Bitcoin has experienced 100% uptime in the last 9 years, arguably one of the most notable technological accomplishments to date. In a fully decentralized manner, without explicit coordination, a piece of distributed software has been running continuously for the last 9 years. Google, Facebook, banks, airlines - virtually any organization that you can think of has not been able to achieve this feat despite enormous amounts of funding, brain power, and the economic incentives to do so. It sometimes feels as though Bitcoin is some sort of AI: a piece of software with self preservation features strong enough to deter the coordinated efforts of hackers, governments (who may fear the loss of their monopoly on money minting) or even the drug lords, child pornographers and ransomware pirates who irrevocably taint some of its coins.

However, at this point, it’s apparent that the reason Bitcoin is resilient may not be in the code itself, but, rather, in its behavioral and psychological implications. Digital scarcity, coupled with our ability to craft narratives, turned computing primitives into a digital store of value and medium of exchange. Consequently, Bitcoin became something worth investing in, optimizing for, and even organizing around. Which is why hundreds of hobbyists "mined" the first few million coins, why thousands of unconventional investors started to build an ecosystem around it, and why millions of people now have wallets that hold several coins.

Whether it’s a store of value, a medium of exchange, unit of account, or something entirely different, Bitcoin is valuable because it is now unstoppable.

In the last couple of weeks, we saw the launch of the decentralized prediction market Augur. But prediction markets themselves have been used for years as a means to "price risk" and reduce uncertainty. In fact, in the early 2000s, I was avidly using Newsfuture, an early prediction market which allowed everyone to bet on the outcome of thousands of events. Prediction markets work well when the event is something that cannot be controlled or when the event is one that requires mass coordination. Some events on the other end can actually be fully "triggered" by a small group of people, and if their odds are sufficiently unlikely, their price may eventually become a bounty.

A couple days after Augur launched, assassination markets started to appear. What are the odds that Donald Trump dies in 2018? Right now, it’s at around 5%. Since the payout is actually inversely proportional to the odds, if the probability becomes low enough, someone could decide to assassinate the US president in order to capture the bounty.

Previously, centralized platforms were able to curate the bets on the platform, but, because of its decentralized nature, this is not something that Augur is positioned to do. Augur has modest guardrails in place, mostly involving oracles who could witness (or refuse to witness) the outcome of an event... but even these oracles can be bought with the proceeds of the bounty. By leveraging our deep primal behaviors, the bounty, and its incentives, make actual prediction markets unstoppable.

Another popular smart contract these days is Fomo3D. This is a game where anyone can purchase a key which resets a 1 day timer. If the timer reaches 0, whoever purchased the last key earns the pot. The proceeds of each key purchase are split between the pot and a dividend paid to all previous players. As I write this, the pot is currently at 21,691 ETH while the total contribution is 96,051 ETH: there is little to no doubt that Fomo3D is more of a Ponzi scheme and less of a lottery. However, as illegal as it may be, since Fomo3D’s authors and earliest players are unknown (we haven’t been able to map their Ethereum addresses to a physical world identity) it is not stoppable.

What's particularly interesting about Fomo3D, is that it’s actually a version of the infamous dollar auction: a sequential game where players make rational decisions that lead to a completely irrational outcome: betting more than $20 (up to thousands of$) to earn a \$20 bill. It shows how it becomes nearly impossible for seemingly rational people to exercise willpower. Just to illustrate the systemic cost we'd ultimately bear if a significant number of actors take the game too far, remember that Fomo3D was actually activated 3 weeks ago, but already accounts for a large portion of transactions on Ethereum. At this pace, it (and other similar contracts) could end up consuming almost all available resources in today's version of the Ethereum network, arriving at a fate not unlike that of Easter Island.

One of the most fascinating aspects of crypto networks is that they transfer control from the individual to algorithms, mostly without a fail safe mechanism. Decades of research in psychology and behavioral economics have exposed our weaknesses and our tendency to act in economically and socially irrational ways. Paradoxically, crypto networks can help save us from ourselves by mitigating the influence of corrupt political and financial officials, but this very characteristic can simultaneously lead us down a path of self-destruction and enslavement.

Julien Genestoux is the CEO and founder of Unlock. Unlock enables creators to monetize their content or software without relying on a middleman. Unlock recently raised a round of funding, and they're hiring a world class team of engineers.

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Julien Genestoux
CEO, Founder https://t.co/5kifuEENKa. Previously @medium, @superfeedr. Open web nerd!