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"Bitcoin Is Venice," a book by Allen Farrington and Sacha Meyers, describes the renaissance of sound money.

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This is an article in a series of adapted excerpts from “Bitcoin Is Venice” by Allen Farrington and Sacha Meyers, which is available for purchase on Bitcoin Magazine’s store now.

You can find the other articles in the series here.

Let us begin with a thought experiment: Bitcoin’s history mirrors the history of mixed martial arts (MMA).

Consider that prices emerge from action, and the truth of prices comes from experimentation. It is not dictated. It is discovered iteratively. Every transaction spreads knowledge, inching a price toward a better consensus, yet consensus itself is a moving target.

MMA has gone through many iterations from its roots in arts like judo to the form we know today, and it continues to undergo this process through the natural experiment that every individual fight represents.

The power of prices is the process of dynamic discovery that underpins their emergence, not the fleeting consensus of a specific moment in time. The price is never right, but prices are as right as can be hoped for at that moment. Attempts to coerce prices without the ability to change the reality they communicate are, therefore, bound to run into trouble. And yet we do not seem capable of accepting the truth of prices whenever it is inconvenient. To ensure that consensus can arrive at valid social truths, we require systems or institutions that withstand attempts at coercion and which tap into decentralized discovery.

Martial arts are a fitting case study, and an encouraging allegory for all that follows. A few decades ago, they were under the grip of bullshitting coercion. Today, they are thriving under a marketplace of ideas.

In The Beginning Was The Fight

 “It's kind of crazy when you think about the history of martial arts... Since the dawn of time, people have been trying to figure out better ways to fuck people up. Since they figured out language and figured out how to teach skills they've been working on techniques. [And not] until 1993 did we really know what worked.”

–Joe Rogan, “The Joe Rogan Experience MMA Show #98 With Luke Thomas”

Wrestling is probably the oldest sport in the world. The earliest evidence for it dates from cave paintings in France over 15,000 years old. We also discovered that most holds practiced today were known in ancient times. Boxing is a little younger, depicted as far back as the third millennium BC in Sumerian relief. The reader might therefore be forgiven for believing there is little more to learn about the art of fighting. And yet, the modern world has only learned which fighting techniques are truly effective in the last 30 years. Few sports have evolved as much in recent decades, fewer still tracing their lineage to prehistory.

As Rogan alludes to above, 1993 marked the birth of the Ultimate Fighting Championship (UFC). UFC spawned a free marketplace of fighting ideas called mixed martial arts, or MMA. Before, charm and authority shielded much of martial arts from scrutiny. Competition was limited and the truth of stylistic superiority could not be definitively established. The UFC along with its famed fighting arena, the octagon, created an environment where competing hypotheses could be systematically tested. With nowhere for falsehoods to hide, truth might finally stand a fighting chance.

The recent evolution of martial arts serves as a unique case study to understand the ways in which ideas are created, tested and spread. Instead of arguing about a hypothetical judo versus karate fight with your mates after one too many pints, the UFC would run the experiment for all to observe. Instead of judging a given martial art by how cool it looked in a movie, it would have to prove its efficacy against a skilled, motivated and resisting opponent. Deference to a sensei would no longer suffice. Mere decree would hold no value. Traditions would be questioned and schools humiliated. Others would emerge from unsuspected corners of the world. In that sense, we can say after 1993 that fighting stopped being theoretical. It became practical.

We will evaluate the evolution of fighting using three settings: the movie set, the dojo and the octagon. We will loosely link each with the three ancient Greek modes of persuasion: pathos or emotion, ethos or authority and logos or reason; and three different ways of learning: inspiration, rote and praxis. We will see how ineffective ideas were spread and what would eventually combat them: ideally a front kick to the face. This is the story of how the UFC unleashed the competitive forces of free markets onto martial arts. It is, by extension, an allegory for the power of competition in incentivizing the search for and discovery of truth.

The Movie Set, Or The Appeal To Emotions And Aesthetic Knowledge

“It is impossible for somebody to lie unless he thinks he knows the truth. Producing bullshit requires no such conviction.”

