The Bitcoin Village Commons

Metatechnologies and Semicommons

Bitcoin is a metatechnology. Moreover, it is rare metatechnology because it directly enables the creation of semicommons, much like it was with medieval Village Commons.

The Bitcoin Village Commons simultaneously curates rules for an overarching open-access commons as well as those for private use cases within semicommons. The former fuels the search of technological developments beyond blockchains; the latter fuels the search for uses beyond money.

Metatechnologies

The trouble you face in trying to place a value on a technology is compounded when the technology in question is actually a metatechnology.

A metatechology is one that is capable of realizing extensions of a foundational technology depending on the particular use at hand. To the casual observer of the history of a metatechnology, what stands out are distinct technologies rather than a distinct basis. Metatechnologies possess the remarkable ability to morph from one technology to another based on emerging contexts and the shifting needs of its users.

How do you possibly estimate a definitive social value for a metatechnology when it is nigh impossible to apprehend all of its fundamental uses at a given point in time? Just when you seem to have defined its benefits and identified its costs, a metatechnology transforms itself for use in a new and previously unforeseen application, leaving you scratching your head about whether you had truly grasped the depth of the technology’s applications. Those who were once skeptics identify a use that they can finally endorse and become believers; those who were already believers find themselves having to modify their basis for belief again and again.

Metatechnologies tend to be rarer than hen’s teeth, for not only do they rest on a solid foundation of unimpeachable concepts, they must also coalesce those theoretical ideas into several practical insights for a myriad of realizable solutions.

My favorite examples of metatechnologies would include toolmaking (from lithic technology onwards, this is the oldest of them all), wheeled transportation (of material and man), written language (tangible history), meditation (and its various incarnations), heat engines, the internet, semiconductors. And Bitcoin.

To this short list you might add several others. However, the point of import is that each metatechnology must represent not just some climactic paradigm shift that leaves the destinies of human societies completely altered, but with several such shifts.

It is little wonder then that the significance of a metatechnology is better appreciated in retrospect, with the benefit of the lapse of some requisite time for the metatechnology to erect several subordinate technologies. In other words, metatechnologies provide the overall plot in the arc of a story, not just its characters.

A Rarer Kind of Metatechnology

Given this rarified definition of a metatechnology, it should be clear that they are devilishly hard to come by. While it is obviously true that the occurrence of such momentously transformative technologies is accelerated by the abundance of extant ideas, on the whole they remain incredibly elusive.[1]

Yet, even among the select group of metatechnologies there are some that are rarer still. These are the Koh-i-Noors among the brilliant diamonds, and what makes them so singularly unique is that they also create semicommons. In other words, these metatechnologies establish both an open access system, a commons, and a system for the restricted use of subsequent developments that occur within.

Before we consider the thrust and significance of what this means, let us first consider a simplified typology of commons, presented in Figure 1 below, to help us along with the narrative.

There are two aspects to any commons: First, the manner in which it provides public access to an exhaustible resource, and, second, the manner in which it governs the use of the exhaustible good by the included set of users. Variations to these aspects give us four types of commons.

When access is open and use of all resources within the defined area is unrestricted we get the traditional commons, such as the proverbial village pasture shared by all farmers or an ocean bank that is shared by fishermen. The ‘tragedy of the commons’ arises from situations where the individual incentives of users lead to an overuse of the resources and a subsequent dilapidation of the entire commons.

The obverse of this situation occurs when access and use are both heavily restricted. This creates an anticommons, where the tragedy is one of suppressing interest in the commons and, as a consequence, underusing the resources it contains.

Both commons and anticommons are well-examined in the literature. The other two types of commons, unfortunately, garner much less attention. Gated commons are interesting because they provide a method for controlling access to the commons, but are not directly interested in monitoring use. Think here of annual fishing licenses or even all-you-can-eat buffets.

Semicommons take the opposite approach: they permit open access to the commons but provide a system to restrict use of the resources within. Patent systems serve as good examples of placing emphasis on restricting use.

Figure 1: A Commons Typology

When a metatechnology erects a semicommons it does something special: It creates open access to the broad technology it introduces (the foundational technology) and provides a mechanism by which to restrict usurpation of economic rent that is created by employing its subordinate technologies. It does so not once but repeatedly.

The Bitcoin metatechnology enables the creation of semicommons. This, in a nutshell, is what marks the Bitcoin metatechnology as having transformative potential for human progress.

