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Pico y Pala – Bitcoins, Ethereum, Ripple,…

Bitcoin Data Concept: B.I.T.


Entropy, a pure phenomenon, is intently associated to cash and knowledge power — Bitcoin as info is a discount of entropy.

When Buckminster Fuller was requested by a 12-year-old boy how he would counsel fixing worldwide issues with out violence, he answered:

“I all the time attempt to resolve issues by some artifact, some instrument or invention that makes what persons are doing out of date, so that it makes this explicit sort of drawback now not related. My reply can be to develop a world power grid, an electrical grid the place all people is on the identical grid. All of a sudden, there can be no issues anymore, no worldwide troubles. Our new financial foundation would not be gold or {dollars}; it could be kilowatt hours.”

The above quote from the prescient Buckminster Fuller in 1983 was in reference to his now well-known prognostication of the “Kilowatt greenback”, one thing he first mentioned way back to 1969 (three years earlier than Nixon took us off the gold customary). Whereas Mr. Fuller was referring to a theoretical energy-based unit of cash, what he couldn’t have realized on the time is that he was actually speaking about bitcoin.

Cash: Our Most Basic Unit Of Social Data Know-how

● In a free market society, the best community of data by far is value, which itself is, at its core, an intersubjective settlement of worth. Cash is the abstraction of that worth.

● The “Schelling level” for contributors in a society is whichever cash exists that may finest transmit that value info. That is the place cash “needs” to go.

● Cash is, subsequently, the facilitator of our communication and distribution of all financial sources. All innovation and societal progress flows from this communication. It’s maybe probably the most elementary and consequential social instrument we’ve got and has been important to our species’ skill to efficiently scale (i.e., dominate and hyper-exponentially populate the Earth).

● This precept of cash, whereas concurrently imprecise and grandiose, is maybe so as a result of it’s taken with no consideration, abstracted away and obfuscated by technocrats, economists and politicians alike who’re at present co-piloting our current financial system.

● Importantly, cash can also be the means to switch uncertainty and danger to these keen to bear that uncertainty. This is among the key manners through which cash acts as info (past value itself), as financial switch of danger and uncertainty unveils invaluable morsels of data by the use of successes and failures. It builds anti-fragility within the system with these increments of volatility all through time. With out cash, there can be no measure of volatility. No means to judge success or failure and no motivation for such risk-transferring conduct.

● Extra particularly, a medium of danger transmission is important for the buildup of productive capital. Danger-takers and people with the suitable abilities to construct new

productive capital will not be all the time the identical folks. Those that have already got collected wealth will not be all the time these most match to construct new capital inventory. Thus, a market is required to permit the swapping of danger with the intention to construct the capital inventory. Cash is the medium for such transactions.

With these elementary and philosophical logos as our background state, allow us to now discover how cash as info know-how is vital to our grokking of cash’s entanglement, with the harnessing of power as a method to advance civilization. Not solely does such an exploration assist us to determine simply how detrimental fiat types of cash are to the method of power part transitions, nevertheless it helps us notice simply how invaluable bitcoin is as a method to extricate ourselves from the socioeconomic dilemma we at present face.

Above: The Kardashev Scale- A idea originating from Russian astrophysicist Nicolai Kardashev that touches upon the themes of this text, particularly the connection between know-how and power. The idea posits that to know a civilization’s capability to advance, one should know the obtainable power it might harness. Sadly, Earth at present is outlined as Sort 0, unable to but harness all of the power obtainable on our planet, and never even on the above evolutionary map.

Vitality, Financial Entropy and Data Parity

For the needs of the under dialogue, allow us to outline entropy in its easiest method. Excessive entropy is a state of excessive dysfunction, whereas low entropy is a state of excessive order.

An Entropy Equilibrium Speculation:

Thermodynamic entropy (TE) will increase are all the time balanced by a commensurate lower in info entropy (IE), in order that:

TE = – IE

the place a constructive worth signifies a rise in entropy and a detrimental worth signifies a lower in entropy.

This speculation is actually an adaptation of the second legislation of thermodynamics, combining it with ideas from info idea, and utilizing these observations to create a method that’s extra comprehensively relevant to human financial actions. It’s a restatement of this legislation in order to higher perceive the connection between power, cash and knowledge. It’s easy and symmetrical.

The Energy Of X

X ^ = technological innovation’s exponential order of scaling.

○ Human productiveness includes taking our short-term and low entropy states — elegant organizations of double-helixed, natural and carbon-based existence — and reworking these preparations into larger entropy states as we devour different low entropy power matter to then produce larger entropy power within the type of work.

○ Technological innovation permits us to do that work simpler, sooner, higher and extra abundantly with an identical quantity of sources. That is additionally referred to as productiveness.

In keeping with the famend info idea of Claude Shannon:


Data = Decreased Entropy

Know-how, in flip, is what permits info to scale.

