Bitcoin and the History of Thermodynamics

Here’s a small fact: everything decays, and it’s irreversible.

That was the lesson that came out of the new science of thermodynamics during the 19th century.

And the story behind it is fascinating.

The field gradually emerged as physicists and natural philosophers questioned the prevailing wisdom of the time around the study of heat, temperature, energy, and work.

Today, we’ve grown dependent on inventions that make use of the laws of thermodynamics – heat engines, pumps, refrigerators, power plants, chemical reactions, electricity generation, and gasoline power, among a host of others.

Without thermodynamics’ conceptual foundation, the inventions that make our modern quality of life possible probably would not exist.

Thermodynamics seems like a no-brainer in hindsight. Of course, they should’ve kept experimenting. Of course, it was worth taking seriously. Studying thermodynamics helped us understand how heat and energy behave, which helped us understand how engines work, which helped us build transportation infrastructure. The utility was surely obvious, right? Surely, the scientific community and broader public would have been welcoming – at least curious – of this new frontier, right?

Yes and no. Well, it’s complicated. But super fascinating.

There’s a rich history of the events that led to our current laws of thermodynamics that can teach us a lot about our new emerging technologies – especially Bitcoin.

So what happened?

Two Conflicting Messages

It took many decades of laboratory experimentation and real-world engineering for scientists to peel back the layers of how thermodynamics works.

Over the course of the 18th and 19th centuries, dozens of physicists, engineers, and natural philosophers made contributions others could build on.

One of the first people to bring these ideas to the public was a young medical doctor named Hermann Helmholtz.

In an 1854 lecture, Helmholtz put the implications of dissipated energy into a new, scary context. Since emitted heat in an isolated system is irrecoverable (2nd Law), he pointed out that the total store of dissipated heat in the cosmos must constantly be increasing.

Therefore, the store of dissipated heat would grow until, eventually, everything was dissipated heat.

Written in Helmholtz’s Popular Lectures On Scientific Subjects:

“Then all possibility of a further change will be at an end, and the complete cessation of all natural processes must set in.”

He was referring to what is now termed The Heat Death of the Universe.

As you might guess, the public’s reaction was unfavorable.

Can you blame them?

Remember, this is the 1850s. The clash between traditional religious teachings and Metaphysical Naturalism was just starting to take shape. The ideas coming out of thermodynamics had a microscopic sliver of mind-share at the time.

Despite the fact that it was already an uphill battle, thermodynamics proponents were essentially telling people:

• There was no higher meaning in nature.
• The universe is doomed to an inevitable “heat death.”
• Nature exerts a tax in the form of emitted heat.

It’s no surprise that these messages were totally unacceptable to most people.

And it wasn’t just the educated public. The new worldview had a particular impact on scientists who held more traditional religious positions. One such individual was William Thomson, a physicist who had been raised in the Presbyterian Church.

Thomson – who had studied and even contributed to this new science of thermodynamics – was caught in the middle between the biblical literalists and the liberal compromisers of progressive development. He didn’t fully identify with either side.

So he created a compromise.

"Humans were enjoined to be stewards of the creator's gift of energy so as to minimize the inevitable waste."

He was happy to note that humans didn't have the option to restore unavailable energy so it could be used to do work – that was God's job.

Now that's a nice middle ground, isn't it?

The lessons coming out of thermodynamics were so inconsistent with long-held, established religious views that people designated this as a "tragic view of the world."

It seemed sad and pointless to view ourselves and our universe as decaying bags of matter that eventually just fall apart. The church’s more comforting message – that the world is eternally stable and created by God – assigned humans a higher purpose.

The mental model that the universe is irreversibly wearing down is admittedly a difficult one to accept.

Our natural tendency is to resist breakthrough new ideas & technologies. Like Thompson, we cherry-pick the parts we’ll accept.

But one thing is clear: had these new ideas about thermodynamics never emerged, we would live in a vastly different (and probably less advanced) world.

