On human dynamics in crypto & navigating complex systems


  • human dynamics in crypto & beyond
  • navigating complex, chaotic systems
  • rational and intuitive mental models

At the turn of the year I came across Vitalik Buterins Endnotes 2020, and I feel I might have some important thoughts to contribute.

Let’s dive straight in:

Human dynamics in crypto & beyond

The evolution of any kind of human ecosystem - be it in the crypto space, in nation states, religion or the economy - is shaped by three main influences:

  • the architecture of the system (its rules/laws, institutions, checks and balances),
  • the underlying culture (global, regional, local, sub- and even individual cultures; and not just in a geographical sense, but also in a domain sense, like a certain specialized niche in a scientific field),
  • complex systems/chaos dynamics.

The latter point is somewhat universal for all complex ecosystems, and will be discussed in the second part of this article. The other two aspects though vary highly between different ecosystems.

For any complex system, it is hard, and sometimes even impossible, to distinguish which factors are most important for the overall development of the system, what the causal relationships in the system really are and how mutually influencing feedback mechanisms work. Therefore, all of the three above mentioned influences always are important and to be considered. However, in modern culture we usually pay a lot more attention to point one - the architecture of the system - and a lot less to the other two - the underlying culture and chaos dynamics.

Take nation states for example. In my eyes the underlying culture and the associated human dynamics seem to have a bigger influence on the development and state of a nation than its political and institutional system. It is the underlying culture and its inherent values and spirit that determine how people inside of this system act, in which direction the system further evolves, and where rift lines form. I am not saying the architecture of the system is not important though, and for sure there is a mutual influence between system architecture and culture, but having a look at nations around the world, to me it seems the underlying culture is the more dominant factor that ultimately decides on the overall state and course of a nation.

Contemporary German culture for example has a comparatively high emphasis on rational thinking, pragmatism and idealism, which is mirrored in its institutions, its whole society and even its leader Angela Merkel. Similarly, the last two leaders of the US mirror rather well two major contemporary cultural fractions in the US. If you look deeper into the matter, it of course always gets more complex and nuanced, but there are these major cultural patterns.

Religion is another interesting example. Let’s have a look at the US and Germany again. In both countries Christian protestantism is a major denomination. But if you look closer into it, those versions are very different from each other. And the main differentiator, I would argue, here, too, lies in the value of rational thinking/reflection. In US protestantism there is a lot more magical thinking and a lot more emphasis on emotion (“charismatic Christianity”), while the German version is a lot more about reflection and meditation. So the character of the religion really is a consequence of the underlying culture (and so are its local teachings, its institutions and its politics). Religion itself is just a tool to constitute and pass on the local culture, and in the end it almost is irrelevant which religion you use, what label you put on it. In its local and contemporary manifestation it always gets twisted in such a way that it can carry the local and contemporary culture. Again, here too, if you go deeper into the matter, it gets more complex and more nuanced, but there are these major cultural patterns. And here too, I am not saying the structure and type of the religion has no influence on the local culture. It has. And for sure there is a mutual influence between the two. However, in the end, the local culture and the contemporary Zeitgeist seem to be more important.

In the crypto space similar mechanisms are at work. And while the architecture of the code and that of the general ecosystem are important, it is the underlying cultural dynamics that ultimately decide over the course of the evolution of a project. It is the values and the spirit of a community around a project that determine the decisions on how to alter the code (or if to do so at all), and it is the values and the spirit of the users that determine how they will interact with the system, and what they will build on top of it. While at the beginning naturally people with a similar set of goals, values and beliefs converge and form a community/project, over time differences begin to emerge. Sometimes this happens right after the foundation, when the founders suddenly realize they actually had fundamentally differing visions of the project in mind, or that there are differences in important core values between them. And sometimes this happens gradually over time as the composition of the community changes, as new kinds of people with slightly different sets of values and beliefs are entering, and as people inside of the community are evolving in their own views. And also the project itself often eventually evolves into something different than initially envisioned.

