1. What Is Proof-of-Work?
(1) The Brain of the Democratic Citizen: When Everyone Is Equal, Meaning Vanishes
Before comparing Proof-of-Work and Proof-of-Stake, the primary subject of this article, we must examine the characteristics of the democratic citizen’s brain. The key feature of this brain is that sovereignty—once earned only through strict Proof-of-Work—has degraded into a 1/N Proof-of-Stake granted merely by birth. Here, sovereignty includes the narrow right to execute predatory measures against the bodies and private property of others based on law and force, as well as the broad right to assign meaning to natural and civilizational phenomena without uncertainty. In archaic and non-democratic eras, the authority to determine what was sacred or profane, or to heal disease and death, belonged solely to kings and priests. Once sovereignty was divided equally among all, its sanctity and value rapidly desacralized.
Most arts, organizations, and religions initially operated as secret societies, requiring candidates to prove identity purity through initiation rites. This phenomenon occurred because, at a stage where doctrines or laws were not systematically established, contradictions and interpretations differed among factions. Organizations needed to solidify unity and identity to prevent the system from breaking. For example, the Pythagoreans believed that the origin of all things was whole numbers. However, the disciple Hippasus proved that √2, the diagonal length of a square with sides of length 1, was an irrational number that could not be expressed as a ratio of integers. The school attempted to conceal this secret, but when Hippasus leaked it to the outside world, they reportedly assassinated him by throwing him from a ship into the Mediterranean Sea.
However, secret society methods requiring mathematical research, asceticism, or dialectical debate inherently possessed the limitation of accommodating only an elite minority. To suppress competing factions and hold hegemony over society, the most powerful method for a minority faction was mass capture. By lowering the entry fee—the difficulty of initiation rites—to the bottom and capturing the collective emotions and beliefs of the masses, political power emerged, opening a path to resolve doctrinal contradictions.
“Believe for now, and obedience will bring salvation. In return, pay me a periodic subscription fee (taxes or donations).”
Although this concept of “justification by faith” is a core doctrine of Christianity, democracy operates identically by forcibly instilling its sanctity into the masses through constitutions and war of position. Consequently, the masses fail to reflect on whether democracy actually brings material or spiritual abundance, driven by the fear of being branded anti-democratic heretics.
Yet, one reason democracy is inferior to Christianity is its inability to provide a unitive experience with a transcendent entity. Democratic citizens hold nominal sovereignty through voting rights, but in reality, they control nothing to their liking. As a 49% minority, no method exists to neutralize the dictatorship of the 51% short of physical revolution.
Why does this difference exist between Christianity and democracy? Christianity treats all believers as sheep equally, yet it recognizes priests (ministers) and a transcendent entity. While Christianity provided the masses (believers) with a Proof-of-Stake method through ‘justification by faith,’ it maintained its hierarchy by demanding a rigorous Proof-of-Work from its priests. Priests complete high-intensity Proof-of-Work through faith training to guide the masses. Because a hierarchy of existence exists between the masses and the priests, the masses can release the fear of facing the world alone. Under pastoral guidance, they sever the arrogant ego and realize their deficiencies. This realization drives them to seek a transcendent entity and lowers their time preference to unite with that entity. Realizing how ignorant and fragmented one currently is serves as the first step in practicing asceticism (low time preference).
Democracy differs. Democracy relies on an egalitarianism asserting that no one can be superior or sacred to oneself. It legally validates envy and jealousy toward entities holding higher or transcendent sovereignty, validating the primal desire to kill the dictator. Paradoxically, within this strong ressentiment lies a desire to possess “sole sovereignty” and an irreplaceable aura.
Producers perceive this ontological deficiency in the masses and supply products and services to address those needs. Especially after the institutionalization of democracy, commercialized sanctity (romance) became crucial, a topic addressed extensively in previous series. This article examines the results when qualifications for sovereignty shift from work to stake—similar to democracy—and the opportunities this creates for modern producers.
(2) Definition of Proof-of-Work
Proof-of-Work (PoW) and Proof-of-Stake (PoS) originated in the cryptocurrency ecosystem. They address how a blockchain network verifies reliability and maintains a ledger.
- Proof-of-Work: Grants block generation rights and rewards to the participant who extracts the computer’s physical computing power to solve complex mathematical problems first. High-performance mining equipment and astronomical electricity consumption (cost) are mandatory.
- → A qualification proof where one bears pain and risk directly.
