12/17/2023 0 Comments Entropy magazineIf, however, money is inflating, we lose our measure of value. That is, as long as money remains a constant in the equation. Said differently, all productivity is driven by technology and all technological innovation is deflationary at a fundamental level. These forces are often labeled generically as technology or innovation, and they always create value decreasing informational entropy. Value is created through human ingenuity, environmental necessity and the compounding productivity driven by our accumulation of collective knowledge. It is a compass to guide us toward a better economic path. To change something, build a new model that makes the existing model obsolete.” - Buckminster Fuller Bitcoin = A MirrorĪ deflationary monetary system of absolute hard money acts as a mirror for value creation. “You never change things by fighting the existing reality. The notion is subtle, but once understood, the gravitational desire to dive headfirst down this rabbit hole of myriad societal revolutions becomes an inescapable journey. Once this problem is truly appreciated, the value of an absolute scarcity that is verifiable, immutable and censorship resilient across time and space, as well as stateless (belonging to the free market), we suddenly realize just how incredible an invention this truly is. Quite the opposite is true in terms of the natural state of human progress and free market capitalism. But it is not the natural economic state, and in a broader historical context, it is actually a fairly recent experiment (see Gibson’s Paradox). Since the early decades of the 20th century, we have errantly accepted inflation as a first principle necessity in all free markets. This simple statement can not be overstated. Inflationary monetary systems obfuscate the value created by societal productivity. The most encompassing definition for inflation is more fundamentally the depreciation of money versus the value otherwise created. It is not even your house’s value appreciating. It is not the price of a Big Mac or your electricity bill. Inflation does not = the Consumer Price Index (CPI). Bad money blinds us, causing us to veer off onto spindly and corroded dirt roads. Instead, it is a measure of value created in an economy. The above equation helps us visualize a framework for such a dynamic and demonstrates how bitcoin, as a base layer with a zero monetary entropy, can help propel us into this future. Growth = informational entropy = more time, lower time preference. ○ Human productivity involves taking our temporary and low entropy states - elegant organizations of double-helixed, organic and carbon-based existence - and transforming these arrangements into higher entropy states as we consume other low entropy energy matter to then produce higher entropy energy in the form of work. X ^ = technological innovation’s exponential order of scaling. It is a restatement of this law so as to better understand the relationship between energy, money and information. This hypothesis is essentially an adaptation of the second law of thermodynamics, combining it with concepts from information theory, and using these observations to create a formula that is more comprehensively applicable to human economic activities. Where a positive value indicates an increase in entropy and a negative value indicates a decrease in entropy. Thermodynamic entropy (TE) increases are always balanced by a commensurate decrease in information entropy (IE), so that: No means to evaluate success or failure and no motivation for such risk-transferring behavior. Without money, there would be no measure of volatility. It builds anti-fragility in the system with these increments of volatility throughout time. This is one of the key manners in which money acts as information (beyond price itself), as monetary transfer of risk and uncertainty unveils invaluable morsels of information by way of successes and failures. Importantly, money is also the means to transfer uncertainty and risk to those willing to bear that uncertainty.This principle of money, while simultaneously vague and grandiose, is perhaps so because it is taken for granted, abstracted away and obfuscated by technocrats, economists and politicians alike who are currently co-piloting our existing monetary system.It is perhaps the most elementary and consequential social tool we have and has been essential to our species’ ability to successfully scale (i.e., dominate and hyper-exponentially populate the Earth). All innovation and societal progress flows from this communication. Money is, therefore, the facilitator of our communication and distribution of all economic resources.The “Schelling point” for participants in a society is whichever money exists that can best transmit that price information.
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