–Harry Frankfurt, “On Bullshit

Starting in the 1960s, Hollywood was largely responsible for the spread of Eastern martial arts to a Western audience. Many of today’s greatest martial artists were drawn in by movies such as Bruce Lee’s “Enter The Dragon” or Jean-Claude Van Damme’s “Bloodsport.” The romantic image of a skilled fighter swiftly disposing of a dozen goons on his way to glory is more than enough to make most kids search for their nearest kung fu club.

Unfortunately, for many, their unrealistic expectations were rewarded only with bullshit. Hollywood looks to sell movie tickets, not rigorously test fighting techniques in realistic combat scenarios. Movies spread ideas and techniques of martial arts to resonate visually and emotionally with their audience and generate box office revenues.

Ancient Greeks dubbed this method for convincing people pathos, an appeal to emotion. You believe me because you like me. What you learn you know (or you think you know) because of how it makes you feel; it feels right. It is a distinctly aesthetic way to acquire knowledge. It is pleasing. It is calming. Its forms are smooth, symmetrical and flush.

Knowledge arrived at by this form of inspiration can of course be legitimate, but we can only know this by providing a proof. If practical, as opposed to deductive, a proof requires a test. But perhaps these fighting methods are never supposed to be tested, only admired. In fact, the point in these circumstances is precisely to avoid such a test at all costs. It is the feeling of knowledge that must be preserved; not the fact of it, or likely lack thereof.

No matter how good these movies are — and some are bloody good — they put form over function. A punch no longer travels the shortest distance to its target. It takes a dramatic looping detour. Street fights rarely end up on the ground. They are perfectly choreographed across streetscapes. The street ceases to be an interactive terrain of combat and becomes instead the inert setting of a melodramatic dance. If not the dance, then certainly the drama is compelling enough for the audience to suspend its disbelief, which is when the virus strikes. We buy some of the extravaganza because of how pretty it looks and we emotionally bond with the hero. Yet long after the credits have rolled and the lights have been turned back on, moviegoers will still associate karate with near superhuman feats. Most know it's all exaggerated, but we probably will still believe a black belt is someone to fear.

In moderation, a serious martial arts school might resort to breaking boards to attract new members, a useless practice never taught in a self-respecting regimen. Taken to the extreme, we get fake martial arts that teach you to channel life energy or chi into your strikes.

This is total fantasy. The emitters and receivers of these ideas alike are ambivalent as to their real effectiveness. Their assessment is based solely on how it looks and makes them feel. This is as divorced from empirical testing as it gets. The dynamics are like those of cult members accepting indoctrination purely for the sense of belonging it can bring.

The Dojo, Or The Appeal To Authority And Codified Knowledge

“Education is an admirable thing, but it is well to remember from time to time that nothing that is worth knowing can be taught.”

Oscar Wilde

You must bow before entering the dojo. It’s tradition. It’s respect. It’s Japanese. It is a show of deference to authority signaling a willingness to learn from the master. Unlike in fake martial arts, students of real martial arts believe in their teacher and her craft because of her accomplishments and standing in the wider community. This is akin to the trust we put in police officers and government officials. We might not be able to directly assess the veracity and deservedness of their claim, but it stands to reason that many others have done so. Ideas are tested for effectiveness through an intermediary.

The dojo spreads ideas by appealing to authority, or ethos. The knowledge we derive we learn by rote. As a child might memorize her times tables by performing a kind of mental operation, so too she learns her karate steps by repetition of a physical operation. The knowledge has been codified and transmitted.

One of the greatest such teachers — or sensei — is Kano Jigoro, born in 1860, eight years before the Meiji Restoration when Japan began to industrialize. This period also marks the abolition of the samurai warrior class. Its three main disciplines were: sword fighting — or kenjutsu — archery — or kyujutsu — and unarmed combat — or jujitsu. As the samurai class began to fade, so did its knowledge. Enter Jigoro. While not a samurai, Jigoro trained in martial arts and became well known for his meticulous recording of the jujutsu techniques he deemed most effective. He described his work askeeping what I felt should be kept, and discarding what I felt should be discarded.” Old masters sought Jigoro to share their techniques in the hope they would not die out. These masters accumulated hard-won stores of capital in the form of knowledge gained through experimentation. Unable to maintain, let alone nurture, replenish and grow these stocks themselves, the masters looked for someone they hoped would. They feared their knowledge would depreciate entirely, leaving nothing behind. Jigoro offered the means to avert such an epistemological disaster. He called his new school judo, the gentle way.

