The Trinitarian Formula of Money
Answering the question "What is Money?" through the lenses of information, energy, and spacetime.
Money is mysterious. It exhibits a hidden architecture akin to white light, visible in different spectrums when refracted through a prism. Here, we will explore the nature of money through a prismatic stratification of information, energy, and spacetime.
Money is a human social construct, a (psycho)technology nearly as natural to thinking and acting as language itself. Since “talk is cheap,” market actors rely on money as a more honest means of signaling preferences. Obtaining money requires sacrifice (unless you’re a counterfeiter or central banker), as the supply of money is intended to map directly onto the human time and energy it emblematizes in the marketplace. As the mankind’s most important coordination mechanism (even more important than the calendar), money largely determines how, where, and with who humans spend their time. None of these three aspects of money are the same, yet in some mysterious way money is an amalgamation of all three: information, energy, and spacetime.
In modernity, central banks have monopolized money, corrupting the management of its supply to cheaply acquire energy and spacetime from market actors. This violation of the trinitarian formula comes at the cost of distorted pricing, which is the money-conveyed information system market actors rely upon for guidance. Bitcoin is the only money which virtually perfects the trinitarian formula in an incorruptible implementation. To better understand this modern monetary conundrum, let’s take a closer look at these three key facets of money.
Money is Information
It is not the task of economic calculation to expand man’s information about future conditions. Its task is to adjust his actions as well as possible to his present opinion concerning want-satisfaction in the future. For this purpose acting man needs a method of computation, and computation requires a common denominator to which all items entered are to be referable. The common denominator of economic calculation is money.—Mises
In essence, money is a messaging system that conveys both past and expected future actions. In the same way words represent meaning, money-denominated prices represent action. Visualize the entrepreneurial battleground as a constantly shifting, kaleidoscopic landscape of anticipated future wants. The aim of the entrepreneur is to map present action onto this uncertain terrain in ways that are profitable. Money is the language of value which mediates this relationship between present actions and envisioned futures by expressing prices and enabling economic calculation.
As the language of value, money is an indispensable communication system to the scaling of human interaction. History’s various implementations of money were all mere approximations of this fundamental communication device. Gold, for instance, was favored as money by free market actors across history precisely because its supply most credibly resisted tampering. A supply resistant to political machinations meant gold-denominated prices maximized the signal-to-noise ratio when expressing market actor preferences. Money is a language of economic calculation that answers:
How much capital there is?
Who controls it?
How have these relationships change over time?
In the attempts to refine implementations of money to mirror its fundamentally informational nature, “trust in the bookkeeper’s pen” was necessary to augment the convenience of physical monies like gold, which were cumbersome to transact across space. In other words, debt-based commodity money scales better than equity-based. Interlinked records of market actor assets and liabilities informationalized money, substantially accelerating transactional velocity by deeply quantizing the capital stock which money represents. Abstracting money into a symbol—the purpose of ledger transactions—made it more convenient but decoupled it from its commodity referent: gold. Monetary settlements were now most often deferred rather than final, since debts moved with high velocity but were less frequently settled with physical gold.
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The emergence of deferred settlement gave those entrusted with custody of the commodity money (typically gold) the opportunity to defraud trading partners to their own benefit. In pursuit of convenience, design tradeoffs were made which disconnected money from energy, the substance which imparted its most important security feature of “unforgeable costliness”: the basis of monetary scarcity and, therefore, its purchasing power.
Money is Energy
“There is an impulse inwrought in all living beings that directs them toward the assimilation of matter that preserves, renews, and strengthens their vital energy. The eminence of acting man is manifested in the fact that he consciously and purposefully aims at maintaining and enhancing his vitality.”—Mises
Energy is the most fundamental reality about which humans can measure, communicate, and transact. Energy animates all life and all action. The universal utility of energy, combined with the fact that it cannot be artificially forged or counterfeited, gives it great exchange value among humans. Purposeful action is almost always directed toward the accumulation of more energy: this is at the heart of the entrepreneurial pursuit of profits, the industrial drive toward higher productivity, and the animalistic appetite for food. Profits, productivity, food, and all the other free market outcomes share one common input—energy.