- Proof-of-Stake: Grants voting rights and rewards proportional to the ratio of coins staked as collateral in the network. It operates on the same principle as corporate dividends.
- → A degradation where benefits are enjoyed risk-free based solely on stake or status.
The core difference is whether one invests blood, sweat, and risk to create utility for an asset, or sits back holding only a stake (risk-free). If the value of an asset replicates infinitely merely because one is born or holds a right, the scarcity of physical assets increases, diluting the asset’s sanctity (aura). Phenomenologically, while subjective interpretation of phenomena remains free, the issue reduces to how one acquires the authority, force, or qualification to make all members of society accept that interpretation.
As noted above, the democratic welfare state acquired governance legitimacy from the anonymous masses and distributed shares of sovereignty to them for free. In other words, to enjoy eternal life (welfare), it adopted a Proof-of-Stake method (justification by faith) where individuals simply trust the state rather than taking risks to bear responsibility. Consequently, democratic citizens tend toward addiction to claiming rights as victims, predatory legislation using morality, and collective strikes, rather than choosing individual survival. Historically, however, bearing pain through Proof-of-Work brought one closer to actual salvation.
2. Proof-of-Work in the Archaic Era: Order Forged in Sacrifice and Hierarchy
Proof-of-Work performed by priests in the Archaic era consisted of rituals that revealed the origins of all objects and phenomena causing pain and uncertainty to humans, explaining their alignment with the “cosmic order (Cosmos).” It also served as proof of the priest’s qualification to officiate those rituals. For this, severance from deficient, mortal daily life was required; physical and property sacrifices, along with ritualistic imitation of archetypes, were selected as the primary Proof-of-Work.
Given that nature—rather than the state or civilization—was the source of pain for archaic humans, phenomena had to connect to the origin of cosmic creation to become Sacred Realities. The ancient Hellenistic view (body-spirit dualism)—which held that physical and bodily things were false, while ideal and spiritual things were sacred because they were immortal—relates to this ideology.
Therefore, in archaic society, a hierarchy existed between those who completed Proof-of-Work and those who did not. This hierarchy formed the foundation of order. It stands opposed to the worldview of democratic citizens, who champion the dismantling of authority and pluralism as justice, yet continuously suffer from conflict and division.
In this regard, Mircea Eliade introduces the ancient Babylonian myth Enuma Elish. The god Marduk slaughters the chaos monster Tiamat, splitting her body in half to establish the order of heaven and earth. This imprinted the concept among Babylonians that the universe was built upon a massive sacrifice. Consequently, they believed that constructing buildings according to the exemplar Marduk used when creating the universe would imbue those structures with order.
Thus, when building temples or palaces, Babylonians drove wedge-shaped nails forged from bronze or clay into the ground at the corners of the building. Furthermore, they buried clay figurines of seven dogs, snakes, and lion-men beneath the threshold. These represented Tiamat’s monster army subdued by Marduk. By burying the captured monster forms beneath the floor, they tasked them with protecting the building as guardian deities.
Beyond construction rituals, an important Proof-of-Work in the Archaic era was the rite of passage (Initiation) spanning birth, adolescence, marriage, and death. These were hierarchical transitions resetting a human’s ontological and social status. To them, life given in a natural state was incomplete. To become a sovereign entity, one had to kill their animalistic, profane first life. Therefore, initiation Proof-of-Work consisted of extreme trials, symbolic death, and resurrection.
Mythologist Joseph Campbell lamented the disappearance of these initiation rites in modern society, arguing that capitalism eliminated mysticism. However, this is a superficial observation. If capitalism were the cause, it could not explain the flourishing of occults, cults, and heretical religions in the United States, the most advanced capitalist nation.
The actual cause of the disappearance of initiation rites in modern society is the democratic welfare state. To exercise a monopoly on governance through delegated citizen sovereignty, the democratic state brainwashes citizens to believe that every human is born a “complete sovereign” at birth without any Proof-of-Work. Because the democratic welfare state teaches the dismantling of hierarchy and the equality of all beings, initiation rites centered on the hierarchy between a transcendent entity and the individual inevitably disappeared.
Furthermore, under the guise of protecting citizens and stimulating the economy, the welfare system destroyed the mutual aid and local identities once managed by family, region, and religion. When family, regional, and religious communities were intact, systems of belief and symbolic interpretation transcending reason existed separately from capitalism. Consequently, various rituals such as rites of passage and communion survived. Individuals enjoyed existential rewards through these practices, willingly undergoing the rituals.
