Presence In Connection

Embodied Relational

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Por primera vez en español, ofreceremos la formación en la práctica mundialmente conocida como Circling, Relacionalidad o Presencia en Conexión, totalmente online (participa desde cualquier parte del mundo).


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Updated: Sep 29

This is an exploration of Bitcoin through the lens of Integral Theory's levels of development, which are similar to the value memes of Spiral Dynamics. Both systems use colors as a shorthand for each level/worldview, so I've included the colors from both systems here.


The first thing I'd emphasize is that it's essential to distinguish between Bitcoin (BTC) and crypto. This can seem like a strange distinction, since Bitcoin is one of the original "cryptocurrencies," and since the business models of most companies in crypto, first and foremost among them the exchanges like Binance and Coinbase, are predicated on conflating Bitcoin with crypto. It's important, however, because most of what is revolutionary and defensible about Bitcoin doesn't really apply to the rest of crypto. And much of what is justifiably reprehensible about crypto (endless pump-and-dumps, lack of real value, avoidance of accountability, etc.) doesn't really apply to Bitcoin, although of course the Bitcoin and crypto markets are still very intertwined.


An analogy for this relationship between Bitcoin and crypto could be to imagine that when the internet was first being developed a bunch of companies sprang up offering people the opportunity to "invest" in the "new and improved internet." They'd probably gain traction riding on the coattails of the original innovation and a few might even create significant tech (that would likely eventually get folded into the original internet), but most would ultimately be seen as redundant. This is how it is with Bitcoin and crypto. Bitcoin is the innovation, crypto is the "Attack of the Clones." I say all this to be clear that what I want to look at in integral terms is mainly Bitcoin (BTC), not crypto.


I think the pseudonymous Satoshi Nakamoto may have been coming from a Teal/Yellow or Turquoise level of cognition when they created Bitcoin. Firstly, because Bitcoin is a rather multi-disciplinary artifact that takes insights from various fields (Austrian economics, distributed ledgers, game theory, cryptography, peer-to-peer networks, open source software development) and combines them to create innovation that was previously unthinkable. This is similar to integral theory itself, which Ken Wilber (its originator) has stated is not so much a new invention as it is a cross-paradigmatic synthesis that helps enact a more whole reality. As an aside, I think the practice of Circling could also be seen that way, as combining elements of different paradigms like therapy and meditation to create something novel.


Another reason why I theorize that Bitcoin may have emerged from integral cognition is that it seems to enlist aspects of many of the developmental levels in ways that harmonize them and help to make the entire network (ie. the entire spiral) more robust. This is what integral thinking at its best can do. I'm not saying all of these were deliberately intended by Nakamoto, but they do seem to be playing out that way.


So from a Magenta/Purple perspective, there's a magical, almost totemistic relationship that many bitcoiners have to Satoshi, to the various elements of the network (running a node, block clocks, stacking sats, the Bitcoin "B", etc). There's definitely a strong sense of tribe, especially among the so-called "bitcoin maxis." This seems to provide a pretty solid base on which to build. There's an increasing number of members of this "tribe" that are simply buying BTC at every price and holding for the long-term and will never stop buying. As the saying goes "HODLers set the floor." The tribalism of course has its shadows as every meme does, and I think that's evident right now in the figuratively cannibalistic way that some bitcoiners are turning against each other during these times of extreme fear in the markets, perhaps on some level hoping that the symbolic sacrifice of certain public figures in Bitcoin might "appease the gods" in their unrelenting bearishness. ; )


From a Red perspective, Bitcoin is sometimes described as the "apex predator" of all the forms of money to date. In monetary history it's clear that the hardest (to debase) form of money tends to win out (gold won over other goods, for example). Bitcoin is ruthless in the sense that it simply continues to do its thing, regardless of how anyone feels about it, and continues to fight off (and arguably strengthen from) every form of attack, from attempts to hack the network, to China's mining ban (the "honey badger don't care" meme comes to mind).


In terms of Amber/Blue, one of BTC's greatest strengths is its dogmatically enforced immutability. The core elements of the Bitcoin software, including the hard cap of 21 million coins, the periodic halving of the supply issuance and the difficulty adjustment are about as "set in stone" as anything can be. That is to say, these qualities are rigidly enforced by all the users who run a node and they are uncompromising in their fidelity to Satoshi's original code ("fundamentalist", if you will). Changes to Bitcoin are possible, but are incredibly difficult and take a long time to implement (the ethos is precisely the opposite of "move fast and break things.") This immutability is often critiqued by people in crypto, who like calling BTC "boomer coin" but is in fact what allows for the credibly enforced digital scarcity that makes BTC a highly investible asset in the eyes of more and more savvy investors (Bill Miller, for example).


And then there's Orange, where Bitcoin's unprecedented rise in value against fiat over the past decade has done a better job promoting it than any altcoin's marketing team ever could. This "number go up" technology, resulting from the digital scarcity of the 21 million cap and the supply halvings, is perfectly tailored to entice the profit motive of Orange. It also inspires massive innovation and entrepreneurial spirit, both in the forms of those who choose to build on/for BTC and those who succumb to the temptations of seignorage (or don't yet know any better) and join the broader "crypto" industry. I also think that Bitcoin could potentially revitalize capitalism in its healthier form, allowing for truer expressions of free market dynamics thanks to its immutable monetary policy, as opposed to the many forms of crony capitalism (bank bailouts, the Cantillon effect) and manipulated markets that we contend with today (the fact that every utterance from a handful of unelected central bankers has the power to aggressively move markets I think is evidence enough of how much we've strayed from a true free market, merit-based economy).


