Why Bitcoin is Integral Money
By Johannes Schunter
What makes
something integral? The term ‘integral’ refers to a worldview in the Spiral
Dynamics (SD) model (developed by Don Beck, Chris Cowan and Ken Wilber based on
the work of Clare Graves) that looks at various historic ways of seeing the
world as each holding an important piece of the puzzle without being sufficient
on their own. The tribal worldview thinks primarily in heroic win/lose power
relations, the traditional worldview champions collective rules and absolute
truth, the modern worldview pursues rational science, competition and personal
success, and the post-modern worldview values community, global diversity and
inclusion. An integral mindset then tries to integrate the strengths from each
of these worldviews into an overarching and balanced whole. To learn more about
what the Spiral Dynamics model is about, this website
is a good start.
In the following, I argue that as far as monetary technologies, financial assets or currencies are concerned, Bitcoin is the closest thing to integral money that we currently have, which should have implications on how the integral community deals with it.
What is Bitcoin?
Here is a
primer from the Bitcoin.com
website:
“Bitcoin is the first and most widely
recognized cryptocurrency. It enables peer-to-peer exchange of value in the
digital realm through the use of a decentralized protocol, cryptography, and a
mechanism to achieve global consensus on the state of a periodically updated
public transaction ledger called a 'blockchain.'
Practically speaking, Bitcoin is a form of
digital money that (1) exists independently of any government, state, or
financial institution, (2) can be transferred globally without the need for a
centralized intermediary, and (3) has a known monetary policy that arguably
cannot be altered.
At a deeper level, Bitcoin can be described as
a political, philosophical, and economic system. This is thanks to the
combination of the technical features it integrates, the wide array of
participants and stakeholders it involves, and the process for making changes
to the protocol.
Bitcoin can refer to the Bitcoin software
protocol as well as to the monetary unit, which goes by the ticker symbol BTC.
Launched anonymously in January 2009 to a niche
group of technologists, Bitcoin is now a globally traded financial asset with
daily settled volume measured in the tens of billions of dollars. Although its
regulatory status varies by region and continues to evolve, Bitcoin is most
commonly regulated as either a currency or a commodity, and is legal to use
(with varying levels of restrictions) in all major economies. In June 2021, El
Salvador became the first country to mandate Bitcoin as legal tender.”
So what
makes Bitcoin integral? It features multiple essential elements that are
anchored in different worldviews of the SD spiral, which integrated together
make it something new that is more than the sum if its parts, and thus,
integral:
The tribal worldview (marked by the SD model
with the color RED)
Bitcoin was
designed in 2009 (see original white
paper here) in explicit response to the Great Financial Crisis and its
handling by governments which was read by many as an institutional betrayal of global
taxpayers. It thus represented an anti-establishment counter-movement that
promoted sovereignty of the individual who – with Bitcoin – would not be at the
mercy of non-trustworthy governments and financial institutions anymore, but
could save, transact and operate as their own bank free of censorship, exploitation,
surveillance or confiscation (either directly or via inflation).
Another
defining aspect is the fact that Bitcoin was created by the anonymous
individual or group ‘Satoshi Nakamoto’ which resulted in a vibrant hero myth within
the Bitcoin community, who speak the name in reverence, ponder on his/their
true identity and never cease to be amazed by the foresight, elegance and
robustness of their technological invention (solving among others the Byzantine
General’s problem, a long-standing math problem in computer science).
Both of
these elements are strongly RED features (aka rooted in the tribal worldview),
and they make up an important piece of what Bitcoin is.
The traditional/absolutistic worldview (BLUE)
Bitcoin also
features a zealous, quasi-religious ‘Maximalist’ community of Bitcoin holders
who commit to never sell their Bitcoin and believe without a doubt that Bitcoin
will replace the US Dollar as the world’s next reserve currency (a notion championed
among others by the 2018 bestseller “The Bitcoin Standard”) due to its pre-programmed
halving cycle (the amount of Bitcoins that can be brought into existence is cut
by half every four years), its absolute scarcity (only 21 million Bitcoins in
total can ever be brought into existence), its final and irreversible
settlement of transactions, and its iron-clad rules-based governance mechanism
that achieves consensus over new transactions on the blockchain and
improvements to the software. ‘Code is law’ is the philosophy behind it, and it
illustrates the absolutistic BLUE qualities of this new monetary asset that
unlike any other asset in history cannot be stolen via corruption,
confiscation, inflation or increase of the money supply by governments and thus
protects the asset holder from the whims and moods of power players. In Satoshi’s
own words:
“The root problem with conventional currency is
all the trust that's required to make it work. The central bank must be trusted
not to debase the currency, but the history of fiat currencies is full of
breaches of that trust." (Bitcoin
White Paper 2008)
The bitcoin
consensus algorithm solves this problem of trust, and provides an ultimate unbreakable
blue ruleset to prevent exploitation of monetary assets or transactions by non-trustworthy
actors.
Or as
Preston Pysh, host of a popular business podcast, put it:
“Everybody in the global economy is cheating.
