If Bitcoin were a mechanical watch, the fee market (not the free market) would be the mechanism making everything tick.
This is where everything starts and ends.
This is where censorship resistance comes from and where the precious resource of block space gets priced into energy consumption.
The Bitcoin fee market is the first man-made free market that ever existed.
In a free market:
- No third party can intervene in pricing
- No one can stop you from participating
- Participation is voluntary
Most markets that emerge naturally are actually free; it is the man-made ones that usually struggle with this property.
If you believe in the efficient-market hypothesis, then you know how important markets are and how they can help us to solve many problems.
Most of the problems that humans have ever faced were coordination problems. One obvious solution is to create a dominance hierarchy and elect a leader on top of it. This worked wonderfully for a long time, but as soon as our world became complex, which it did because we made it so, this started being less and less effective.
Another issue with such structures is that there is one single point of failure, which makes them prone to corruption. Markets have the same issue if they are not built on trustless, censorship-resistant infrastructure.
Bitcoin : An Analog-To-Digital Converter Function
There are two worlds:
1. The realm of the tangible, the real: the world of thermodynamics
The constraints of the “real world” are enforced by the laws of physics. I can’t put my hand through a wall, or if I do, I need to push through the wall with greater force than the forces that hold the wall together, and my bones need to be able to resist the force with which the wall pushes back at me. If there is a coin on a table, I can’t really copy it. The best option is to obtain some materials and then spend some time and energy crafting a new, identical coin. As we evolved in this world, we learned to use these constraints to our advantage.