The concepts of thermodynamics undergird many technologies we take for granted every single day. If you have heat and air conditioning, you have thermodynamics to thank. If you’ve ever used a vehicle with an engine, you have thermodynamics to thank.

I argue that Bitcoin is following the same pattern of acceptance as the science of thermodynamics.

We 21st-century humans benefit immensely from the groundwork and controversy those in the 19th century had to work through. Most people couldn’t tell you the first or second laws of thermodynamics. But it’s important to acknowledge that a fight had to be fought by many smart people to bring these world-changing ideas to the public’s general acceptance.

Today, we’re swinging between two conflicting economic ideologies:

1. Bitcoin & the Austrian School of economic thought → Economic decision-making happens at the margin, and humans don’t need more motivation to consume. Absolute scarcity has been engineered via Bitcoin and provides the strongest foundation with which to build an economy. The network parameters are maintained by incorruptible distributed software, and that’s a giant leap forward in how to organize a free market economy.

   
   

2. Governments’ established economic authorities & the Keynesian School of economic thought → Governments are the best avenue to control and stimulate the economy by increasing the amount of aggregate spending. Everyone will be better off if one central entity has the power to control the money supply. Those central entities will not abuse that power.

Two wildly conflicting messages.

Bitcoin is thermodynamically-consistent money.

There’s plenty written about Bitcoin mining, but I’ll paste this explanation from Scientific American:

“[Mining is] The process by which nodes of a cryptocurrency network compete to securely add new blocks of transactions to a blockchain. Units of the currency are the reward—and hence, a financial incentive to ensure security. Mining involves downloading the latest version of the blockchain's transactions for verification, then using brute-force computation to randomly search for the solution to a difficult mathematical puzzle created via hashing. The first node to discover the correct solution “mines” that block, adding it to the blockchain and claiming the reward associated with it. Humans control nodes, but the competition has nothing to do with skill: simply, the more raw computing power a miner applies toward the solution, the more likely he or she is to find it—a process called proof of work.”

In Bitcoin exists a unique combination of processes that make the network fully subject to mathematical scrutiny. And the significance of this is not immediately clear to most people.

In physics, you can run calculations based on laws that remain consistent 100% of the time. For example, the ideal gas law (PV=nRT) represents the relationship between pressure (P), volume (V), amount of gas (n), and temperature (T). We call it a “Law” because it can be represented mathematically as a universal constant.

Progress has room to happen when a foundational system contains mathematical constants. Bitcoin’s hard-capped supply of 21 million is the closest we’ve ever gotten to a monetary supply mathematical constant.

Thus, we’re much closer to a mathematical certainty. Not a mathematical certainty that Bitcoin will pan out--that’s up to humanity and the educational effort we build--but a mathematical certainty that in the same way 2+2 will always equal 4, that 1 Bitcoin will always equal 1 Bitcoin.

Personally, I’d rather save my time and energy in a monetary system that functions as a machine, not a political apparatus where corruption and coercion are baked into its fundamental inter-workings. I’m not a scientist, I’m just a writer. But I know which unchanging foundation I’d rather stand on.

Bitcoin sits on top of the laws of physics. Fiat currencies sit on top of politics. The laws of physics don’t change, while politics changes daily.

As Harvard Psychologist & Author Steven Pinker writes:

“The.. ultimate purpose of life, mind, and human striving: to deploy energy and information to fight back the tide of entropy and carve out refuges of beneficial order.”

Not to get woo-woo metaphysical on this topic, but Bitcoin seems to be our best possible tool for mitigating human-driven disorder in our monetary system (curbing entropy) while also remaining thermodynamically consistent (requiring external energy to function).

The question is not whether we can prevent entropy (what fiat currencies try to artificially do) but how we can understand and work with it.

Like the science of thermodynamics, Bitcoin is a breakthrough worth fighting for.

FURTHER READING & EXPLORATION:

If you found this interesting, I highly recommend The History of Science: 1700-1900 via The Great Courses, a series of lectures, all of which are interesting and illuminating.