Bitcoin forces all players of the game to now have to play by the rules” (https://twitter.com/PrestonPysh/status/1446637368086302723)
The modern worldview (ORANGE)
The most
prominent element of Bitcoin for many people is its price, specifically its
astonishing price rise over just a few years. Since it first started trading in
July 2010 at a price of USD $0.05 per Bitcoin, Bitcoin has reached a value of
above $60,000 per coin as of Oct 2021, which represents a unfathomable return
of 123 million(!) percent or a 347% return per year. No other asset can
compete, and over the last decade Bitcoin has beaten all asset classes (stocks,
bonds, real estate, precious metals, commodities) by orders of magnitude,
creating countless new millionaires and a number of new billionaires in the
process. It is this aspect that also draws the scrutiny of uninvested observers
who conclude this can only be explained by fraud (read here Lyn Alden's explanation why the critique of Bitcoin
as a Ponzi scheme is flawed), and will inevitably
result in a giant crash that will collapse Bitcoin to zero (read here about the
432 times Bitcoin has been
declared death by the media since 2010). The truth is that only very few
who bought in the early years held on to their Bitcoin, and those who did and after
a long run cashed out for a profit (or are still holding as we speak) were
rewarded for their exorbitant risk with exorbitant rewards. Bitcoin is the
ultimate capitalist ORANGE asset which encourages individual risk-taking for
possible outsized reward like no other investment before. Which other
entrepreneurial or technology venture could give you a perspective of
1,000-fold, 10,000-fold or million-fold returns over the course of less than a
decade?
Of course,
Bitcoin also has been at the cutting edge of science and technology with its groundbreaking
cryptographic innovation, grounded in math and cold rationality and thus in an modern
ORANGE mindset.
The post-modern worldview (GREEN)
Maybe the most surprising aspects of Bitcoin to the uninitiated are its qualities that are based in the values and mechanisms of the post-modern worldview. Bitcoin is not just a cold capitalist asset, it is also a digital decentralized peer-to-peer payment network with no single point of failure, and a strong egalitarian and anti-institutional community behind it, that brings with it all the hallmarks of large social networks (viral adoption, exponential growth, failure redundancy and resilience to recover from shocks). Because of these qualities, Bitcoin has over the years become a life raft for millions of people who are (unlike the financially privileged citizens of OECD countries) living under conditions of financial oppression with double-digit inflation rates, violation of property rights by state actors, censorship and strict capital controls. Alex Gladstein from the Human Rights Foundation has collected countless stories from countries as disparate as Cuba, El Salvador, Venezuela, Senegal, Palestine, Turkey, Afghanistan, Hong Kong or Myanmar who were able to send money to relatives, receive donations for their activism, take their assets with them when fleeing from war or persecution or simply save their nest egg from rampant government-induced inflation. The “Lightning Protocol” which acts as a payment layer on top of Bitcoin’s settlement layer has recently enabled instant, quasi-free and permissionless transactions of even the smallest amounts across borders, and in the process solved the problem of international remittances and their high fees almost overnight. The profound real-world impact for the millions suffering from financial oppression leads Gladstein to the conclusion that
“Satoshi was a human rights activist igniting
the biggest and most effective peaceful protest of all time, planting a seed of
liberty at the root of exploitation and tyranny with nothing more than free and
open source code.” (https://twitter.com/gladstein/status/1449233180955795458)
If unintentional
or by design, the incentives created by Bitcoin’s RED, BLUE and ORANGE
qualities align in ways that make it a tremendously powerful tool against
oppression and disenfranchisement of the poor and disadvantaged, which are
hallmark values of the GREEN worldview. For more information on this dynamic, this
article is a good start.
Even the
popular criticism of Bitcoin consuming too much energy and thus contributing to
climate change has recently been turned into its opposite by the realization
that Bitcoin’s incentives, which naturally seeks out cheap and renewable or
standard sources such as hydropower or flared natural gas make it the perfect
tool to help balance out the unpredictable load of a renewable power grid.
Going forward, this will make Bitcoin likely a driver for adoption of
renewables, rather than an accelerator of climate change.
Bitcoin as Integral Money (YELLOW)
None of
these individual qualities above can on their own deliver the benefits that
Bitcoin as a monetary asset and a payment network offers today. Nor could any
of the worldviews above on their own have given birth to such a dynamic that
marries the benefits of all of them so neatly, creating synergies in the
process that make it bigger than the sum of its parts. In the past, each
worldview brought with it its own monetary standard: commodities for RED,
gold/silver currency for BLUE, gold-backed paper money for ORANGE and untethered
fiat money for GREEN. An integral, aka YELLOW approach to money will integrate
the qualities of all of them, yet transcend them in new ways, initiating a new
era of how currency and economics work and replacing the GREEN fiat money paradigm in its current form. An integral society and economy will
not be a paradise, and it will eventually be transcended by something new
again. So integral money will not be the end all to solve all problems, it will
in fact even create entirely new ones. But integral money will emerge. Bitcoin is the first candidate on the horizon that can
realistically vie for this role. That doesn’t mean it is guaranteed to succeed.
However, given the fact
that due to network effects an incumbent active network is difficult to be
replace by a new player after a certain threshold is reached, every day
that passes by without Bitcoin going away, it increases the likelihood that Bitcoin
maximalists may eventually be proven right and Bitcoin will be an important
part of an integral future.
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