Contents
In the sixth chapter of “The Art of War,” Sun Tzu writes that the highest form of disposing your forces is formlessness. If you show no form, even the best spies cannot pry into your plans, and the wisest opponents cannot lay plans against you. Bitcoin is a modern example of Formlessness. Whether or not you think the project is a good idea, its design shows how formlessness protects against attacks.
Digital money and its Achilles’ heel
Situation
Before Bitcoin there were several attempts to create digital money. Almost all of them had one thing in common: a company, a server, a person in charge. In 2007, the U.S. Justice Department indicted the operators of e-gold. In 2013, U.S. authorities shut down Liberty Reserve; its founder was indicted and convicted. Whoever hit the center hit the whole system.
Link to the principle
A fixed form is a target. A system with a center has a point where it can be seized: an address for the courts, a server for attackers, a boss to put pressure on. If you want to survive where others don’t want you, you must not have that point.
A pseudonym instead of a company
Situation
On October 31, 2008, someone using the name Satoshi Nakamoto publishes a short paper on a cryptography mailing list: “Bitcoin: A Peer-to-Peer Electronic Cash System.” On January 3, 2009, Nakamoto creates the first block, known as the genesis block. It contains that day’s headline from The Times of London about a second bank bailout. Who is behind the pseudonym is still not known for certain.
Link to the principle
Even the inventor is formless. There is no face, no address, no contact person. This removes the first and most obvious point of attack. When Nakamoto withdraws from development at the end of 2010 and falls silent in 2011, the network simply keeps running.
A network without a center
Situation
Bitcoin consists of many computers in many countries, the nodes. Each node holds a complete copy of all transactions, and all of them recognize the genesis block as their common starting point. The code is open source. Anyone can check it, copy it and run their own node. New blocks are created by miners, who spend computing power to do so.
Link to the principle
Here formlessness becomes a design principle. There is no point whose failure would destroy the whole. If one node fails, the others take over. Anyone who wanted to shut down Bitcoin would have to hit almost all the nodes worldwide at the same time. Like water you cannot grasp, the network slips out of reach.
Adapting instead of breaking
Situation
In June 2021, China bans mining, which until then had largely taken place there. The miners move to other countries, above all the United States, Kazakhstan and Russia. The network keeps running.
Link to the principle
Formlessness does not mean invulnerability. It means that a blow is not fatal. Water gives way when you press on it and gathers again somewhere else. That is exactly what the network did when a large state banned part of it.
Where forms emerge after all
Situation
Around Bitcoin, fixed structures have grown up: exchanges, custody services, large mining companies. They have addresses, bosses and servers. When the Mt. Gox exchange collapses in early 2014, many customers lose their bitcoins. Today, regulators focus mainly on these points. Critics also point to Bitcoin’s high electricity consumption, its sharp price swings and its misuse for crime.
Link to the principle
Formlessness protects only as long as it lasts. Where people seek convenience, new centers emerge, and with them new points of attack. At the same time, the example shows that a formless system has nobody who bears responsibility. That is a strength and a weakness at once.
Key takeaways
Key lessons
- Ask where your organization has a single point at which it can be hit.
- Spread what is important instead of concentrating it in one place.
- A blow is less dangerous if the whole can regroup.
- Watch where new centers emerge out of convenience.
- Clarify who bears responsibility when nobody is at the top.
Summary
Bitcoin was launched in 2008 and 2009 under a pseudonym as a network without a center. There is no company, no boss and no server that could be shut down. When the inventor disappeared and China banned mining in 2021, the network adapted and kept running. This shows the power of Formlessness: if you have no fixed form, you offer no target. But it also shows its limit, because new centers that can be attacked have emerged around the formless network.
Sources
- Satoshi Nakamoto: Bitcoin: A Peer-to-Peer Electronic Cash System. 2008. bitcoin.org/bitcoin.pdf
- Sun Tzu: The Art of War. Translated by Lionel Giles. London: Luzac & Co. 1910, Chapter 6.