In the Puritan capitalism visible in 18th-century American literature, mystical elements coexisted with capitalism. By maintaining a low time preference and saving heavily, capitalists invested in the largest productivity innovations in human history while maintaining religious piety and self-reliance across society. Benjamin Franklin represents this era; the foundations of modern civilization were largely established during this period.
However, when the democratic welfare state eliminated the Proof-of-Work of enduring pain, the mature mindset that freedom exists only within the scope of fulfilling personal responsibility also vanished. The prevalence of immature adults over forty today stems from their failure to undergo the Proof-of-Work required to become a mature being. Failing to understand that freedom exists only alongside responsibility, they gather and complain. They have become kidults, pursuing painless progress in their 40s and 50s just as they demanded in their 20s.
Eliade notes that apart from leftist ideologies blindly followed by modern humans, people realize in actual life that reality is neither easy nor complete. Thus, an archaic need to return to the “Sacred Realities”—which they rejected under egalitarian ideology—remains hidden within modern individuals. From this perspective, the public’s indulgence in postmodern art and blind devotion to dogmas like Neo-Marxism appear outwardly as “anti-authoritarian” coolness, but internally reflect a cry of “Father, tell me the answer.” Even within orthodox leftist groups, despite public causes or deconstructivist viewpoints, a strict hierarchy exists based on age and experience between the leaders (“godfathers”) and lay members. Even the left accepts that hierarchy is essential to transform chaotic phenomena into cosmic order.
An interesting aspect of ancient rites of passage is the principle of secret societies (Esotericism) and the presence of a priest (master). This signifies that the experience of being reborn as an individual by adopting the cosmic order is not granted to everyone and cannot be realized alone. The initiate receives training from the master, learning the secrets of the world’s origin. They learn the names of gods, the origins of objects, and ritual tools like the bull-roarer and stone knives for circumcision.
Through this, the practitioner realizes that a tree on the path is not simple firewood, but the axis of the world (Axis Mundi) connecting heaven and earth. The disciple receives an implanted “resolution (eyesight) of sacred perception” from the master.
To raise this perceptual resolution, existing daily perception had to be reset. Initiates were isolated from the comfort provided by family and civilization, exiled deep into forests and thickets. This structure corresponds to Chaos—an unformed state of potential that could become anything.
There, initiates were buried alive in the ground, thrown into freshly dug graves, had teeth pulled, fingers severed, and underwent circumcision where the foreskin was torn with stone knives. Sometimes, collective orgies were used to format the existing social self. All these processes were managed and supervised under the direction of the priest (master).
Eliade stated, “In all archaic societies, access to spirituality is expressed through the symbols of death (chaos) and new birth (cosmos).” Although the specific procedures of initiation rites differed, the core remained identical: the past self had to die in pain for a new sovereign entity to be resurrected.
3. Proof-of-Work in Judaism
(1) Hardware (Body & Bloodline) + Software (Life-Risking Law Compliance)
In Judaism, the required form of Proof-of-Work (PoW) differed between priests and prophets. However, the principle remained identical: achieving a sacred status required paying the cost of bearing pain.
Priests
Priests were hereditary positions officiating the temple sacrifice, Korban, across generations. Becoming a priest required belonging to the bloodline of Aaron, brother of Moses, and verifying the integrity of physical hardware—a pure body without defects or skin diseases.
Subsequently, a ritual applying blood and oil to the body occurred. A bull and a ram were slaughtered, and their blood was applied to the priest’s right earlobe, right thumb, and right big toe. Initiated priests ate and slept inside the threshold of the tabernacle for seven days and nights without leaving. This process served as a strong Proof-of-Work, consecrating all sovereignty over the body’s hearing, labor, and walking to the transcendent Yahweh.
The primary Proof-of-Work for priests possessing this hardware was the precision of executing daily repetitive sacrifices according to the exact sequence and rules recorded in the law without error. A single mistake brought divine wrath, causing immediate death on the spot.
However, the most severe measure imposed on the priestly class (the Levites) was the absolute prohibition of private property. When the Israelites distributed shares of the land of Canaan through war, Yahweh commanded that the Levites receive no land (territory as private property) to farm or pass to descendants, unlike other tribes (Numbers, Deuteronomy).
