Bitcoin and Epistemology: Rationalism versus Empiricism

Peter R

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Aug 28, 2015
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Bitcoin and Epistemology: Rationalism versus Empiricism

The block size limit debate has given birth to an epistemological question: How do we know Bitcoin’s nature? Can its nature be deduced a priori from our innate knowledge, the rules defined in Satoshi Nakamoto’s white paper, and the protocol encoded into his reference software? Or can it only be known a posteriori through observation and experience? The purpose of this thread is to examine the question of Bitcoin’s nature from the perspectives of rationalism and empiricism, in the context of the block size limit debate.

Rationalism holds that some propositions are known to be true by intuition alone and that others are knowable by being deduced from intuited propositions. The Rationalist may hold the view that Bitcoin has a 21-million coin limit or a 1 MB block size limit, based on deductive reasoning from the rules enforced by the Bitcoin Core source code. Such a Rationalists might believe that the code represents some immutable truth and then his understanding of Bitcoin follows from axiomatic deductions from that premise.

The Empiricist rejects the Rationalist’s intuition and deduction, believing instead that knowledge is necessarily a posteriori, dependent upon observation and sense experience. The Empiricist questions the notion that Bitcoin has a 21-million coin limit, instead observing that its money supply grew by 50 BTC per block for the first 210,000 and then 25 BTC per block ever since. The Empiricist rejects the idea that Bitcoin has any sort of block size limit, having observed previous empirical limits at 250 kB, 350 kB, 750 kB collapse in the face of increased demand.

To the Rationalist, the Empiricist promoting a block size increase might appear as an enemy intent on ripping apart the truth that he took as self-evident. To the Empiricist, the Rationalist appears irrational because the Empiricist has never accepted (nor rejected) the premises that the Rationalist holds as foundational (there was insufficient empirical data). Indeed, the block size limit debate is a debate over the very nature of Bitcoin. What is Bitcoin’s nature? Was it carved into stone or is it a creature of the market?
 
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awemany

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Aug 19, 2015
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To the Rationalist, the Empiricist promoting a block size increase appears as an enemy intent on ripping apart the truth that he took as self-evident. To the Empiricist, the Rationalist appears irrational because the Empiricist has never accepted (nor rejected) the premises that the Rationalist holds as foundational (there was insufficient empirical data).
Emphasis mine. So the rationalist might have the truth as the enemy from the Empiricist's point of view? Good luck ... :)
 
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Zangelbert Bingledack

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@Peter R
What is Bitcoin’s nature? Was it carved into stone or is it a creature of the market?
It's a creature of the Core devs, of course. Anyone who doesn't like Bitcoin (Core, of course!) can go back to using fiat, of course, not altcoins of course ;););)
 

cypherdoc

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Aug 26, 2015
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i'm a bit of both, i think.

being one that got in near the beginning, my beliefs around Bitcoin could only really be formulated as a Rationalist projecting forward into the future. that rationalism was based on what i gleaned from the code and how it should be relatively immutabel going forward. the 21M is the central tenet behind my support and hence investment backing. what i didn't see back then was this 1MB cap that is turning out to be a hindrance to further adoption, imo. this i have found out through Empiricism, ie, backwards looking analysis of stress tests, price, and user growth along with numerous other data points.
 
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Peter R

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Great points, @cypherdoc!

Rationalism and Empiricism are lenses through which we can understand how we gain knowledge. Neither is better than the other and both are important for making progress. We are all part "Rationalist" and part "Empiricist" but it's nice to look at questions from both extremes in order to find the middle ground.

In my opinion, the Rationalist was important around the first halving: the Empiricist had no faith that the halving would be successful (and thus no faith that Bitcoin could be hard money). Without the Rationalist part of ourselves, we would not have had the requisite faith to envision Bitcoin's success.

Now we have the opposite problem: the Rationalist is fighting to maintain some rule which he mistakenly believed to be an immutable part of Bitcoin's nature. It is now time for the Empiricist to show that the rule is hurting Bitcoin and that the 1 MB block size limit was never part of Bitcoin's nature anyways.
 

Peter R

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Is Bitcoin's block size "empirically different" or "technically the same" as Bitcoin's block reward?

Without a priori knowledge of the Bitcoin source code, it is trivial to empirically determine that Bitcoin's inflation rate is 25 BTC per block (and 50 BTC prior to the first halving). From the following animation of real Blockchain data, it is clear that Bitcoin strictly adheres to a particular inflation schedule.