Given the task at hand and the high quality of the result, Jigoro seems to have achieved wonders. Judo remains one of the more effective martial arts and is a great foundation for aspiring fighters. But its flaws were inherent in Jigoro’s method. By choosing what to keep or discard, he acted as the authority. We might say his doctrine acted as a server, and all who followed were merely clients. Of course, as a single server with no exposure to feedback, the doctrine itself invited self-induced vulnerability. The rigid structure Jigoro created shielded judo from outside criticism and internal experimentation alike. Students defer to their sensei and dojo rules prohibit using techniques from another tradition.

What if I punched you before you got close enough to grab my collar and throw me to the floor? It’s not allowed. You may only compete against other practitioners of your art. As a result, the art slowly loses any grasp of the reality of consequential combat and turns into a game played against itself. Don’t strike, don’t grab the trousers, don’t use leg locks, don’t flick the genitals. Don’t check if it works.

The rigid techniques and rules of a given school tend to lead it to evolve like a species trapped on an island. It becomes hyper-specialized for its environment. But what if the environment changes? The chink in a dojo’s proverbial armor can appear during an exhibition match pitting two styles against one another. In 1963, boxer Milo Savage fought judoka Gene LeBell in a contest meant to show the superiority of American boxing.

Things didn’t go as the organizers hoped. LeBell threw Savage to the ground and choked him into unconsciousness. It was the first sanctioned mixed martial arts fight in the United States. When two very different hypotheses meet, we may get surprising results. There is in fact no way to know for sure without a fight. It must be tried empirically. We might say it cannot be modeled. Even if we could perfectly mathematicize the fighters’ abilities and parameterize the dynamics of the fight, the result would still be computationally irreducible. Why simulate the entire universe when the universe will happily simulate itself?[i] Why not just watch the fight?

Another seminal exhibition fight occurred in 1988 when kickboxer Rick Roufus fought Thai boxer Changpuek Kiatsongrit. The Thai fighter won with a single technique. He kicked Roufus’s legs until they stopped working. The technique is common in Thai boxing but was rarely used in American kickboxing. After the fight, Rick’s brother, Duke Roufus, said in an interview:

“I hope that people realize that Thais, if they fight our rules, they’re not gonna win. And we’re not gonna fight their rules. We experimented tonight but we found out it’s not worth it. It doesn’t take too much talent to kick to the legs.”

Duke eventually became one of America’s best Thai boxing coaches. He realized that kickboxing had not yet developed an answer to this simple but effective technique. It was fundamentally unpredictable, but now that an experiment had been run, the truth was out. The challenge now was to systematize such learnings.

The global martial arts community, nascent as it even was, had to find a way of testing techniques repeatedly by running empirical tests rather than aesthetic comparisons or thought experiments. Only then could we hope to discover the truth.

The Octagon, Or The Appeal To Reason And Practical Knowledge

“A true partnership between the people on the ground managing holistically and the researchers supporting their efforts needs to start with mutual respect. But since the time of Descartes, and the beginning of modern science, society has so elevated the status of the academic researcher and so lowered that of the land manager that generally the researcher speaks with more authority on management today than the person actually managing the farm from day to day and producing food. And this is so even though farmers and pastoralists were the ones who discovered which plants and animals could be domesticated, and then bred thousands of varieties from them several millennia before scientists existed.”

–Allan Savory, “Holistic Management

The Gracie Challenge was an open invitation to martial arts schools in the Los Angeles valley: come fight a member of the Gracie family. Kung fu, judo and karate practitioners all rose to the challenge hoping to demonstrate the superiority of their art. The grainy footage, most of which dates from the early 1990s, shows a consistent story. The Gracies took their opponents down to the ground and submitted them with a choke or joint lock. Pretty kicks and punches were no match for someone versed in ground fighting. The Gracies’ art is now known worldwide as Brazilian Jiu-Jitsu (BJJ). BJJ is a cornerstone of modern mixed martial arts training. But in the early 1990s, it was virtually unknown.

