Hashes are used for

• transactions (txid)
• public key (Pay-to-PubKey Hash = P2PKH)
• signatures (content according SigHashType + private key)
• blocks (hashPrevBlock)
• proof-of-work (POW): find a nonce that makes the block hash smaller than nBits

While POW's smaller-than task is hard, finding the data exactly hashing to a given hash is almost impossible. Hashing is a trapdoor.

Node

A bitcoin node is a bitcoind daemon running on a computer. Each node is its own time. Parallel times means parallel independent information.

To manage to maintain the consistency of many transactions, transactions are divided into blocks.

A mining node creates blocks (CBlock) that are filled with transactions (vtx) from the mempool of transactions (addTxs). The block is like a page in a ledger.

To make a common ledger, a common time, more mining nodes need to find a way to choose, who contributes the next block with transactions to the chain.

The first mining node that fulfills the proof-of-work, adds a block to to the longest chain. The frequency of blocks is controlled by the difficulty.

CBlockHeader::hashPrevBlock of each block fixes content of the previous block, because changing the content would produce a different hash that would not fit any more to hashPrevBlock of the next block. The hash brings the blocks into a sequence, a chain (vChain).

This ledger is replicated in all full nodes.

CBlock is derived from CBlockHeader and contains the transactions (vtx).

The hashPrevBlock that fulfills the nBits difficulty is based on data in the header (hashMerkleRoot, nTime, nNonce). The transactions are included in the hash indirectly via the hashMerkleRoot field.

The block chain is like its own time. The many different times of all the nodes create one common time.

The result of hashing is random. To find hashPrevBlock that meets the difficulty the hashes per second matter. Whether they are achieved in parallel or sequentially does not matter. This way many slow machines can be as fast as one fast machine. The fastest machine must not be more than 50% of the hash frequency of the whole network, else that fast machine could tamper with a block and then rebuild the chain and produce a longest chain, that would be accepted by the network.

Network

The network has a documented protocol.

Nodes in the network are characterized by permission flags like PF_MEMPOOL,...

The nodes exchange NetMsgType messages:

CConnMan::ThreadMessageHandler
    PeerLogicValidation::ProcessMessages
        ::ProcessMessage
            ::RelayTransaction
            ::ProcessGetData
            ::Process...
                CInv//ventory

A PeerLogicValidation implements the NetEventsInterface interface with SendMessages and ProcessMessages.

Only full mining nodes create new blocks. They need and others can fetch all accumulated unconfirmed transactions (NetMsgType::MEMPOOL/[GET]BLOCKTXN). Other nodes RelayTransaction one-by-one (NetMsgType::TX), so after some time all nodes will have all relevant transactions.

CInv types correspond to NetMsgType commands:

MSG_TX: NetMsgType::TX
MSG_BLOCK: NetMsgType::BLOCK
MSG_FILTERED_BLOCK: NetMsgType::MERKLEBLOCK
MSG_CMPCT_BLOCK: NetMsgType::CMPCTBLOCK
MSG_DOUBLESPENDPROOF: NetMsgType::DSPROOF

Each node constantly communicates with other nodes:

• connman->PushMessage(pfrom, msgMaker.Make(NetMsgType::TX, ...)), ...
• ProcessMessage according to the protocol, especially:
  • fetch new blocks and determine ChainActive (longest chain) (ActivateBestChain/FindMostWorkChain)
  • fetch new transactions as they need to be in the block before the block hash is created

ZeroMQ or zmq is an additional optional protocol to broadcast transactions and blocks.

Transactions

Each of the transactions vtx in a CBlock have

• many inputs (vin)
• many outputs (vout)

A transaction can

• split the vin[i] to more vout[j], to take only part of a vout[n].nValue addressed by vin[i] and keep the rest via one's own change address, or it can
• combine more vin[i] (previous vout[k].nValue) to one new vout[j].nValue.
• or mix otherwise

vin is the n'th vout of another transaction (txid), referenced via prevout:COutPoint{txid;n}.

The unspent coin is important for validation.

cacheCoins:CCoinsMap is a map from vin[m].prevout to Coin{TxOut{nValue,scriptPubKey}} (CCoinsViewCache::FetchCoin()). This map is also stored in a leveldb .lvl database (CDBWrapper). The CBlockTreeDB is also stored in a leveldb database.

The Coin can be fetched from a CTxMemPool with mempool.get(txid).vout[n]. mempool holds enough transactions to check yet unstable blocks (COINBASE_MATURITY) against double spending.

Older transactions are secured in blocks by hashPrevBlock. Many blocks are serialized into one .blk file.

The sum of all vout[].nValue, i.e. GetValueOut(), minus the sum of all the vout[vin[].prevout], i.e. GetValueIn(), is fee.

Fee

The fee of a transaction is Σoutput - Σinput. The fees of all transactions mined into a block contribute to the coinbase, together with the subsidy. The fees are not linked to its original transaction via address keys. The coinbase has no input, but its output is subsidy+fee.