However, it is very difficult to empirically determine whether Bitcoin has a block size limit. Instead we first see evidence of some sort of "obstruction" at 250 kB, giving way to a new obstruction at 350 kB, followed by 750 kB and today an obstruction near 1 MB. A reasonable guess could be made that the present obstructions at 1 MB may give way to new peaks at a higher block size.



Hat tip to @dgenr8 for the raw data.

Link to combined graphic.
 
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Peter R

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Here is a version of the block size distribution chart color-coded by "fee pressure".



Basically, green means that fees (measured in BTC/byte) are decreasing, yellow means neutral and red means increasing. I was expecting that we'd see pressure build when the "obstructions" are visible and drop when the obstruction is removed, however, that wasn't been the case for the 250 and 350 kB peaks.
 

Zangelbert Bingledack

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I'm starting to see the beauty of this approach. If the market is really in control and not the devs or the "consensus rules," then the blocksize cap is only illusory or temporary until the market (via the network of nodes and miners responding to investor intent) tells us otherwise. I say "or temporary" because one characteristic of the market is that although it adapts, it doesn't do so at infinite speed, as it is willing to weigh a little short-term pain against jumping the gun. The market (via the network) may respect the cap while it can easily do so, but if the market is really in control we should expect the limit to be ignored once that becomes a BTC value-positive thing to do - but the market must balance investor sentiment around these magic numbers, so final result is not perfectly clean "cap is illusory."

What this approach does sort of say is that code in an implementation or injunctions from Satoshi or any dev cannot have any lasting effect if they go against the market.

Some more along these lines here:

 

Pecuniology

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@Peter R

"[A] Rationalist might believe that the code represents some immutable truth and then his understanding of Bitcoin follows from axiomatic deductions from that premise."

In the formulation in the OP, both the Empiricist and the Rationalist are passive observers. However, where there are schools of thought, there are agendas and gatekeepers.

The Empiricist might be a faux-Empiricist, whose underlying motive is—as the Rationalist strongly suspects—to corrupt Bitcoin's true nature and to deform it into something that fits the Empiricist's Chaoist agenda to clog the Bitcoin network with spam. Basically, the Empiricist might be either an Illuminati minion or at a minimum a useful idiot.

The Rationalist might be a faux-Rationalist, whose underlying motive is—as the Empiricist strongly suspects—to commit a kind of financial Munchausen by Proxy on Bitcoin by turning it into a financial Bonsai Kitten, so that the Rationalist and his Ordoist cabal can profiteer by proffering solutions to the problem that they have created. Basically, the Rationalist might be either an Illuminati minion or at a minimum a useful idiot.

If we now draw a 2x2 matrix with Empiricist and faux-Empiricist on one axis and Rationalist and faux-Rationalist on the perpendicular axis, we get:

Empiricist vs Rationalist: An unending religious dispute

Empiricist vs faux-Rationalist: The Empiricist's worst fear

faux-Empiricist vs Rationalist: The Rationalist's worst fear

faux-Empiricist vs faux-Rationalist: A contradictory set of agendas
 
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nerdfiles

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We have good reasons to believe that a posteriori necessary truths and contingent a priori truths probably exist. Nevertheless, something is pragmatic to the C-series of timezones. I've just connected here what I believe to be a powerful roster of thinkers: David Lewis's "counterpart theory", John McTaggart's demonstration of the unreality of time, Anthony Braxton's dialogical space of "world creativity", Crispin Sartwell's "epistemic minimalism", and Satoshi Nakamoto's P2P FSM for money supply delegation.

I think the epistemological discussion centers on the platitudes of justification for conformance with the protocol at any given order of the blockchain. Leveraging McTaggart's schemas of time, I assert that the nature of the blockchain is not temporal, that it involves no change. Blockchains are similar to natural kinds, in that they are sparse or fail to denote at all. Conformance with such a thing's nature requires significant epistemic resourcefulness, such that platitudes of knowledge require various axioms like the Robustness Principle to glue together various observations of the causal correspondence aspects of blockchains to mathematical statements which are truth-apt.

I think instead of the question — What is the nature of blockchain? — we should be focused on the question: what conceptual role does the blockchain play? As we explore the intersections of public consciousness of blockchains, what insight does our discourse itself bear on the Moore's Law constraints? Very little, but our expression conjoins the communicative texture of reality with the expansion of its real form.
 
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