Truth States, Consciousness, and Decentralized Intelligence
The world is on the cusp of a shift more profound than any single technology — because what is emerging isn’t just intelligence or compute, but the framework that dictates how they interact with truth, power, and each other.
At the core of everything — computation, biology, intelligence, even ethics — is the bit: 0 and 1. The binary constant. It’s not just how we compute — it’s how we manufacture intelligence, how we gate access to resources, and how we record truths. (Bits have physical teeth: erasing one bit costs at least kT ln 2 energy — Landauer’s principle.)
But bits alone aren’t enough. There’s always something watching: the observer. The act of observation doesn’t just passively witness — it changes the system. Not by magic, but by selecting what matters, collapsing possibilities, and steering the direction of compute. In quantum physics, this is foundational. In economics and society, it’s destiny.
So emerges the triad: 0, 1, and ⊙ (observation). From this, we build the technological truth state of the universe. (Wheeler’s “it from bit” captures this spirit succinctly.)
A Technological Trinity: 0 / 1 / Observer
0 / 1 are more than bits. They’re gates. Inclusion/exclusion. Permission/denial. Every decision-making system, every CPU cycle, every blockchain, every organism making a choice — relies on these constants. Without them, there is no compute. No intelligence. No consciousness.
⊙ Observation sits as a superset. It doesn’t manipulate directly — it updates belief, selects the outcome, tunes the system. In quantum mechanics, choosing a measurement changes the state. In logic, observation refines knowledge. In governance, surveillance shapes behaviour. In markets, price is observation made public.
Observation changes compute. But only holding state — remembering, acting, encoding — can manipulate it.
And when does consciousness arise? I would say it is when observation is aware of its impact on the system. When observation becomes deliberate. This is the spark that builds intelligence — from atoms to AGI.
Jung, Quantum Physics, and Computation: The Convergence
Carl Jung’s Red Book was a deep, deliberate confrontation with the unconscious. He dialogued with inner figures not just to see but to integrate. Observation, in this light, wasn’t passive — it was transformative. Conscious observation becomes the mechanism to reshape the psyche. (A metaphor for inner work, not a physics claim.)
Quantum physics mirrors this. Measurement is not neutral — it changes the wave-function. Mathematically:
Where ρ is the state (density operator); Mₖ is the measurement/Kraus operator for outcome k; Tr(·) is the trace; and p(k) = Tr(Mₖ ρ Mₖ†).
Choosing what to observe (Mₖ) affects both what you see and the future state of the system.
Jung watched the soul. Physics watches particles. Both agree: to observe is to alter, and to understand what you’re observing is to direct the effect.
Intelligence, Utility, and the Economic Arms Race
John Nash formalized equilibrium as a profile where no player can unilaterally improve given others’ strategies — it’s stable, but not guaranteed to be jointly optimal. In centralized economies where a few actors set the rules, the game can lock into suboptimal equilibria. It tilts toward short-term self-maximization — just like Robin Hanson warned: most decisions are made for one or two generations ahead.
Geoffrey West showed cities scale and live, but firms die. Why? Cities are decentralized. Firms are not.
This biological short-sightedness in governance, especially under concentrated control, is an existential bottleneck.
We need something more durable. Something decentralized. Something where the rules of access (0/1) aren’t controlled by a few.
Decentralization: The Remedy to a Centralized Fate
Decentralization lifts the utility ceiling. Intelligence raises efficiency — but without fair access, those gains concentrate. If 400 IQ can build iPhones from trees, who decides if we instead build Dyson spheres? Resource competition — a universal constraint — decides what we optimize for.
In decentralized systems, compute is unshackled. Intelligence gets to play in open sandboxes. Observation flows freely. Access (0/1) is governed by neutral rules, not bureaucratic gatekeepers.
This is where proof-of-work shines. It ties access to energy. Identity becomes priced pseudonymity. It’s expensive to manipulate. Cheap to observe. Perfect for autonomy.
And blockchains? They’re economic alignment engines. Ethereum’s basefee is a resource consumption index:
This becomes our lens: intelligence turns energy into utility; decentralization lets it be shared fairly.
Digital Intelligence and the Coming Friction
As AGI enters, power will centralize — unless we intercede. Intelligence itself won’t remove competition. It amplifies it.
Markets optimize decisions through competition, but without minimized-byzantine coordination layers, we end up in arms races. Blockchains provide those coordination rails. Zero-knowledge proofs remove the need for synchronous interaction across space — compute there, prove there, verify here — while local consensus still arbitrates conflicting claims opening up interplanetary coordination. With open ledgers, we raise the cost of misguidance.
We move from surveillance capitalism to observable capitalism.
AGI must play by the same rules as humans. Decentralized financial systems are its sandbox. The only place with verifiable identity, public audit, and programmable ethics.
Reframing Consciousness and Policy
We’re born individualistic. We learn to cooperate. We rationalize competition. But when intelligence becomes digital, policy becomes code.
Kenneth Arrow argued that failing to account for future generations leads to incoherence. Yet central actors do discount the future. That’s the short-termism trap.
With non-biological intelligence, that shifts. Temporal preference collapses. Decisions must be optimized across infinite horizons. This forces us to revisit the Arrow social welfare function under emergent consciousness.
The Loop: From Ethics to Utility and Back
This loop governs civilizations. When ethics get encoded as access rules, intelligence optimizes, and the results feed back into our moral norms.
Decentralization is the only path to keep this loop open and fair.
“Observation updates. Authority manipulates. If you can flip bits for others, you’re not an observer — you’re a governor.”
Final Takeaway
We must understand:
- Observation is real (and formally modelled).
- Bits are the universal substrate — with physical costs.
- Consciousness is observation with understanding.
- Intelligence is how we turn energy into utility.
- Decentralization is how we share that utility.
Bitcoin was just the beginning. The truth state has shifted. Now that the world has seen what’s possible with programmable ethics, economic autonomy, and observer-rich systems, we can’t go back.
This isn’t a story of mysticism. It’s the unfolding engineering of truth.
Let us observe it well.
Sources / Further reading
- Wheeler, “Information, Physics, Quantum: The Search for Links” (“it from bit”). (PhilPapers)
- Landauer (1961); Bennett (2003) on the thermodynamics of information. (Worry Dream, Computer Science at Princeton)
- SEP overviews of QBism and Relational QM; measurement/Kraus formalisms. (Stanford Encyclopedia of Philosophy, CMU Quantum Theory Group)
- Arrow (1950) on the social welfare paradox. (Stanford Encyclopedia of Philosophy)
- Nash equilibrium (SEP). (Stanford Encyclopedia of Philosophy)
- Geoffrey West, “The surprising math of cities and corporations”. (TED)
- Bitcoin whitepaper (PoW, honest majority). (Bitcoin)
- EIP-1559 (basefee mechanics) and Ethereum gas docs. (Ethereum Improvement Proposals, ethereum.org)
- Jagdeep Sidhu (2022) on Zero-knowledge: Blockchain as a coordinated global Von Neumann architecture. (Medium)
- Jung’s Red Book context (Philemon Foundation). (Philemon Foundation)