“You shall have no inheritance in their land, nor shall you have any portion among them; I am your portion and your inheritance among the children of Israel.” (Numbers 18:20)
The economic reason Yahweh eliminated the priests’ assets was that farming or speculating would trigger a time-preference bug, chasing immediate profits. To preserve the law and maintain the order of the Jewish community, priests had to depend on Yahweh for survival. As priests propagated Yahweh’s power more diligently, god-fearing people offered sacrifices more diligently, enabling priests to maintain purity of faith.
Prophets
Conversely, prophets were unrelated to bloodline. They were civilians receiving a sudden calling from God while living secular lives. Consequently, they had to prove the legitimacy of being true representatives of God to the public, requiring far more severe Proof-of-Work than hereditary priests. Deuteronomy 18:22 provides a principle for distinguishing false prophets:
“When a prophet speaks in the name of the Lord, if the thing does not happen or come to pass, that is the thing which the Lord has not spoken.”
That is, a prophet’s future predictions had to come true 100% of the time to gain recognition. To demonstrate fulfillment physically rather than through words, prophets embodied God’s message with their bodies. The public believed their authenticity upon witnessing their endurance through these severe acts. Numerous cases exist in Scripture:
- Hosea: To demonstrate God’s faithfulness and Israel’s betrayal, he married a promiscuous woman (Gomer) from the market by divine command, suffering the destruction of his family.
- Ezekiel: To prophesy the ruin of Jerusalem and captivity, he lay bound in chains on his left side for 390 days and his right side for 40 days. He ate bread baked over cow dung before the public.
- Jeremiah: He appeared in the square wearing a heavy wooden yoke and ropes used for oxen. A hostile crowd struck his face, placed him in stocks at the city gate, and spat on him. Later, thrown into a subterranean mud pit filled with filth, he proclaimed destruction while weeping tears of blood in solitude and terror.
Jeremiah’s plea remains worthy of quotation:
“For whenever I speak, I cry out; I proclaim violence and ruin, because the word of the Lord has become to me a reproach and a derision all day long… If I say, ‘I will not mention Him or speak any more in His name,’ then there is in my heart as it were a burning fire shut up in my bones, and I am weary of holding it in, and I cannot.” (Jeremiah 20:8-9)
(2) Why Proof-of-Work Must Involve Pain: Burning Time Preference and Ego
Questions may arise: “Uniting with God through Proof-of-Work is understandable. Why is severe pain—tearing flesh, surrendering property, destroying lives—necessary rather than offering suitable sacrifices or performing simple formal rituals?”
In conclusion, pain corresponds to symbolic death, and healing corresponds to symbolic resurrection. Therefore, pain is required to be reborn as a new entity. This indicates that the dead entity and the resurrected entity differ hierarchically. Experiencing hierophany requires a prior existential will to accept that an overwhelmingly transcendent entity exists in the cosmos and to actively pursue it. A creature as small as dust enters a value-saturated reality by aligning with and uniting with that immense power.
To differentiate themselves from the public and prove existential hierarchy, priests and prophets lowered current time preference—such as pleasure and comfort—while burning the arrogant ego that mistakenly views itself as the center of the world.
The public possesses high current time preference, falling into fatal arrogance and pretending to control the world whenever moderately satiated. Creating a distinct hierarchy relative to the public requires taking the opposite position. Physical and mental pain, along with asceticism, serve as a shortcut to cut down high time preference and arrogance.
Consider the priests. They executed precise rituals where mistakes caused immediate death, proving bloodline and a low time preference that the public could not imitate. Applying animal blood to the body could be copied, but living a life of serving Yahweh through ritual without private property could not, granting the priest an aura.
A dramatic case is Abraham, the first prophet. When Abraham reached age 99, Yahweh appeared and commanded circumcision—tearing the foreskin of the genitalia—for every male in his household. Without anesthesia or antiseptics, a 99-year-old man using a stone knife to cut the most sensitive flesh on his body served as a life-or-death Proof-of-Work.
Furthermore, Yahweh issued a second mission: take Isaac, the only son obtained miraculously at age 100, to Mount Moriah, slit his throat, drain his blood, and offer him as a burnt offering. To Abraham, this was an irrational and contradictory demand. However, it served as a stress test to verify whether he could abandon his ego before absolute order.
