Money Games

I want to reduce my understanding of money to the absolute essentials.

The plan is to use excessive simplifications to create a mental gameboard of pieces, rules, and points or goals. Nuance and strategies can then be applied on top of the simplified framework.

Money is commonly understood as something valuable that other people want to own. It is usually represented as a number. The money or point system we use depends on the era and community we live in. The goal of most players is to maximize their points and win all the benefits, status, and glory that comes with victory. How the game is played depends on how the rules and points are defined.

The players can be individuals or collectives. They can choose to cooperate or compete.

What changes from money game to money game are the points, rules, and players. Switching out the parameters changes the game but leaves a root truth intact – and the root truth of money is a competition over scarcity. We evolved in a world of scarcity and still live on a planet with limited resources, so humans have an instinctual respect for scarcity. Even in the digital world, we recreate scarcity in the form of attention (likes and views), authority (blue checkmarks), or simply limiting the numbers of available units (NFTs and ETH or BTC).

Why money matters

Money will never go away entirely because it’s useful. It is a story we tell ourselves about what we want and it’s a way to easily compare different things.

Money helps people who wouldn’t normally trust each or have any way of communicating share an understanding of what is valuable. Go to any market in the world and without speaking the language, it is possible to get a meal if you have the money the seller wants. This can be done with trade and barter, but money makes the transaction smoother. It’s a common language and just like language, it’s largely arbitrary. Also like language, it has profound effects on how we see and behave in the world.

We value what is difficult to obtain and we value what other people want. That will never change. It is why money will always matter even if it looks very different between eras. Instead of fighting this pattern, we should embrace money’s quality as a stand-in for scarcity and limited resources. What should be fought is any system that is unjust, unfair, and involuntary.

Money in its purest form reminds humans that we can’t control everything. Like nature, money doesn’t care about our feelings.

The free market is all the money games people play – all the transactions – combined into one giant scoreboard with the same point system. The scoreboard reflects the metrics or statistics people want to extract from the state of play between players at a given time.

Collectively playing the money game can help us determine what is valuable. The free market – when truly free – is uncontrollable and can offer useful signals and information for society in a way that is impossible to predict.

At the opposite end of the pure money game is complete centralized control. A planned economy. These economies tend to fail. It has not been possible to effectively plan and dictate peer-to-peer transactions. Perhaps you can in the future, but it hasn’t been possible in the past.

Money also acts as a hedge against violence. If a game is simply an interaction between two or more players, then the most brutal game is war. There needs to be no shared understanding or agreement in war. The only objective is to take. Take resources, take lives, inflict damage and suffering on your opponent(s). War is the game with the highest stakes.

The current money game has legitimate qualities. It was born out of a reshuffling of world powers in the 1940s and led to a relatively stable, peaceful, and prosperous period. Though never perfect, games of politics, money, and even sports give humans an outlet for war. Competing over made-up points releases the tension that can build up when different tribes of apes are forced to live next to each other. Money can be a good thing.

99% bullshit

The earth is physically limited and money has acted as a symbol for what we simply cannot replicate to infinity (store of value). With money, we can trade using a commonly understood system of points (medium of exchange). And we can easily communicate how much we value something (unit of account). But as our reality becomes more digital – more digitally abundant – money and scarcity can take new forms: ETH, NFTs, ERC-20s, etc.

As scarcity becomes more obviously an abstraction, it also becomes more of two things:

  1. A circle jerk

  2. An open experiment

Money has the highly reflexive or mimetic quality where if more people want the thing, the more value it has, so more people want it. Thirstiness rises as FOMO and YOLO mentality start to dominate until the last buyer is spent. When the climax happens, it’s a mess. The bigger the circle, the bigger the mess. This is often referred to as a bull market and crash. What was once wanted by all is now wanted by practically no one and the trend goes in the opposite direction.

Money is not all a joke, but it’s a more of a joke than most people want to believe.

James P. Carse defines finite games as being played to win and infinite games as being played to continue playing. Money is a finite game on top of an infinite game. The infinite game contains an enduring thread of truth while the finite games are mostly bullshit.

The problem with money is the current system – the institution of money – that we have now, which is at its core deeply coercive. Players are born into the game and forced to play with massive advantages or disadvantages. Between certain countries, the discrepancies are obscene.

The current system is oriented toward the short term. The goal is to win the game by maximizing your points even if that means poisoning our planet; imprisoning and ostracizing those who don’t want to play; forcing people to work demeaning jobs; or optimizing sadistic algorithms to capture our attention and piss us off.

“Evil is not the inclusion of finite games in an infinite game, but the restriction of all play to one or another finite game.” - James P. Carse

Legit money

Humans have used many types of money over the years. We’ve played different versions of the money game. Why should we believe we’ve discovered the perfect one? The last one? One way to look at Ethereum is simply as an evolution of these games.

Ethereum is an open experiment which allows for every possible type of finite game on top of it – all connected to the base root that no one controls. Everyone on the internet can access the new money game. New waves of people can create money games that suit their own needs and interests.

People can try variations of planned economies. People can volunteer to participate in as many experiments as they want until they get it right. It may turn out that socialism works, but only as niche economies on top of certain free market conditions. Ethereum lets us test out the idea. It may turn out that some versions of planned economies can work and work well.

The expansiveness of the system allows for endless experimentation. A paradox: Ethereum allows for an infinite number of ways to play with scarcity.

Open public blockchains like Ethereum show people what money is made of – the guts and bones of it. After some questioning and learning, most people reach the conclusion that money is a story about legitimacy and trust.

If belief creates money, then we can make new types of money using a shared layer of trust and consensus: the thing blockchains are good at. Ethereum solidifies legitimacy as shared software with a common database. It opens games of legitimacy, which includes money games, to a wider audience of both players and game makers.

The existence of a different money game exposes the current one as absurd because they are both absurd. NFTs are great at showing the subversive power of absurdity.

Ethereum represents a new board with new rules. There is one base layer of the game, which guarantees everyone plays by the same rules. On top of the base, any variation of arbitrary status game is possible.

Money is not that serious. It’s made-up points for a made-up game. The difference now is we can see the rules more clearly. And more people are becoming aware the game is anything we collectively agree to. In these decentralized and permissionless systems, we can volunteer to participate and choose which games we want to play. Only those who want to enter the arena engage in the competition. Everyone else should be spared with no consequences. If this money games sounds better than the one we have, then the next step is to collectively migrate value and legitimacy from one system to the next. The process is not orderly, but it can be done peacefully.

Ethereum is not magic. It’s just a first step in what will hopefully be better forms of money. We don’t know what those forms of money will look like because the point is not to arrive at a destination but to move the game forward. The point is to keep everyone in the game.

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