In the rest of this article we shall contrast two metatechnologies to highlight essential features about their respective abilities to create a semicommons: Open-field farming and Bitcoin. Crucially, the example also helps make the point that, when the premise of a semicommons breaks down, the social and private benefits from the metatechnology are imperiled.

The Bitcoin Village Commons

Ever since the advent of agriculture, some 12,000 years ago, there have been numerous innovations in the organizational processes adopted by social groups that pertained to best exploiting the land that surrounded their settlements. There is some very convincing evidence, for example, that by 7500 BC, at the very latest, crop rotation was being practiced in the Levant.[2] This is significant, because it portrays a society that combined the practice of animal husbandry with agriculture in an incipient form of ‘farm management’. It was the birth of a collective effort to manage an agrarian basis for a settled society. An effort, that is, to build a Village Commons.

Among other innovations in farm management to build a village commons, the manorial feudal system was especially interesting. Exactly when it first appeared is highly uncertain. For example, besides its obvious and usual association with medieval Europe, there is ample evidence of its practice (under different names) in countries as far apart as Japan, India, China and Ethiopia. Among much else, what this system gave birth to was the open-field farming system.

Open-field farming is most closely associated with medieval England, where there are extensive records of its practice. It comprised a system of farming for land held in common by the inhabitants of a village, the population of which was usually between two and three hundred individuals, or less than a hundred families.[3]

Figure 2: The Manorial Basis for a Village Commons

The ideas of open-field farming can quickly get quite complicated, but its essential features can be defined as a composite of three types of commons that, taken together, comprised the overall village commons:

1. A Boundary Gated Commons: Common ownership of a defined forest (called the ‘waste’) that surrounded the village and effectively demarcated its boundaries, with a system of private use-rights for its resources;
2. An Arable Lands Semicommons: Common access to arable land, and individual ownership of strips of land (combined into furlongs) within;
3. A Livestock Semicommons: Common care for a grouped herd of individually owned livestock, and common ownership of a pasture and a meadow used for the collection of hay and for common grazing.

The Boundary Gated Commons essentially established a limit to the size of usable land for the village; by defining the perimeter it essentially delimited the maximum size of the village commons, as it were.

This boundary-setting exercise for the village commons is often missed when we focus attention only on either the shared arable land or the livestock; such an approach leads us to consider either arable land or the pastures to be the real commons. The importance of the Boundary Gated Commons goes beyond just setting boundaries. For example, the practice of pannage — which consisted of letting livestock forage in the wild wastelands — is entirely overlooked as a private benefit that is accrued from participation in the overall village commons that includes the wasteland semicommons.

In the case of Bitcoin, the idea of a Boundary Gated Commons is related most directly to the hard constraint or cap on the number of bitcoins and its codebase. Slightly softer are the constraints that arise from feasible technological and resource limits manifested as maximizing hashrates and minimizing mining costs. While use rights within are open, access to this Bitcoin Boundary Gated Commons entails a cost, chiefly that of buying bitcoins or contributing acceptable code. Much like it was for the village commons, the Bitcoin Boundary Gated Commons outlines the size of the overall Bitcoin Village Commons.

The second and third types of commons — The Arable Lands and Livestock Semicommons — are critical features of an open-field farming system.

The arable land was divided into two, three or even four sections, corresponding to different seasonal crops during the course of a year. At least one section, however, was always left fallow for a season, permitting livestock to graze upon it and, in the process, fertilize it naturally. The cultivated sections were divided into strips usually an acre in length, ostensibly because that was how long an plough could be driven by an ox without rest during the course of day. Several such strips, scattered over all the arable land parcels available to the village, belonged to a family and were passed down through the generations.

The pasture, meadow, forest and the arable land that was left fallow, all permitted individuals to have their own herds, but the village commons also incentivized common care for the animals in the village. This was done with a system that established a rule requiring increased effort from those farmers whose herds represented a larger proportion of the aggregate herd.

Thus the open-field system included a rule-based mechanism for a correspondence between the net social surplus from the commons of the village to the net private benefit of the farmer. A firm basis for establishing a private-to-commons correspondence is, of course, crucial to incentivizing participation and the requisite effort needed to maximize yield.

In a Bitcoin Village Commons, building, developing and strengthening the base layer is akin to building the essential infrastructure for the overall manorial village where we live. They key difference is that, rather than appealing to a feudal lord for permission to access the commons within, we buy our rights of access: A bitcoin is much like a strip of land or our private herd of livestock.