Abraham showed no arrogance. He walked silently for three days and nights, climbed Mount Moriah, bound his son’s limbs on the altar, and raised the knife to strike his throat. At the moment he attempted to slay his enlarged ego, Yahweh spoke:
“Do not lay your hand on the lad… for now I know that you fear God, since you have not withheld your son, your only son, from Me.” (Genesis 22:12)
Mircea Eliade evaluates this event as the initiation of Judeo-Christian faith, transcending general ancient rituals. Because Abraham, as a prophet and ancestor of humanity, offered his life and stake according to Yahweh’s command, God was elevated in the Judeo-Christian world to the status of an “absolute personal God,” “Wholly Other (Ganz Andere),” and “omnipotent monarch.” Yahweh represents the first creator God demanded through unreasoning faith rather than merely explaining cosmic origins.
Paul states the following in Romans (Chapter 4):
“What then shall we say that Abraham, our forefather according to the flesh, discovered in this matter? If, in fact, Abraham was justified by works, he had something to boast about—but not before God. What does Scripture say? ‘Abraham believed God, and it was credited to him as righteousness.’ … Under what circumstances was it credited? Was it after he was circumcised, or before? It was not after, but before! And he received circumcision as a sign, a seal of the righteousness that he had by faith while he was still uncircumcised. So then, he is the father of all who believe but have not been circumcised, in order that righteousness might be credited to them.”
Paul asserted that although ancient primitives understood child sacrifice as a magical custom for tribal prosperity, Abraham obeyed Yahweh’s command solely through faith and was accounted righteous, despite lacking rational understanding of why he had to undergo circumcision or kill his son.
Paul declared that Gentiles could achieve salvation without painful Proof-of-Work like body mutilation or child sacrifice demonstrated by Abraham. This instance represents the first case where Yahweh exempted the Proof-of-Work repeatedly demanded of the Israelites throughout the Old Testament (circumcision, sacrifices, child slayings), granting grace through Proof-of-Stake (faith) prior to physical pain.
Both archaic myth and Judaism gradually diluted Proof-of-Work or transitioned toward Proof-of-Stake methods as in Christianity, a topic to be addressed in the next article.
4. Lessons for Modern Producers from Archaic Humans and Abraham
The anecdotes of Judaism and archaic humans provide insights for modern producers. In a producer’s context, abandoning high time preference and eliminating the arrogant ego specifically means enduring roundabout production and obeying self-emergent market orders (God), such as prices and interest rates.
This directly opposes Keynesian time preference and arrogance, which hold that manipulating interest rates, creating monetary illusions, and inflating prices yields full employment and continuous economic growth. Keynes treated producers as puppets from the beginning, studying economics from the perspective of consumers and workers; hence, mass enthusiasm for Keynesianism is understandable. However, when producers—who should oppose Keynesianism most firmly—act populistically, they abandon the path to becoming the entities (priests) that democratic citizens desire.
(1) The Trap of ‘Sell It Fast’ and Abandoning Investment in Higher-Order Goods
Modern producers focus on malinvestments aimed at selling quickly to the public. Producing quality bread requires understanding recipes, double boilers, mixers, and oven properties, while precisely controlling time and temperature. Once a demo product’s utility is proven, the producer’s duty shifts to structuring capital goods processes. This improves consumer goods quality and lowers costs, increasing product competitiveness.
Achieving this requires altering the production process into a long arrangement of capital-intensive tools. For example, once fish utility is verified, rather than making a fishing rod out of a nearby branch or consuming it as firewood, one must gather 100 more branches to build a wooden boat and venture into the ocean. That remains the sole method to catch more fish. This process naturally develops division of labor, leading the producer to continually expand higher-order capital goods, such as third- and fourth-order goods.
Building this roundabout production system takes time. However, because the democratic welfare state prevents the market’s natural liquidation function, fixed costs consumed merely by breathing become extremely high. That is, because low-productivity workers and companies are prevented from failing, physical prices remain high.
Under these conditions, growing the economy relies on debt, spreading inflation throughout society. In this structure, as prices rise continuously, the pressure to sell as fast as possible overrides technical innovation and investment in higher-order goods. This presents a desperate problem for small and medium producers lacking cash, compared to large corporations.
For example, applying the bread-making scenario, producers receive frozen dough from large factories (OEMs) and execute only second-order processes—fermentation, shaping, and baking—using low-skilled part-time workers. Investing in higher-order goods, such as training skilled pastry chefs, extends the capital recovery period excessively, damaging margins. Producers decorate outer labels with flashy marketing, deceiving the public through alchemy. Because mass consumers lack connoisseurship regarding products, producers act arrogantly, believing that applying trendy gimmicks and narratives suffices for sales.