Green, of course, is represented in BTC's decentralized structure and peer-to-peer nature as well as the fact that it’s open source software. Bitcoin's permissionlessness (basically anyone with access to a mobile phone can send value to anyone else, anywhere in the world) makes it a powerful force for leveling hierarchies of privilege (ie, access to bank accounts, access to dollars, "accredited investors", etc). Of note is the fact that most of the top 20 countries in Bitcoin adoption are nations experiencing hyperinflation and/or severe currency controls, things we in the "1st world" don't have to worry about (yet?). For all its volatility, more and more people in places like Turkey or Argentina would rather hold BTC than their own collapsing currencies. (Alex Gladstein from the Human Rights Foundation has written extensively on the subject, I highly recommend checking out his work). Also pertaining to Green are the ways in which Bitcoin mining is (ironically, given how it's often portrayed) helping to curtail carbon emissions, for example by monetizing flared methane gas in oil fields or by providing load balancing that's helping stabilize the energy grid in places like Texas. Furthermore, Bitcoin is the first form of truly global money we have ever had. An argument could be made that we already had this in gold, but the difficulty in transporting large amounts of gold makes it cumbersome and impractical as a global means of exchange. Bitcoin, on the other hand, can be sent to anyone, anywhere in seconds or minutes. And most importantly, these transactions cannot be censored or stopped by any authority. In terms of money, it doesn’t get much more egalitarian than that.


From a Teal/Yellow perspective, Bitcoin is endlessly evolving. Although as mentioned before, its fundamental monetary properties are practically impossible to change (Amber/Blue base), the Bitcoin ecosystem is growing in leaps and bounds. New Bitcoin Improvement Proposals (BIPs) are being put forth by developers all the time. These proposals go through a long process of code review and testing in which the Bitcoin community and all the users who are running full nodes (verifying the code and transactions) get to decide together whether the proposal is actually an improvement for the network. This process itself seems to me like a beautiful synergy of Amber/Blue, Orange and Green. There’s the immutability of Bitcoin’s core principles and monetary properties, but also a merit-based welcoming of the best proposals to improve the protocol, and a consensus-building that needs to happen for these proposals to be adopted by the wider ecosystem. These proposals include improvements in Bitcoin’s privacy, advances in ways BTC can be custodied (for example, by multiple parties) and much more. In addition, Bitcoin is being evolved on its 2nd-layer, and this is an exciting area where BTC is becoming a robust medium of exchange through solutions like the Lightning Network.


There’s a way in which Bitcoin seems almost like a living organism. It continues on its trajectory, regardless of what any of us believe about it. It’s constantly evolving and transforming and can be many things to many people (it’s a wonderful Rorscharch or mirror for each of us, showing us the way we see life). I find it to be a thing of great beauty.

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I think it's essential to know what we actually mean when we say "inflation."


When most people use the term, they mean CPI inflation, or simply put: how much the prices of things are going up. So 9.1% CPI inflation (the "official" number this month in the US) means that on average prices have gone up 9.1% from the same time last year (and yes, that's a lot, it's much higher than normal, and the real number is probably much higher than 9.1%).


But another, perhaps more accurate, definition of inflation is this: an expansion of the supply of money.


New money (new dollars, euros, pesos, etc) are created through a convoluted system of debt and credit, by central banks and other financial institutions. The supply of money is greater, therefore we can say it has been inflated (like a balloon). An inevitable consequence of this inflation of the amount of money in the system is that the purchasing power of every unit of that money decreases. Hence, monetary inflation leads to price inflation. Things cost more and more, not necessarily because they are more desirable or scarce, but because the money is worth less and less.


So is Bitcoin a good inflation hedge? Well, let's think it through, having now defined inflation as an expansion of the money supply (sometimes referred to, somewhat inaccurately, as 'money printing'):


When COVID hit, the Federal Reserve's response was a massive expansion of the money supply. Several trillion dollars of new liquidity were injected into the US economy through stimulus checks, subsidies for businesses, etc. If you bought Bitcoin around the time that this monetary expansion (inflation) was kicking into high gear (Spring or Summer of 2020) you could have bought at somewhere between 5 and 10 thousand dollars per coin.


This meant that over the next year or so your purchasing power would have increased 5 to 10X, as Bitcoin's price ran up to over 60K per coin (twice). Even now, after the massive drawdown in all the markets, you'd still be up 2X or more on your Bitcoin holdings. In that sense, I think Bitcoin is one of the best inflation hedges. If you buy it when the money supply is being expanded (inflated), you can hedge yourself quite nicely against the inevitable CPI inflation (prices going up) that eventually follows as a consequence of there being more money in the system.


As an addendum, I think it's also important to understand that CPI inflation isn't only caused by monetary expansion (as much as we bitcoiners like to oversimplify things in this way). It seems pretty clear that price increases are caused by a whole slew of complex factors that include supply chain disruptions, energy scarcity, etc. Monetary inflation is definitely a cause, but it isn't the only one. And we're experiencing a bit of a perfect storm for CPI inflation at the moment, because we're seeing the consequences of massive monetary supply expansion (inflation, in the way I mean it) plus all the other factors in a unique confluence. Interesting times indeed.


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