Allow us to additional unpack this idea of data, no less than within the context of this text, as unstructured information manipulated right into a structured and deliberately ordered format that reduces uncertainty.

Simply as the primary legislation of thermodynamics teaches us that power can neither be created nor destroyed, likewise, the second legislation of thermodynamics states that thermodynamic entropy all the time will increase over time. Nevertheless, this legislation says nothing of entropy inherent to info or particular human techniques reminiscent of market economies. Consequently, the second legislation of thermodynamics says nothing of the impression of human technological ingenuity on different types of entropy, notably associated to info.

Given all this evaluation, we are able to refine the above method additional as:


Nevertheless, this equation, spartan as it’s, isn’t full, no less than when utilized to human social and financial techniques. As beforehand mentioned, given that cash is maybe the basest unit of data know-how for social scaling, we should incorporate it into this method, together with the final exponential order of technological scaling, in order that:

(X-ME) ^

Whereby, ME= Financial Entropy

We’ll outline financial entropy because the long-term inflation price of that cash. In reality, financial entropy is influenced by way more than financial inflation alone (mentioned additional under), however for the sake of parsimony, allow us to be content material with this lean definition for the second.

We are able to now write the speculation extra comprehensively as:

The essential realization because it considerations the essential paradigm shift inherent to bitcoin is as follows: Fiat cash includes a web enhance in entropy.

This can’t be overstated and is crucial to this text’s thesis. Such a conclusion is reached regardless of cash theoretically being a type of info that ought to cut back entropy when utilized as supposed. Nevertheless, fiat, sadly, isn’t cash as cash was supposed. Inflation, centralized and thus arbitrary management of the foundations of provide (and makes an attempt at additionally controlling demand by way of administered risk-free charges), international alternate price volatility and aggressive devaluations and mercantilism, subsidies, free debt-supporting zombie industries, opaque and uneven taxation enforcement, and plenty of different behaviors, all conspire to create an combination equation of large entropy in fiat cash economies.

When cash is denominated in fiat, ME is all the time > 0 (and is usually effectively above this threshold, particularly within the fullness of time).

When cash is denominated in bitcoin, ME all the time = 0, interval. No asterisks, no footnotes.

One other essential statement teased out by the above method is that as TE(X-ME) will increase, a system’s inputs (power sources) exhibit better shortage.

Kyle Baranko writes, 

If cash isn’t permitted its intrinsic capability to soak up this shortage, different sources might want to fill that void. This will increase the price of info manufacturing as a result of there are fewer and fewer sources of accelerating thermodynamic entropy from which to transform into reducing informational entropy. Consequently, the system will expertise a drag on productiveness. Such an setting additionally manifests hidden prices like environmental externalities and systemic fragility that are simply cemented into persistent issues that change into tough to repair.

If a rise in TE^(X-ME) results in better thermodynamic or financial shortage, this means that the equal decline in IE results in a better provide of structured, ordered info (reducing informational entropy). Fundamental legal guidelines of provide and demand conclude it will have a tendency to cut back the price of info proportionally.

If, within the type of bitcoin, cash is allowed to soak up thermodynamic entropy, cash will accrue the incremental shortage from will increase in thermodynamic entropy values. That is how we arrive at one other “mathematical” phenomenon, said as NgU, or extra colloquially often called “quantity go up.” Progress does NOT have to = gross home product (GDP); GDP progress = extra consumption.

The most important contributing issue to GDP is consumption, and this has been rising materially as a proportion of GDP ever for the reason that financialization of our economic system by way of exponential progress in cash and debt for the reason that 1971 unraveling of Bretton Woods, the following formation of the fiat customary and the USD petrodollar international reserve system. This pattern solely will get amplified additional after every debt shock, forcing an increasing number of consumption and leveraging to extricate ourselves from the newly indebted state we create with every cycle. That is clearly evidenced within the under chart, each at the place to begin within the early Nineteen Seventies, for the reason that Nice Monetary Disaster (GFC) and extra not too long ago the COVID-19 pandemic.

Consumption in nominal U.S. {dollars} as a proportion of U.S. GDP.

It is a recipe for catastrophe. It’s definitionally unsustainable to develop in perpetuity by this measure given 1) restricted thermodynamic sources and, extra importantly maybe, 2) the inefficient use and squandering of those very sources. This squandering is effectuated by inflationary financial insurance policies that don’t permit the economic system to transition naturally right into a decrease consumption society ensuing from diminished informational entropy and the abundance this might create if we permit it. A sustainable path requires a redefinition of progress away from ideas requiring elevated consumption (amount of products and companies produced, wage progress, time labored, asset inflation/wealth results, and so on.), permitting the evolution of power, info and cash to virtuously enhance our prosperity.

Progress = informational entropy = extra time, decrease time desire.

The above equation helps us visualize a framework for such a dynamic and demonstrates how bitcoin, as a base layer with a zero financial entropy, may also help propel us into this future.

Cash doesn’t = worth.