An interesting example for the crypto space is the cultural value of the importance of freedom of speech (and the role of regulation/governance more generally). For that specific value for example there are major differences between the US and most other parts of the world, including Europe (see here). Again, here too, if you look deeper into the matter, it gets more complex and more nuanced, but there are these major underlying cultural patterns that influence our beliefs, feelings, decisions and actions. And it is very important to realize just how deep this cultural collective as well as individual personal conditioning in such fundamental values and beliefs goes, and how far-reaching in its consequences this is. We always need to thoroughly examine where our opinions, values, beliefs and mental models might stem from, and if it is not actually those shaping our arguments and actions rather than unbiased empiricism and logic. And not only is it incredibly hard to see through the full scope of our own conditioning, on top of that we often don’t realize our fundamental limits in grasping - let alone predicting - complex chaotic systems. No matter how rational, how evidence and knowledge based our decisions seem to be, no matter how much experience we have, a residuum of “random” acquired or chosen beliefs and mental models will always remain - in some people more, in some people less, and always embedded in a different individual framework - and communities will form that share certain sets of beliefs. And all of this also applies to the belief on the importance of freedom of speech. In my opinion in the end the answer to many such hard-fought-over questions lies not in an either-or, but in an and, and in a how. In this case for example I think that both are important, individual freedom/rights and regulation/rules for the collective, and that the actual task at hand is not to fight endless holy wars of either-or, but to find the right measure/combination/balance of both (which usually is different for different contexts).

In his blog post, Vitalik compares the evolution in the crypto space to the evolution of nation states. To me, it resembles even more closely the evolution of religions. They start out from a common inception, a new core belief and value system, often represented by a mythical founding figure (Buddha, Jesus, Satoshi Nakamoto), with a salvation/liberation hope/promise (nirvana, salvation from suffering/sins, salvation from the old corrupted financial/economical system), and almost immediately after their foundation they begin to fork into many different versions - more conservative ones, closer to the original core belief system and values (which again are interpreted differently by different fractions), and more progressive ones, that are more open to changes and evolution. And then at some point a fundamentally new concept emerges, with a completely new paradigm/functionality like Ethereum or Christianity, which then again immediately starts to branch out into many different versions, more conservative/fundamentalist or even extremist ones, and ones more open for change and further evolution. And also scam versions begin to emerge that just try to exploit people, and otherwise corrupted versions that are dominated by status and power seeking individuals, and eventually we end up with the same archetypical fractions as always:

  • sheep (laymen in a certain area/field, that depend on the good will and integrity of the experts of that field),
  • shepherds (the experts in that field with good intentions), and
  • wolves (experts with malicious intentions).

And the shepherds and the wolves compete for the trust of the sheep. Trust is built, trust is lost, FUD is sown, communities, alliances and collaborations form.

On top of this already highly complex dynamics inside of the mentioned ecosystems, there also are interactions and feedback mechanisms between all of those systems, and between all of the involved individuals and communities and their complex inner worlds. Additionally, the macro environments those systems are embedded in permanently change and evolve as well (such as information technology, other technology, ecology, culture, …), in turn with associated feedback mechanisms. And the pace of change seems to be accelerating, which leads me to Vitaliks final question:

How do we adapt to today’s ever more complex, inscrutable, chaotic, surprising environments?

I spent the last few years musing and researching on that very same topic. I will try to outline a few key insights here in this article. I am hoping to put together a more detailed and elaborate version soon.

My professional background is in meteorology, which in the end is nothing else but the study of highly complex, highly nonlinear chaotic systems with many unknowns. And over time, I realized that many concepts and approaches from this field can actually be applied to other fields that try to describe complex dynamic systems, such as economics, sociology or psychology (take the famous butterfly effect for example).

I professionally worked in both theoretical numerical modeling of the earth’s atmosphere with computer simulations, as well as practical synopsis and forecasting. To my surprise - and confusion - those two worlds actually seemed to have very little to do with each other, and to operate in completely different ways. Even the people working in these two fields appeared to have totally different characters, and forecasters tended to have certain problems with theoretical abstraction and scrutiny, while theoreticians on the other hand often had problems with practical forecasting. Eventually, I realized this is because of the respective primary mental mode they are operating in: the rational-thinking one or the intuitive-feeling one, respectivley. And with each of these modes come very different advantages and disadvantages, and very different sets of tools and mental models. The rational-thinking mode is better in theoretical model building and detailed analysis, while the intuitive-feeling mode is better in practical forecasting and grasping complex big picture contexts. And the truly exceptional people in the field are the few ones that manage to operate on both of these sides with a high degree of sophistication, and that know how to combine them in a mutually enriching manner. Again, the answer here does not lie in an either-or, but in an and, in the right combination/balance/measure.

Like Vitalik rightly put it:

Often, the boundary between multiple intersecting worlds is the most interesting place to be.

And for me, the most fascinating boundary is precisely the one between those two different mental modes, between rational-thinking and intuitive-feeling. And as explained above, from my experience for successfully navigating complex, chaotic environments one needs both clear and sophisticated rational thinking as well as fine-tuned intuition. One needs the best rational mental models and the best intuitive mental models. And one needs to combine them in the right manner.

The rational mode is all about logic and abstract thinking. It works sequentially and verbally, and is great for reflection, details and scrutiny. It dominates in domains like science, maths and philosophy (and theoretical meteorology). Its major tools are logic, words and numbers.

