‘The moment man begins to take thought of the morrow he passes out of the Garden of Eden into the vale of anxiety; the pale cast of worry settles down upon him, greed is sharpened, property begins, and
the good cheer of the “thoughtless” native disappears.’

– Will Durant, The Story of Civilisation, Vol 1.

In order to understand Bitcoin, we need to know how we got here. So before we dive into the fundamentals of the Bitcoin network, I would first like to start with a little venture down a certain economic phenomenon known as The Coincidence of Wants, for it is worthwhile to remember that trade and exchange are a vital component of civilisation. Without them, we would not be able to live the lives we lead today.

So first, let’s go back to the beginning.

Anatomically modern human beings, that is, people like you and me today, have existed for over 300,000 years and there is even recent evidence which could push this date back further to around 420,000 years. However, let’s safely say that we have existed for 300,000 years. It is a remarkably long period of time and one that can be quite hard to comprehend. It means that people like you and I lived during the Pleistocene. More specifically, during the Middle Pleistocene. This was a period of time that saw humans exist in the early days of the Stone Age, or what is also referred to as the Upper Palaeolithic. This was a period in which there were more than just homo-sapiens, but other human species too – not least the Neanderthals and the Denisovans. We lived alongside one another and we shared a wild world alongside woolly mammoths, sabre-tooth tigers, short-faced bears and even dire wolves.

For most of our history it is widely believed that we existed as hunter-gatherers. We lived in small, nuclear family units that consisted of around 25-50 individuals and we worked, on average, around 14 hours a week to hunt and gather all of the food and resources needed to sustain our small societal units. There were no cities or civilisations (that we know of) and life was relatively simple. These early humans lived and roamed vast stretches of territory and probably followed game for their survival.

This period of time has also been likened to ‘Eden’ – a reference to the opening of Genesis in which the tale of the Garden of Eden, a time where man and woman live in bliss, is told. They know no work, no taxes, no government, no state and more importantly, no farming. They exist in an ideal garden in which everything is provided for.

But their ignorant bliss does not last forever, for Adam and Eve, tricked by the serpent, eat the forbidden fruit. This fruit gives them knowledge. As a consequence they become self-aware and fearful. They become self-conscious.

They become human.

As a result, God punishes them:

‘And unto Adam he said,

Because thou hast hearkened unto the voice of thy wife, and hast eaten of the tree,

of which I commanded thee, saying,

Thou shalt not eat of it: cursed is the ground for thy sake;

in sorrow shalt thou eat of it all the days of thy life;

Thorns also and thistles shall it bring forth to thee,

and thou shalt eat the herb of the field;

In the sweat of thy face shalt thou eat bread, till thou return unto the ground;

for out of it wast thou taken: for dust thou art,

and unto dust shalt thou return.’

Now, I understand that biblical verse on a website for Bitcoin, digital assets and economics may not seem related, but there is a very profound wisdom and knowledge hidden in the opening story of Genesis.

Consider the hunter-gatherer. He did not know work and once the quota of food was in, time was his to do with as he pleased. You could even make the argument that our ancestors had more of this precious resource – time – than we do today.

Which is why the tale of the Garden of Eden is so profound. There is a truth to it that is often forgotten today.

After eating this forbidden fruit – this fruit of knowledge – man was expelled from the garden of Eden and cursed to a life of work and toil. It is a symbolical tale that tells the moment when we transitioned from hunter-gatherers to farmers. It tells us the moment that the Agricultural Revolution began:

‘Five hundred generations ago, the first phase change in the organisation of human society began. Our ancestors in several regions reluctantly picked up crude implements, sharpened stakes and makeshift hoes, and went to work. As they sowed the first crops, they also laid a new foundation for power in the world. The Agricultural Revolution was the first great economic and social revolution. It started with the expulsion from Eden and moved so slowly that farming had not completely displaced hunting and gathering in all suitable areas of the globe when the twentieth century opened.’

–  from The Sovereign Individual, by James Dale Davidson & Lord William Rees-Mogg.

But what does the agricultural revolution have to do with the coincidence of wants and further still, with Bitcoin?

The reason that we begin here is because in order to understand Bitcoin, we first need to understand money. But to understand money, we also need to understand trade, exchange and human nature because that is how we got here in the first place. As Murray Rothbard put it:

‘If no one could exchange, if every man were forced to be completely self-sufficient, it is obvious that most of us would starve to death, and the rest would barely remain alive. Exchange is the lifeblood, not only of our economy, but of civilization itself.’