Even for products requiring at least five years from advanced development to safety testing and mass production, such as automobiles, Tesla—which designs modularly around electronic components to minimize interdependencies within the production process—receives evaluations as an innovative company. This tendency appears strongly in stock markets; Tesla receives praise for pouring volume into markets quickly by compressing processes for existing single models to accelerate production turnover, rather than developing new vehicles.
However, contrary to the roundabout production chain taught as standard in Austrian economics, Tesla develops technology by reducing complex division of labor. Instead of lengthening the roundabout production chain by pursuing interdependence and complementarity among capital goods required for automobile production, Tesla simplifies external supply chains and stamps out whole units at headquarters through modular assembly, coated in Elon Musk’s narrative to sell quickly.
Tesla operates this way because long-term artificially low interest rates from continuous intervention by the democratic welfare state cause malinvestment in markets. Factor prices become excessively expensive relative to actual productivity, causing the marginal productivity of capital to fall. Consequently, increasing capital turnover speed becomes necessary to inflate nominal revenue and stock prices.
Although Tesla’s massive investment in Gigapresses may superficially resemble a heavy hardware-level Proof-of-Work, it essentially serves to collapse the intricate vertical labor craftsmanship and subtle capital-good complementarities into a simplified process optimized strictly for capital turnover. For instance, “Gigacasting,” touted by the media as an innovation, remains a production method filled with defects. Traditionally, Toyota or Hyundai construct the rear underbody of a vehicle frame by pressing over 70 to 80 steel pieces separately, joining them through hundreds of welds. Although the process is complex and highly interdependent, this method increases product durability and repairability.
Conversely, Tesla injects aluminum into a casting mold, stamping out the entire piece at once. While this increases production efficiency for the rear underbody, quality and completeness decline. Consider several chronic defects in Tesla:
- Panel Gap and Micro-Deformation Bugs: Tesla’s method struggles to control the shrinkage rate as molten aluminum cools and contracts in the mold. In traditional methods, an misaligned part requires adjusting only that specific component. In single-piece castings, a 1mm deviation breaks the frame alignment across the entire body.
- Repair Cost Bombs and Total Loss (Scrap) Bugs: Traditional vehicles with bumper damage require cutting out and welding the affected frame parts. Gigacasting uses a single aluminum frame, making replacing the entire frame or scrapping the vehicle cheaper than repairing it.
- Durability and Fatigue Failure Risks: Welded steel assemblies absorb impact with elasticity across weld points. Single-piece aluminum cast parts face physical limits where accumulated large impacts cause sudden brittle fractures, cracking the piece entirely.
Self-employed business owners resemble Tesla. They no longer build roundabout production processes involving boiling broth, prepping vegetables, and dividing labor. They shorten production processes into modular formats, heating and selling meal kits. This allows competitors free entry, shortening brand lifespans. Owners respond by launching new brands repeatedly.
The Austrian school of economics advises building roundabout production processes to reduce production costs because replacing skilled labor with machinery requires lower marginal production costs, increasing efficiency. However, when factor prices across all fields remain excessively high relative to productivity, profit for reinvestment disappears, and lengthy roundabout production chains raise costs instead.
Consequently, production processes for all producers—whether Tesla or small business owners—have become “meal-kitted.” Still, this method sells better, even if it does not produce better. Consumers in democratic welfare states lack product connoisseurship, tending strongly to seek lifestyle and narrative in products. The criterion for premium judgment shifts from product performance to whether the product provides a quasi-spiritual experience. This manifests sometimes as apocalyptic technological optimism, other times as vanity. Observing mass behavior in high-barrier fields like cryptocurrency confirms this analysis: most crypto investors evaluate coins by technical narratives and founder stories rather than analyzing validity through financial structure and history.
Small-capital producers must not act populistically. Large-capital producers operate this way to maximize turnover speed due to high fixed costs that must be recovered. Small-capital producers face lower fixed costs, requiring them to lower time preference and build long roundabout production processes, as demonstrated by archaic humans and Abraham.
Because small-capital producers invest less capital, their production processes remain labor-intensive; competing with large-capital producers through high capital turnover strategies fails. Therefore, small-capital producers must establish businesses using self-owned capital without debt, minimizing fixed costs to secure reinvestable profits.
They must continuously reinvest in higher-order capital goods—such as core technology, recipes, and customer management—increasing integration among capital goods to build moats in niche markets. Maintaining a strategy of selling to consumers with connoisseurship at high prices after lowering costs through roundabout production processes remains essential. Experience indicates that if a product is authentic and scarce, consumers purchase it regardless of price, even at 8 to 9 times production cost.