As an alternative, it’s a measure of worth created in an economic system. Good cash, subsequently, is info. It informs us of our progress. Dangerous cash blinds us, inflicting us to veer off onto spindly and corroded dust roads.

Inflation doesn’t = the Client Value Index (CPI).

Inflation isn’t the price of gasoline costs. It isn’t lumber costs going up. It isn’t the worth of a Massive Mac or your electrical energy invoice. It isn’t even your home’s worth appreciating.

Essentially the most encompassing definition for inflation is extra basically the depreciation of cash versus the worth in any other case created.

Inflationary financial techniques obfuscate the worth created by societal productiveness. This straightforward assertion can’t be overstated. Because the early a long time of the twentieth century, we’ve got errantly accepted inflation as a primary precept necessity in all free markets. However it’s not the pure financial state, and in a broader historic context, it’s really a reasonably current experiment (see Gibson’s Paradox). Fairly the alternative is true by way of the pure state of human progress and free market capitalism. As soon as this drawback is actually appreciated, the worth of an absolute shortage that’s verifiable, immutable and censorship resilient throughout time and area, in addition to stateless (belonging to the free market), we instantly notice simply how unbelievable an invention this actually is. That is the rabbit gap that’s bitcoin. The notion is refined, however as soon as understood, the gravitational want to dive headfirst down this rabbit gap of myriad societal revolutions turns into an inescapable journey.

Bitcoin = A Mirror

A deflationary financial system of absolute onerous cash acts as a mirror for worth creation. It’s a compass to information us towards a greater financial path. Worth is created via human ingenuity, environmental necessity and the compounding productiveness pushed by our accumulation of collective data. These forces are sometimes labeled generically as know-how or innovation, they usually all the time create worth reducing informational entropy. Stated otherwise, all productiveness is pushed by know-how and all technological innovation is deflationary at a elementary degree. That’s, so long as cash stays a relentless within the equation.

If, nevertheless, cash is inflating, we lose our measure of worth. It could be like utilizing the proverbial yardstick that always redefines what a yard is: A desk is 2 yards; however then a yardstick creates extra models and instantly that desk is 4 yards. The desk didn’t develop. The measurement unit shrank. A retailer of worth is simply because it sounds. It shops all of the productiveness and work created. If extra worth is created than a sound cash, then that cash by definition has extra buying energy and shops better and better worth. If as a substitute worth is being destroyed by cash provide abuse, then folks will with out fail search to retailer their worth elsewhere. Cash should all the time, subsequently, begin as a retailer of worth earlier than it turns into a medium of alternate. Deflation is a measure of success in creating financial worth as innovation creates extra for much less. If costs lower by 5% per yr, that could be a a lot better expression of worth creation than our present measures which might be perversely inverted, reminiscent of “actual GDP.” For those who print {dollars} after which depend the worth created in these very {dollars}, what does that really inform you? What when you may as a substitute calculate the quantity of products and companies created versus the {dollars} created. Would that not inform us extra?


We dwell in a time of unbelievable technological developments on more and more exponential progress curves. That is taking info manufacturing to an unseen scale of abundance, however such abundance is diluted and infrequently absolutely negated by fiat’s perversion of cash’s potential to synergistically accommodate such plentitude.

If technological productiveness has the potential to lower informational entropy output for every thermodynamic unit of elevated entropy enter, that is the true definition of wealth creation and prosperity. Extra for much less. Fiat not solely robs us of this wealth, nevertheless it provides to the entropic dissipation polluting our ecosystem and making it ever extra fragile. Sure, “ecosystem.” A phrase most frequently related to environmental dialogues isn’t coincidentally constructed from the phrase “economic system” itself (with its etymological roots within the Greek phrases for “distribution of the house”), as thermodynamic techniques are inextricably linked to techniques of human productiveness (info).

Concluding with the trite axiom, “bitcoin fixes this,” doesn’t even start to do the answer that’s bitcoin the justice it deserves. Bitcoin addresses this drawback like Cinderella’s slipper. It’s a good match or an ideal answer on this case. Not solely does the Bitcoin community inherently take extremely disordered info and asymmetrically (via cryptography) make this info extremely ordered, as eloquently said by Bitcoiner Gigi in his article Bitcoin’s Everlasting Battle, however bitcoin (the cash) with its properties of absolute shortage, decentralized consensus, immutably programmed provide, rule-based and anti-fragile incentive construction, adjustments the sport solely. Every of those properties on their very own would change the sport, as they’re every intensely conducive to decreased informational entropy, particularly when in comparison with fiat. However when mixed, the synergistic discount in entropy is maybe much more exponential than the Cambrian explosion of data that’s being produced by at present’s technological abundance.

It is going to be an incredible day, maybe a nice filter of types, when the ships of cash and different know-how can sail alongside the identical present.

It is a visitor submit by Aaron Segal. Opinions expressed are solely their very own and don’t essentially replicate these of BTC, Inc. or Bitcoin Journal.