Brazilian Jiu-Jitsu’s story starts with a roaming Japanese emigrant named Mitsuyo Maeda. Born in 1878, Maeda studied judo under its founder, Jigoro. He traveled the world, reportedly winning over 2,000 professional bouts, many against practitioners of other arts. He eventually settled in Brazil where he taught a version of judo with a high emphasis on ground fighting. He called it jiu-jitsu. One of Maeda’s students was named Carlos Gracie. The art spread through the family and was for a time known as Gracie Jiu-Jitsu.

Although BJJ’s techniques are like judo’s, its culture and training methodology are not. BJJ encourages playful experimentation. New techniques are constantly developed and tested by the community. In comparison, judo has an official list of techniques that can only be edited by an official body. Whereas judo operates on a client/server model, BJJ is truly a peer-to-peer martial art; whereas judo focuses on competition within its community, BJJ was from the start focused on testing itself against other arts; whereas judo seems intent on honing an aesthetic equilibrium, BJJ is a dynamic process: never settling, always looking to discover its own flaws and improve.

The veracity encoded in judo must be trusted; the veracity encoded in BJJ can be verified. The measure of BJJ’s success has always been effectiveness. It does not bow to authority nor look to convince with aesthetics. It appeals to reason, or logos, and it grants knowledge in the form of what James C. Scott calls mētis, in his magisterial “Seeing Like A State,” which we reference repeatedly. Of this form of knowledge, Scott writes:

“Mētis is most applicable to broadly similar but never precisely identical situations requiring a quick and practiced adaptation that becomes almost second nature to the practitioner. The skills of mētis may well involve rules of thumb, but such rules are largely acquired through practice (often in formal apprenticeship) and a developed feel or knack for strategy. Mētis resists simplification into deductive principles which can successfully be transmitted through book learning, because the environments in which it is exercised are to complex and nonrepeatable that formal procedures of rational decision making are impossible to apply. In a sense, mētis lies in that large space between the realm of genius, to which no formula can apply, and the realm of codified knowledge, which can be learned by rote.”

Mētis — hard-won, discovered, evolving practical knowledge — is needed to act, and where the necessity for human action exists, the knowledge it allows the actor to generate comes about in a helpfully, practically reflexive manner. Scott writes:

“We might reasonably think of situated, local knowledge as being partisan knowledge as opposed to generic knowledge. That is, the holder of such knowledge typically has a passionate interest in a particular outcome. An insurer of commercial shipping for a large, highly capitalized maritime firm can afford to rely on probability distributions for accidents. But for a sailor or captain hoping for a safe voyage, it is the outcome of the single event, a single trip, that matters. Mētis is the ability and experience necessary to influence the outcome — to improve the odds — in a particular instance.”

The mixed martial artist does not want to win a moral or an aesthetic victory, nor does he want to win the hypothetical or the median fight; he wants to win this fight. He has a passionate interest in the particular outcome of his own victory and the avoidance of the physical pain that would come with his own loss. He is deeply motivated to learn in the moment; to treat every action and reaction as an experiment that can improve his performance. He does not want merely to observe the outcome: He wants to influence it.

Back in Los Angeles, Rorion Gracie was looking to reach a wider audience. The family’s wins against local martial arts schools spread its reputation across the valley, but not far beyond. In 1993, Rorion created the Ultimate Fighting Championship. It would have “no time limit — no rules” just like the challenges. Fighters from all styles would be invited. The Gracie family enlisted Royce Gracie not because he was their best but because his slim frame would make his victory even more of a statement. Royce went on to win the first UFC, defeating bigger and stronger opponents with techniques most had never seen before. BJJ’s effectiveness could no longer be denied.

In the 28 years since, much was established — almost none of which could have been predicted, and certainly not modeled from mathematical models of fighting. Entire arts like aikido were shown to be ineffective and flashy striking arts like kung fu or karate were outcompeted by more prosaic wrestling or boxing. Arts mostly unknown a few decades ago like Brazilian Jiu-Jitsu or Russian Sambo[ii], both descending from judo, are now considered among the most effective. Today still, new techniques are emerging like the calf kick, which looks to cripple the opponent’s leg by hitting a nerve behind the knee.