And because money is defined as a medium of exchange, it can be said to be the blood of civilisation. It circulates through the civilisation as if it were a great body, carrying resources and energy where they are needed most.

But how did it come to be? How did exchange and trade begin? How and why did we develop money?

And what is the coincidence of two wants?

Imagine two roaming bands of men. They are out hunting for their families. Perhaps needs and circumstances have driven them further than they would usually venture. As a result, these two factions have now crossed paths. Without a shared language or culture, it is easy to see a standoff occurring, particularly if one group has something that the other needs. Even if both parties share a language or some primeval culture, the needs of survival could drive them to violence.

This ‘eden’ is not perfect. Conflict and violence were a very real possibility.

But there is another element to this. Another element that I believe may have acted as a catalyst for human exchange. Something forced our human ancestors to trade and to cooperate with other tribes and clans, and therefore bind exchange as an evolutionary force unique to humanity.

You see, these small nuclear families of men and women had an issue when it came to reproduction. Inbreeding during this time was prevalent and there is evidence that it had an impact on our evolution as well as consequences to the health, prosperity and survival of these small family clans. It is no surprise then to learn that humans would have gone out of their way to expand their mating partners, and there are periods in our history when we reproduced with other human species, such as the Neanderthals. This innate need to expand the gene pool would have inevitably brought different tribes and small family clans into contact, and over time this could have been a driving force in the establishment of trade and social networks. Simply put, the need to avoid genetic isolation may have driven and fostered interactions between tribes, laying the groundwork for trade.

But once this need for trade and its first transactions had took place, what and how did we trade? From this perspective, we would have clearly traded ourselves. Men and women would have been exchanged between the various clans to diversify the breeding population and ensure the survival of those nuclear units. But not just people. Other commodities would also have been exchanged, and it is assumed that we did this through the medium of barter.

Bartering is a form of trade in which people exchange goods and services directly without using money. In a bartering system, each participant must have something that the other party wants, making it a system of mutual exchange based on needs or desires.

But the system of barter has a problem, and that problem is its tendency to run into the coincidence of two wants, or in this case, the lack thereof. The “coincidence of wants” is a fundamental challenge in bartering systems and refers to the difficulty of finding two people who each have something the other wants and are willing to exchange these items at the same time.

In this case, an exchange between two roaming bands of hunters whereby the coincidence of two wants is unable to be met could have likely led to force and violence. Put simply, if no agreement could be made, then force would have been a reasonable alternative to get what you need. 300,000 years ago, it is assumed we bartered because of a lack of a common monetary good that could be used as medium of exchange, and this assumption is likely given that these bands of early hunter-gatherers may not have come into contact as frequently enough to cause a form of money to arise, at least so far in the early days of trade and exchange.

It should be noted that this did change over time. Hunter-gatherers used commodities such as flint, shells, salt & dried fish and meat as money, but this was later on. Bartering was very likely the first form of exchange that we engaged in as a species.  

Imagine there are two men from neighbouring tribes. They are both hunter-gatherers and the agricultural revolution has already begun. In this situation, they meet at a location that is used as an encampment area during certain times of the year. Tribes from the surrounding area travel (often quite extensively) to reach this place of trade. These men use the stars as a compass, clock and calendar.  

During a particular time of year, these tribes send parties to trade. On this occasion only two men have come to trade. One of them brings a beast in tow. It is a cow.

Both of these men have a very important job. They both made this journey for a reason and a failure to trade may result in the loss of kin. They both have a lot on the line. A successful trade is essential to survival.

But without a form of money, the men are forced to barter. As a result, both men must hold something that the other party wants or needs.

The hunters open with the usual ritual and sacrifices in beginning trade. Offerings are put to the side. Gestures of good and honest will. They are rituals, sacred rites and religious sentiments. They are the early habits of custom and culture.

The seeds of civilisation are being planted.

With the offerings set aside the men begin to barter. But the man with the cow has come with nothing. All he has is his cow and they fail to come to a deal because he is unwilling to exchange it for what the other man has. He cannot give a portion of it to the other man either because to do so would kill the beast.

The hunters are unable to reach agreement. Their time has been wasted and the result could be dangerous for both parties.

This is a consequence of the lack of two wants.

And it is exactly why money came to be.