The intuitive mode is a bit harder to grasp since it is all about (often unconscious) heuristics and feelings. It works in a parallel/high dimensional, nonverbal way, and is great for synopsis, big picture contexts and real time interaction with complex environments. Its models stem from personal experience, as well as collective experience of the species (instincts), as well as collective cultural experience (for a big part also transmitted in a nonverbal way, through observation and imitation, but sometimes also verbalized, in folk wisdom for example, and more complex models often through the framework of religions (whereat, as mentioned earlier, the local version and direct personal transmission is a lot more important than the abstract theology, since per definition it is very difficult to transport nonverbal models with words)). The intuitive mode can be intertwined with emotions, but can be detached from them, too. It dominates in domains like (practical) religion, music, poetry/story telling, but also sports (and weather forecasting). Its major tools are perception, feeling, visualization, heuristics (conscious and unconscious) and metaphors and analogies. It is linked with creativity.

And in both of those modes we use models to navigate the world — rational mental models and intuitive mental models.

At that point we can close the circle and come back to the topic of culture. Because “culture” in my eyes is nothing else but the local collection/combination of such mental models. This includes fundamental values and beliefs (strong, rigid, fundamental mental models, where many other models are built upon), hypotheses (looser, more flexible mental models, more like tools) and feelings. Some feelings for example exist only in certain cultures, or even only in certain individuals. Sometimes they are similar, but always with individual or collective differences. And today, for our fast and radically changing environments we need to update a lot of those models, and to develop new ones, with a special regard to complex systems dynamics and chaos dynamics. Meteorology can be a great inspiration for that, but folk wisdom and religions also contain many insightful heuristics and mental models. Often though, their true core is quite hard to separate from imagination, illusion and embellishment; instrumental tools are hard to separate from metaphorical explanations (sometimes being either-or, sometimes neither-nor, and sometimes even both at once); and sometimes old models just are outdated due to new insights or a changing environment. But often, certain metaphors reveal their true meaning only after one made a certain experience for oneself, which sometimes can happen quite late in life, or never. Just like you feel the inherent wisdom of a certain quote only after you have the necessary experience (though sometimes they connect to our instincts too, to our evolutionary experience, which we have always access to). When we are young, we tend to discard too much of the old ways, because we lack the necessary experience to recognize their deep inherent wisdom, and we overestimate our own degree of insight and abilities. And on the other hand, when we are old, we tend to overestimate the superiority of the old ways, and too easily discard what actually might be true improvements, and we tend to get stuck in old patterns that might not be suitable for the contemporary environment anymore. The result is this eternal struggle between the young and the old, between progressive and conservative, which can be observed in all human ecosystems - in families, in communities, in nation states, in political parties, in religions (which by their nature have to be more on the conservative side, since their role is to pass on established wisdom). The solution, here too, lies not in an either-or, but in an and; in how to find the right measure/combination/balance of both; in carefully examining what is worth preserving, what is still valuable, and where to pursue new approaches. And we need to listen to each other, and to respect each other, and try to understand where the other is coming from. And we need to be aware of our own biases.

Currently, I am working on putting together a collection of such rational and intuitive mental models that can help us navigate our fast changing and complex contemporary world. I am drawing those models from a wide range of sources, such as the skeptical movement, science and philosophy, meteorology, folk wisdom and religions, contemporary crowd wisdom, and from own experiences and experiments (such as immersion into different cultures, social layers and professional contexts). But there is still a lot of work to do, putting it all together, and in a comprehensive and accessible framework. Nevertheless, I am hoping in this article I could point out a few core concepts already, and provide some inspiration.




Complex systems and chaos dynamics, forecasting, intuition, rationality, creativity, culture, mental models, blockchain, ml/ai, science, meteorology.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

All Elven Land Coins A-Z

1. At 3 a.m.

Open up your eyes to the new crypto world of KeplerSwap, Coming Up On 27 OCTOBER 2021

Hedera Technical Insights: Creating an Account on Hedera

Blueprint of a FinTech Unicorn: Ripple, Blockchain Leader in Remittances

Differentiate between general market and candy protocol

Zel Transparency Report — Q2 & Q3 2019 (April — September)

Cryptomarkets are capitalism on steroids.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Thomas Kunze

Thomas Kunze

Complex systems and chaos dynamics, forecasting, intuition, rationality, creativity, culture, mental models, blockchain, ml/ai, science, meteorology.

More from Medium

Ethereum’s Glow-Up: The Merge

Evolution of the Fuel intake of Automobiles

Trust Fuels Adoption

picture of an early Dutch East India company stock certificate

How Web3 is Helping the World