In this paper, we introduce investors to a decades-old subculture of eccentric software-makers who resist the oppressive and ethically-fraught traditions of corporate employment. We encounter how they set out in the 1980s to make commercial software irrelevant, and how their mission expanded into a war against all forms of institutional oversight. We examine their approach to organizing volunteer software production in service of this war, and how their methods produced successful software. We present Bitcoin as the next logical innovation in volunteer-based software development: an ad hoc human coordination machine, which uses unpaid, unplanned contributions in lieu of a salaried workforce. We will examine how a volunteer-based system can resolve moral hazards endemic to software infrastructure development in a commercial setting, if the participants in the system adhere to a strict set of rules. We look at how a distributed network of machines is used to enforce and maintain rules setup for human participants, even if those participants hold key roles in developing the system software. Finally, we consider the cost savings achieved in a system built with volunteer labor, and how the economics of these “permissionless blockchains” might undermine the value proposition of full-time software employment. We relate this outcome to the original goal of the software makers to make institutional software uncompetitive, and examine who will be caught in the crossfire. As a coda, we ask: what is the larger socio-economic impact of systems like Bitcoin, and who benefits?
Timeline to Bitcoin
What's wrong with the cryptocurrency boom?
Historical background on the phenomenon
Understanding how the key participants organize
Human consensus in the cryptocurrency networks
Machine consensus via Proof-of-Work
How value accrues in Proof-of-Work networks
The investment outlook
Popular conceptions about price trends
Appendix II: Reading List
Source material for this paper, beyond the footnotes