As the good most easily exchangeable for any form of energy or product of energy, money is the epitome of energy in free exchange. For maximal exchangeability, money must be isomorphic to the irreproducibility of energy. If energy (or money) is obtainable through any other process besides free exchange, than cooperation becomes a less effective strategy. For instance, if a monopolist (a central bank) can “print money” at will, then the dominant strategy for gaining energy is to get access to the newly printed money first, thus diminishing the incentives for free trade.
Where attention goes, energy flows. Human beings are capable of consciously allocating their attention, although many survival strategies in nature involve “attention-grabbing” features like the tail-feathers of the peacock or the watch with too many diamonds your flashy friend wears. Money intended to be the mechanism which channels attention toward the actions market actors in aggregate deem valuable. Money is the prime implement of guiding human energy in the sphere of socioeconomics, which also means it is a meta-token for all the energies under human command including fossil fuels, geothermal, nuclear, kinetic, etc. On the battleground of ideas, money tells us which ones are energy accretive when well-executed (profitable) and which are energy depletive (unprofitable).
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Unsurprisingly, as social animals, a primary want of all humans is the establishment of individual territory. In other words, humans desire dominion over spacetime: a safe physical space to live in and the time of others as a means of service. To this end, money contains another useful spectrum.
Money is Spacetime
“Several hundred million years of biological evolution have altered not at all the psychological tie between proprietor and property.”—Robert Ardrey
Homo sapiens, like many others in the animal kingdom, are a territorial species. Staking out property, chasing off trespassers, and defending our homelands are all expressions of the deeply seated biological impulse known as the territorial imperative. Observations in the paleolithic record of widely dispersed hunting cultures confirm that utilization of exclusive land rights was a common occurrence among ancient humans. Similarly, many predatory species form “land-owning” groups: lions, eagles, and wolves all violently guard exclusive hunting grounds. Although land ownership is not a human invention, the proclivity to represent this ownership in a symbolic form that is exchangeable with disparate others is a uniquely human construct called property.
Property is not any particular good. Property is the socially acknowledged, exclusive right of an individual to control and render benefits from an asset. County land records, stock certificates, and UCC filings are all examples of property ledgers. Historically, the utility of these lists was limited by the trustworthiness of (corruptible) list-keepers. As a simple matter of decreasing the costs of transactions, proprietors across history have been forced to trust centralized entities to guard property ledgers from error, duplication, and falsification. Trust in such entities is a (formerly useful) layer between property and its proprietors, but it comes at the risk of corruption.
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As the most marketable good in any economy, money is the most important form of property. Money is a “meta-property” that lays claim to all other pieces of property on the market. Since all property is a derivative of either an asset (market actor time and the capital it produces) or a territory (the space controlled by a market actor), money is an icon of exchangeable spacetime. Territoriality is the tendency of life to forcibly seek dominion over specific regions of spacetime. Money is therefore a token of territoriality expressed in meta-property form. This is why money has such deeply psychological impact on human action, and why the entities entrusted with its custody have so often become corrupted. To this end, only incorruptible money can properly enshrine property in its idealized, inviolable form.
Conclusion
“Humanity and the soil—they are the only real basis of money.”—Thomas Edison
A prismatic perspective on money reveals information, energy, and spacetime to be its primary constitutive elements. Seen this way, all attempts at money historically may be considered mere approximations of an ideal medium of exchange. In this sense, Bitcoin can be considered the invention of idealized money: an immutable exchange mechanism that perfectly maps onto money’s trinitarian formula. Bitcoin most closely mirrors the primary phenomena money is intended to emblematize in the marketplace: information, energy, and spacetime. The decision to hold your savings in Bitcoin is the fundamental rejection of central bank tyrannies that distort pricing information, waste energy in warfare, and forcibly extract spacetime (territory) from free market actors.
Thank you for reading The Trinitarian Formula of Money.
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Sources:
http://indiafacts.org/the-indo-european-languages-and-the-relevance-of-sanskrit/
https://en.wikipedia.org/wiki/File:Shield-Trinity-Scutum-Fidei-English.svg
Hi Robert
I have been trying to get in touch with you
I want to discuss what is going to happen with FIAT MONEY
I have knowledge of what governments are very likely to do
Happy to chat
Thank you
Paul
Brilliant - I've always thought money = energy, but the extra dimensions of information and spacetime are profound. Great piece, Robert.