Summary of The Bitcoin Paradox

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“Everything is politics,” the German novelist Thomas Mann once said. That observation remains true even when complex technologies and mathematical formulas govern financial transactions online. In an insightful editorial, social scientist Simon DeDeo uses the example of the blockchain to illustrate that humankind hasn’t moved beyond the basic norms of social interaction that enabled human communities to thrive for millennia. Readers who fancy looking at the bitcoin debate in a broader context should find DeDeo’s take intriguing.

About the Author

Simon DeDeo is an assistant professor in social and decision sciences at Carnegie Mellon University and external professor at the Santa Fe Institute.

 

Summary

Despite its technological and mathematical complexity, the blockchain that enables the trade of the bitcoin cryptocurrency fundamentally remains a social construct. For bitcoin currency transactions to function, all network members need to agree on a common set of rules. The sociological concept of “common knowledge” forms the basis for the existence of the chain itself and the rules that govern it. As a bitcoin trader, you know the transaction rules yourself, and you can be sure that every other trader knows them as well. Furthermore, you know that every network member you interact with...


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