If executing this strategy proves difficult, working as an employee for large-capital producers offers greater benefit. Because large producers accept paying wages higher than productivity as a given, they do not refuse hiring individuals with production skills and experience at standard salaries.
The Medovik Distribution Strategy previously authored by myself failed to build a mass production process due to various obstacles. Nevertheless, the designed direction remains valid. Had food additives like xanthan gum, emulsifiers, and sorbitol been procured to complete the blending ratio, and had higher-order capital goods bypassing high-cost regulations like HACCP been created, the situation would differ. As the production system evolves to higher dimensions beyond primitive structures—like manually double-boiling butter in a stainless steel bowl over a pot in a store corner—it provides superior utility to the market at lower prices. Blind tests conducted with various cafes and hotels yielded supply inquiries and substantial repeat purchases from customers.
Honestly, small-capital founders in modern markets harbor a real fear: high fixed costs (rent, labor) make them worry they will bleed to death before ever finishing a lengthy roundabout production process. Even with this blog, overcoming technical SEO errors and getting the very first Google index took a full year and a half. Until then, traffic was practically zero.
Yet, the sole reason I survived was that I maintained a lean, zero-debt, minimal-fixed-cost structure.
This is not a call to abandon turnover entirely. If necessary, selling popular, well-known items alongside your flagship offerings to boost capital turnover remains a perfectly valid tactic. However, I want to emphasize that dismantling high-cost structures—where excessive fixed costs force you to depend on high turnover just to survive another day—is the true starting point for small-capital producers.
(2) The End of Those Who Ignore the Order of Prices and Interest Rates
Producers desiring to become priests leading the public must obey the market orders of price and interest rates unconditionally. Yet, many producers treat market orders like prices and interest rates lightly. The danger of interest rates warrants emphasis. Many enter production easily by taking loans deceived by debt expansion signals forced by the democratic welfare state, or by accepting partnership investments. Because the “rite of passage” of accumulating primitive capital through pain was omitted, fatal arrogance grows, leading them to think, “Business is nothing special.”
Economically, easy credit and artificially low interest rates raise producers’ subjective time preferences extremely. This devalues the high-dimensional worth of saving through labor to accumulate future reinvestment profits, driving producers into short-termism seeking fast turnover through immediate loans. Instead of building meticulous roundabout production processes using time and equity, they go all-in on short cycle sales strategies like celebrity endorsements and social media marketing.
However, mixing and matching replaceable second- and third-order capital goods leads to a point where the marginal cost of production for final consumer goods stops falling. Even if business prospers, the operation collapses easily to competitors’ copycat strategies. Furthermore, the business becomes vulnerable to external price fluctuation shocks.
Conversely, vertically long process chains allow flexible responses by reducing costs in sub-processes when raw material prices skyrocket during macroeconomic crises. Single processes lacking hierarchical capital goods structures take raw material fluctuation impacts directly. Currently, South Korean restaurants face a wave of closures as cost increases outpace revenue growth due to rising loan interest rates, labor costs, and exchange rates.
Recalling when I cooked and sold chicken at a pub, frozen chicken was purchased three months in advance from multiple suppliers, while curing know-how, powder mixes, and sauces were produced directly, resulting in a longer roundabout production process than typical chicken shops. When Brazilian avian flu struck and raw material costs doubled, causing losses for other owners, digging into each step of the production chain revealed ways to reduce costs further. Furthermore, with no debt other than COVID-19 relief loans, rising loan interest rates caused no damage.
For example, franchise chicken shops were contracted to purchase 18 liters of oil at a fixed price of 100,000 KRW, whereas the writer switched from a 50,000 KRW option to a 39,000 KRW option. Purchasing an oil purifier extended oil replacement cycles. Extending curing periods and reducing batch sizes adjusted lower-level processes, maintaining a 15% raw material cost ratio. Chicken prices were raised slightly due to increased supply costs. Consequently, when chicken supply prices stabilized, the cost ratio dropped below 10%.
Lengthening roundabout production lines in this manner simplifies responding to cost fluctuations. Conversely, franchise branches receive everything pre-packaged; while appearing easy to manage superficially, achieving cost-reducing innovations proves difficult. Furthermore, high startup costs force most to carry high-interest loans. Starting and operating easily to yield revenue is not inherently beneficial. When sudden crises arrive, an inability to alter capital goods structures causes raw material cost ratios to surge to 60% rapidly, driving operations into deficits.