Each time two fighters step in the octagon, an experiment ensues. Techniques from all arts are empirically tested for effectiveness. Success means victory. It is not a popularity contest, nor do authority figures decree what does and doesn’t work. The mat doesn’t lie, as the BJJ saying goes. Try it and see. It’s the only test that matters, and only the truth will emerge.

Going For the Finish, Or The Tap Out

“Stop trying to hit me and hit me!”

–Laurence Fishburne as Morpheus, “The Matrix”

The rules of the UFC have drastically increased the cost and reduced the returns of peddling fake martial arts. Bullshit artists can now be called out and the “arts” they espouse have been unequivocally shown to be ineffective. It is not enough for an art to hide behind a veneer of respectability. Authority first needs to prove itself in combat lest it be ignored or even ridiculed.

By introducing a space where fighting ideas could be empirically tested against a creative, motivated and resisting opponent, the UFC heralded a Golden Age of discovery. The result called mixed martial arts is ever evolving, never static. It is not a destination, but a process. It is not a list of techniques but a mindset to test ideas and adopt any that proves effective in combat. It took Jigoro’s insight of “keeping what I felt should be kept, and discarding what I felt should be discarded” and scaled it beyond one man to a community of purposeful actors.

The UFC established new incentives to discover, preserve and protect truth in a combative but respectful way. Even though its fights are violent affairs, it convinces through non-violent means. It appeals to reason. Unfortunately, until recently in human history, non-coercive means of convincing others were necessarily social. And as such, they suffered from Karl Popper’s “paradox of tolerance” where the tolerance of intolerance leads to rule of the latter. In a society of pacifists, the lone dissenter becomes the king.

Violence has only ever been prevented by one of three means: inherent human goodness, perceived benefit from cooperation, or credible or enacted threats of violence greater and more terrifying still. An appreciation for elements of all three is precisely the rationale for learning martial arts, and self-defense in general: That the good and the brave might defend not only themselves, but can cooperate with those who cannot defend themselves, by threatening the malicious with greater inflicted costs than they expect in illegitimate gains.

This may all sound intellectually impressive at first glance but is really nothing more than pointing out that civilization is superior to a state of nature. That the encouragement of capital and deterrent of morality (i.e., “civilization”) have historically been the best and last defenses against violence has given the immoral a clear incentive: Stigmatize and ridicule morality, demonize the honest formation of capital, or infiltrate the institutions intended to support either (voluntarily established or otherwise), and their prospective violence might generate higher returns.

But now this equation features a novel variable, and one tinged with historical irony at that: After millennia of compounding technological advances taking us from the sword and shield to the longbow to the trebuchet to the handgun to the tank to the dreadnought to the fighter jet to the atomic bomb, humanity has discovered a technology that only resists and disincentivizes violence, and has no other use.

In short: Bitcoin fixes this. In long: the remainder of “Bitcoin Is Venice.”


[i] David Deutsch makes a similar point in the first few pages of “The Fabric Of Reality.” He asks the reader to ponder the possible utility of “an ultra-high-technology ‘oracle’ which can predict the outcome of any possible experiment, but provides no explanations,” concluding that, “but its usefulness would always depend on people’s ability to solve scientific problems in just the way they have to now, namely by devising explanatory theories. It would not even replace all experimentation, because its ability to predict the outcome of a particular experiment would in practice depend on how easy it was to describe the experiment accurately enough for the oracle to give a useful answer, compared with doing the experiment in reality. After all, the oracle would have to have some sort of ‘user interface.’ Perhaps a description of the experiment would have to be entered into it, in some standard language. In that language, some experiments would he harder to specify than others. In practice, for many experiments the specification would be too complex to be entered. Thus the oracle would have the same general advantages and disadvantages as any other source of experimental data, and it would be useful only in cases were consulting it happened to be more convenient than using other sources. To put that another way: there already is one such oracle out there, namely the physical world.”

[ii] Both descend from judo. Jigoro truly was special.

This is a guest post by Allen Farrington and Sacha Meyers. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.