When mining a block the transactions are ordered high fee first. With more transaction available than fitting into a block those with higher fee are chosen, while the others wait for the next block.

There is a blockMinFeeRate(DEFAULT_BLOCK_MIN_TX_FEE_PER_KB) to accept to block and a GetMinFee() to accept a transaction into the transaction pool (g_mempool). The latter is influenced by the maxMemPoolSize configuration. The largest fee of the transaction falling out becomes the minimum of those allowed in. GetMinFee() gets exponentially smaller with a half life of 12 hours (or 6 or 3 depending on how fast the traffic goes down).

The users decide on the fees, but it is a guess, because if too low the transaction will not get into a block. A stuck transaction can be manually prioritisetransaction'ed, thus circumventing currently higher fees. But for that you need RPC access to a node.

The number of blocks in the network are kept at a constant rate (e.g. 1 / 10 min). With constant block size, even a larger network cannot serve more transactions. A larger network only produces more load for transactions.

In nature exponential behavior comes from independent times. The resource usage of a transaction can be considered constant (proportional to the number of network nodes). But those doing transactions are independent and thus produce an exponential memory usage. In the presence or constant memory, the fee will have an exponential behavior, shutting out an exponentially growing number of smaller fee transactions.

getmempoolinfo informs about the current GetMinFee().

GetMinFee() is a rate per KB. The actual fee is GetMinFee().GetFee(<transaction size in bytes>).

On Ethereum the fee required to make transaction go through is called gas. EIP-1559 burns a base fee. Miners only get the difference to the base fee. The base fee changes with the traffic. Burning the base fee means more is burned the more traffic. The supply becomes smaller, when the demand becomes higher. This increases the price of the coin (deflationary coin/token).

Script

Bitcoin has no fields for addresses one spends money to or from. The addresses are buried in a script indirectly addressing public keys as hashes. To redeem a vout[i]->vin[j] from one transaction to another, the following script composition must evaluate to true (done by CScriptCheck):

[ <vin[j].scriptSig> ]  [ <vout[i].scriptPubKey> ]

The first part comes from the later transaction's vin[j].

There are more variants, the most frequent one is P2PKH.

P2PK:

[ <signature> ]    [ <public key> OP_CHECKSIG ]

P2PKH:

[ <Signature> <Public Key> ] [ OP_DUP OP_HASH160 <public key hash> OP_EQUAL OP_CHECKSIG ]

P2SH allows to provide the public keys (or locks) in a script only when actually spending:

[ <only push data to stack> <script> ] [ OP_HASH160 <script hash> OP_EQUAL ]

e.g.:

[ <signature> {<pubkey> OP_CHECKSIG} ] [ OP_HASH160 <hash of {<pubkey> OP_CHECKSIG>}> OP_EQUAL ]

The hash prevents linking an UTXO to the public key and avoids that future more powerful computers can infer the private key from the public. Hashes are also smaller and thus easier to be communicated on paper or screen printout, either via binary-to-text encoding like base58 or a QR code.

ECDSA cryptography (secp256k1 for Bitcoin) allows to recover the public key from the private key. So only the private key needs to be saved.

The public key can also be recovered from a signature and the message/hash that was signed. This is actually how <signature> <public key> OP_CHECKSIG works. To redeem, OP_CHECKSIG needs to have access to the private key. How the hash for the signature is created is known by SigHashType. The last byte of the signature encodes sigHashType for SignatureHash(), VerifySignature(). SignatureHash in script/interpreter.cpp shows what is signed. sigHashType can decide that more of the transaction than just vout[i]->vin[j] is signed, normally sigHashType=SIGHASH_ALL, i.e. the whole transaction is signed in each vout[i]->vin[j] link.

Everybody can recreate the same hash using the same data in the same order, but only the owner of the private key can make a signature of the hash fitting to he public key it contains.

When redeeming, the signature can be published, so that everybody can verify that the token was redeemed righteously (scriptSig).

SignSignature can be used to fill vin[i].scriptSig, i.e. to redeem a transaction.

The sigHashType used in scriptSig does not depend on scripPubKey, i.e. OP_CHECKSIG will succeed if the public key fits to the signature, independent of the content that was signed.

Token

In general the hash of some data is called token. For example, in pay-to-public-key-hash (P2PKH), the public key is the essential part in scriptPubKey. It is thus an ownership token.

EIP-20 (ERC-20) is a specification of fungible tokens on the ethereum network. Coins are fungible tokens: They don't identify an asset. 200000 compatible tokens exist. They are all traded on the Ethereum network, and can thus be exchanged against each other. UNI from uniswap is such a ERC-20 token.

EIP-721 specifies non-fungible token (NFT, deed). The value of NFT's is in its links to physical assets or other non-copyable items like contracts (mortgages and the like).

It is interesting that NFT's are used for images and other things that have no link to real assets, but that consist of data only, and can be copied easily.