Bitcoins grant a buyer with access to the Bitcoin Village Commons where a number of associated commons can be developed. Each such subordinate semicommons provides a commons-to-private correspondence for the economic surplus it generates, and, broadly proportional to the size of the buyer’s access rights, she stands to benefit in this surplus.

In this sense, more real than imaginary, The Bitcoin Village Commons encourages a ‘land grab’. HODLing bitcoins is akin to buying rights to live in a manorial village that is limited in size.

Owing to the scarcity of such access rights, no matter how many subordinate semicommons are built within it — for smart-contract environments, transactional money, intergenerational stores of value, and so forth — each resident benefits directly or indirectly.

Lessons for the Future: Despoiling the Commons

It is worth remarking at this juncture upon the significance of the rules that helped reify and enforce the processes of the Village Commons. Some of the key rules included:

1. a rule for the exclusion from and entrance to the Village Commons, or the Boundary Gated Commons;
2. a rule for the payment of rent to the Lord of the Manor and of the provision of labor to cultivate his demesne (retained arable land not part of the Arable Land Semicommons), and
3. a rule for the transfer of individually owned rights to land within the Arable Land Semicommons across generations of a family.

Contrasting this to the Bitcoin Village Commons, we might note that there are some similarities, such as:

1. market-based rules for purchasing bitcoins and, thereby, for gaining access to its semicommons, such as the Lightning Network;
2. rules for providing resources to ‘cultivate’ or mine bitcoins, essentially providing a Boundary Gated Commons for the Bitcoin Village Commons, and
3. peer-review consensus rules for contributing to the codebase (yet a lack of rules on paying for the service provided by developers).

Over the centuries, the self-serving and socially destructive logic that undergirds a tragedy of the commons was, ironically, not an existential threat to the Village Commons. Much more damaging to it— indeed, terminal in its effect — was the system of enclosure.

With the demise of feudalism, rights to the ownership of land were extended beyond the lords to an expanding class of the gentry. It proceeded by systematically selling off all of the semicommons rights to land use, which led to open fields being cordoned off into smaller and smaller tracts of land.

Enclosure essentially swallowed the open-field system . It replaced the open-field system in England almost entirely by the end of the 16th century, effectively making land ownership by commoners so prohibitively expensive that they had little choice but to provide labor for the owners of the now enclosed farms. Indeed, by 1750 agriculture in Britain became the least labor intensive in the world.

That enclosure was good for maximizing the rent surplus from land for agriculture seems to make sense. After all, the land was now private property, and the landowners had all the incentives in the world to maximize its value. Yet, data suggest that any increase in rent from open-field farming to enclosure was actually rather minimal. [3]

What happened was a violation of the semicommons architecture. In terms of Figure 1 above, enclosure effectively altered the manorial farm system from a semicommons to an anticommons; familial rights were rescinded and access to the land was curtailed. Intensification of agriculture put an end to an open-access system that had given incentives to develop and curate social activities that gave private benefit.

What lessons does this have for Bitcoin?

Most essential is that of jealously guarding the commons principles that undergird the Bitcoin Village Commons. While there is no lord that can arbitrarily rescind the rights of bitcoin holders and dismantle the Bitcoin Village Commons, there will always be threats that hold potential to replicate that scenario. Rehypothecation is one such threat. Rehypothecating bitcoin collateral effectively introduces a fractional reserve money multiplier to the Bitcoin Economy, diluting the value of the its Boundary Gated Commons!

For this reason, the truism of “not your keys, not your bitcoin” is the motto of the Bitcoin Village Commons, or very much ought to be, for bitcoins represent vital rights of access and use in the commons; they are only inalienable rights when they are yours and yours alone.

As the Bitcoin Village Commons matures and begins to curate a multitude of semicommons yet unimagined, it holds potential to reimagine the Village Commons for generations ahead.

[1] In this regard, I highly recommend Joel Mokyr’s fantastic treatise, The Lever of Riches: Technological Creativity and Economic Progress. His work never fails to inspire thought.

[2] I recommend reading Andrew Moore’s very engaging article in the August 1979 issue of the Scientific American.

[3] Dierdre McCloskey’s work on commons in England is fantastic. Much of her work is available on her website. Her 1991 paper in the Journal of Economic History is a masterpiece in economic history.