5. Weakening the Intensity of Proof-of-Work: The Emergence of Baptism
However, across archaic society and Judaism, all rites of passage over time became the domain of a small leadership, reducing the intensity of Proof-of-Work for the general public.
In this context, Korean theologian Young-Oak Kim identifies John the Baptist as the first and greatest heretic of Judaism (Lectures on the Gospel of John, 2007). According to Kim, baptism operates on the logic that entering and exiting river water washes away inner human sin—a concept absent in Jewish law, which built sanctity around Proof-of-Work like sacrifice and ritual.
When John the Baptist invented the logic of “remitting sins through baptism,” masses fatigued by the law gathered at the Jordan River. John the Baptist completed the qualification proof of non-ordinary existence by enduring hardship while eating locusts and wild honey, issuing free pardons to the public on their behalf. This logic was established prior to Jesus and Paul.
The Christian church exerted effort to connect John the Baptist’s archetype to Jesus. Consider an excerpt from John 1:26–34:
“I baptize with water,” John replied, “but among you stands one you do not know. He is the one who comes after me, the straps of whose sandals I am not worthy to untie.” … The next day John saw Jesus coming toward him and said, “Look, the Lamb of God, who takes away the sin of the world! This is the one I meant when I said, ‘A man who comes after me has surpassed me because he was before me.’ … I myself did not know him, but the reason I came baptizing with water was that he might be revealed to Israel.” Then John gave this testimony: “I saw the Spirit come down from heaven as a dove and remain on him. And I myself did not know him, but the one who sent me to baptize with water told me, ‘The man on whom you see the Spirit come down and remain is the one who will baptize with the Holy Spirit.’ I have seen and I testify that this is the Son of God.”
Mainstream church perspectives hold that Jesus received baptism from John the Baptist, inherited the archetype of salvation he administered, and fulfilled his mission as the Christ through the ultimate Proof-of-Work: the crucifixion.
Due to space constraints, how Christianity mitigated Jewish Proof-of-Work, evolved into a popular religion via Proof-of-Stake methods, and established a higher-order capital goods hierarchy structure to become the most monopolistic business in human history will be examined in the next article.
6. Conclusion
The essence of Proof-of-Work is an existential decision and sacrifice: enduring pain directly and obeying hierarchy to transcend a deficient, mortal world. Archaic priests and Jewish prophets chose the pain of burning the ego to transition from chaos into cosmic order.
Conversely, the modern democratic welfare state deprived the public of adulthood—where one bears pain directly and fulfills responsibility—through the sweetness of “Proof-of-Stake,” which recognizes birth itself as a completed share.
Paradoxically, in this equal world brought by the weakening of Proof-of-Work, we witness an unfillable ontological deficiency. For producers, this situation presents both crisis and opportunity. Will one become submerged in narratives of “easy and fast success” to obsess solely over capital turnover, or pass through the painful process of roundabout production silently to acquire an irreplaceable aura?
Small-capital producers cannot execute turnover-centered production strategies like large-capital producers; thus, they must prove their value through Proof-of-Work underground.
In the next article, we will examine how Christianity converted strict Jewish Proof-of-Work into Proof-of-Stake elements to execute mass strategies, while simultaneously establishing a higher-order capital goods hierarchy structure to supply the final consumer good—”salvation”—as a monopoly business.
7. Related Articles
- [The Democratic Citizen’s Brain 1] The Market Landscape Hidden by the Democratic Welfare State: Why We Must Abandon ‘Making’ and Sell ‘Romance’
- [The Democratic Citizen’s Brain 2] Why a Linear View of Time (Judeo-Christianity, Historicism, Democracy) Threatens Modern Producers
- [The Democratic Citizen’s Brain 3] A Phenomenological Guide to Debugging Agony: Why Producers Must Read the Citizen’s Pain to Dominate the Market
- [The Democratic Citizen’s Brain 4] Anamnesis Strategies for Producers — The Alchemy of Memory (Aristocratic Selection vs. Plebeian Consolation)
- [The Democratic Citizen’s Brain 5] Anamnesis Strategies for Producers — The Alchemy of Categorization and the Docent Business
- [The Democratic Citizen’s Brain 6] Anamnesis Strategies for Producers — The Alchemy of Dialectic and ASML Case Analysis
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