OpenSea is a marketplace for NFT's.

Wallet

Coins is an unspent output of transactions (UTXO, COutPoint). To use coins one needs to have

• the private key fitting to the public key hash in scriptPubKey (for P2PKH)
• the transaction hash (txid)
• the index n into vout of txid

The public bitcoin site one can queried with a key hash, i.e. with an address, e.g.:

https://www.blockchain.com/btc/address/1EwpnNBdFJykwxp6X8v9AfZnup9bgmrLE1

Wallets can find transactions with importprivkey.

ScanForWalletTransactions allows to find the COutPoint{txid,n} for the private keys it contains. A wallet then stores the transaction hashes for its keys.

So what is important is only the keys. Only keys need backup.

For anonymity a new key is used for every transaction output.

With HD Wallets (HD = hierarchical deterministic), keys are generated from a seed and thus only the seed needs backup. With it the wallet can construct the keys and then query the blockchain.

Using the same HD wallet, the seed (key, phrase) can be used to regain access to all coins. The HD wallet name should be backed up, too, or the key derivation path.

Non-custodial software wallets:

Bitcoin: Bitcoin, Electrum, Pywallet, ...

Lightning: eclair, breez, muun, ...

ERC-20: bitbox, coinomi, metamask, zengo, brd, edge, trust bitpay (open source, visa functionality, segwit, schnorr)

Mining

Choose one time line (block chain) for more separate times (nodes).

• Make adding a block hard enough by proof-of-work (POW) to last enough human-relevant time to accumulate transactions (10 min).
• Make it easy to check the POW result.
• A random POW algorithm (trial-error) makes two parallel similar nodes about twice as fast, because twice as many trials are done.
• If none of the nodes is faster than the rest together it is impossible to overtake the longest chain.
• A node adds a block to the longest chain (= chain with most work).
• Longest chain with POW is the main consensus rule to choose the common time (ChainActive).
• ActivateBestChain/FindMostWorkChain decides to switch ActiveChain.
• Transactions (and its fees) count only in a matured ChainActive.

POW loop:

• try a nonce until the block hash becomes smaller then a arith_uint256 bnTarget, constructed from nBits (difficulty).

  The arith_uint256 type is used to represent a block hash. SetCompact constructs a large arith_uint256 bnTarget number from a compact uint32_t nBits.

• GetNextWorkRequired calculates nBits, CheckProofOfWork checks.

• A node mines in response to generatetoaddress.

  CreateNewBlock() create a CBlockTemplate, on which one finds nNonce, then ProcessNewBlock()/ActivateBestChain()/ConnectTip()/ConnectBlock()

getblocktemplate is

• an RPC API function
• a protocol

getblocktemplate allows to do mining separately:

• the miner asks the server about some fixed data (nVersion, hashPrevBlock, nTime, nBits) that needs to go into the block via getblocktempate.
• The miner can change hashMerkleRoot, nTime, nNonce to produce a hash that meets nBits difficulty.
• The miner calls submitblock on the server.

For a pure mining implementation in an ASIC, libblkmaker can be used to call getblocktemplate to a server. Then the miner can be simple, concentrating only on changing values to meet the difficulty (mining).

A bitcoin full node (server) can have more miners. This is called a mining pool. The full node is the server. It redistributes the reward to the miners.

Consensus

Apart from fulfilling the difficulty on longest chain, there are other relevant rules that decide, whether transactions and blocks are accepted by the network (MAX_MONEY, MedianTimePast(), ...). The coin is the result of the network consensus rules. The consensus rules decide, which transactions and blocks are accepted. The consensus rules are like a parallel program producing one time: the blockchain.

The nodes could have completely different implementations, if the behavior is the same. Two different implementations would need long testing against each other to produce the same behavior. The nodes are controlled by different parties, but they still choose the same implementation to produce the same behavior. The implementation of peers is not visible, though. If advantages are detected, individual nodes slightly change implementation and behavior here and there. The network adapts slowly by introducing new rules and checks them starting from a specific height or MedianTimePast() time. The upgrades have are named after BIPs or get special names, like taproot.

Changes in the behavior need to be taken over by all nodes simultaneously, or they are backward incompatible.

hard fork

If more nodes do not agree on the new rules, the transactions and/or blocks are mutually not accepted any more, which is a hard fork of the network and the into separate branches.

soft fork

In a soft fork changes need to have backward compatible behavior, to allow communication until almost all nodes are upgraded.

Fork above refers to chain forks. The software that creates a chain can also be forked. The software fork can possibly create a completely new chain with its own genesis block.

RPC Command

After starting, bitcoind exposes its interface as RPC. The RPC names and parameters are also command line arguments of bitoin-cli.

To list commands:

bitcoin-cli help

The simplest way to send money:

bitcoin-cli sendtoaddress [address] [amount]

Further information:

• bitcoin-from-cli tutorial
• In the source code scan for RPCHelpMan.