Technology or Monetary System: What is the key to progress? — Part II: The case for the Monetary System

Is money really the most important innovation of society?

1. What is Money?
1.1 What is Money really?
2. Intelligent Animals
3. Origin of Life
4. Economics
A. Appendix

What is Money?

  1. A universal medium of exchange, store of value, and unit of account.
  2. Six characteristics of money: durability, portability, acceptability, limited supply, divisibility, and uniformity.
  3. a social device for moving value across space and time
  4. an extension of your mind to think about value, you think in your currency
  5. is energy, it represents a claim on all other forms of energy…
  6. is a way to reduce entropy and a signal of information…

What is Money really?

  1. Evolution by Selection: It is the steady accumulation, through natural selection, of such differences, when beneficial to the individual, that gives rise to all the more important modifications of structure.
  2. Evolution by Combination: Given a set of building blocks, new blocks are generated by combining the starting set of blocks. Each block exploits an effect or phenomenon, usually several.
  3. Information Bottleneck: Given a random variable X and an observed relevant variable Y, the information bottleneck problem study is how well Y is predicted from a compressed representation T compared to its direct prediction from X.
  1. Aggregate properties T are predictive of the future state of the system Y (slow variables).
  2. Aggregate properties T are robust to small perturbations 𝛿X.
  3. Estimates of aggregate properties T are used nearly universally by all components to tune decision-making.
  4. Components largely agree in their estimates of these properties T.
  5. As estimates converge there should be an increase in mutual information between the random variable X and the relevant system variable Y.
  1. Money is predictive of the future of social variables(decision making, allocation of resources, error correction,…)
  2. If you value a machine at T dollars, it is going to be the same T amount of dollars if you use a screw with a different brand and supply chain 𝛿X. The network X is totally different, but T changes very little.
  3. From producers to consumers, to companies to cities, to countries everybody uses the money to tune their decision-making.
  4. Although a mechanism of price determination is less universal. We can think that locally there is an agreement in parties of what is the “right” price for an asset.
  5. Similarly, when these local estimates converge we have a high correlation between supply and demand. In other words, correct pricing is fundamental for a party to survive in the market.

Intelligent Animals

  1. Also as a cartoon explanation. In the retina, we have cone and rod cells that are photoreceptive cells. In particular, the cone cells are the most mostly sensitive to colors near Red, Green, and Blue. Therefore all of our human colors are really a combination of these three colors.
  2. However, we can explain this phenomenon without knowing the mechanism behind it. We can say that for us humans, the RGB color data structure solves the information bottleneck problem in a way that we can make useful predictions with an image of only these three colors.
  1. We can recognize objects perfectly with an RGB image.
  2. If we change pixels randomly inside an RGB image, we can still recognize the object inside. See image encryption and adversarial images.
  3. We use image recognition universally in our life and in technology.
  4. Most of the time we coincide with what objects are really on the image. See the infamous blue dress.
  5. When consensus arrives, we can be sure that the original multispectral image is highly correlated with the objects inside. Therefore the colors are highly correlated with the material of the objects the image is capturing.
  1. A good explanation eventually leads to the construction of robust technology.
  2. Good explanations are supposed to be useful in a variety of different physical situations.
  3. We use explanations in all aspects of our human decision-making.
  4. Humans largely agree on what a good explanation is.
  5. The better an explanation of the same phenomena, the easier is to build technologies out of it.

Origin of Life

  1. Metabolism first hypothesis: some aspect of modern metabolism existed naturally in the environment before genes and before proteins.
  2. Life is a planetary process: Life is not a property inherent to things. The property of being alive is defined by participating in the order of the biosphere, all the things that build it up, and all the things that break it down. And things like cells and viruses are a form of individuality.
  1. Organismal Individual: An entity that is shaped by environmental factors but is strongly self-organizing. Nearly all of the information that defines such an individual is internal and based on its own prior states. Mammals and humans are in this category.
  2. Colonial Individual: This entity involves a more complicated relationship between internal and external factors. Individuals in this category might include an ant colony or a spiderweb — distributed systems that are “partially scaffolded” by their environment but still maintain some structure on their own.
  3. Environmental Determined Individual: This entity is driven almost entirely by the environment. If the scaffolding is removed, the entity would fall apart. It’s like a tornado, which dissipates under the wrong temperature and moisture conditions. The very first life to arise on Earth was probably like this.
  1. Darwin’s experiment: Take a square plot of land, and carefully remove all visible living things from the soil. Uproot all the plants, sift to remove insects, and left the plot alone to see how it would be recolonized. What we observe is that the plant species that recolonized the plot are first of the fast-growing unstable variety, that a whole bunch of weeds and bugs spread over the new area. Then, over time, other more hardy species slowly took over from the weeds, until, many months later, the plot was indistinguishable from the remaining land in the lot.
  2. Life preempts life: ” But if (and oh what a big if) we could conceive in some warm little pond with all sorts of ammonia and phosphoric salts, light, heat, electricity etcetera present, that a protein compound was chemically formed, ready to undergo still more complex changes…at the present day such matter would be instantly devoured or absorbed which would, not have bee the case before living creatures were formed“ — Charles Darwin, in a letter to Joseph Hooker (1871)
  3. Life is inevitable: Given the chemical and geological cycles that the earth has been constantly generating, one necessarily gets a background of chemical regularity. Then individuals arise in the “paths of least resistance” defined by the concentrating mechanism of organic chemistry, the cycles in metabolism, and the earth’s energy sources.
  1. Photosynthesis Transition: Structures in the individual were able to harness the energy from sunlight to turn carbon dioxide and water into oxygen gas and sugars, which they could use for energy.
  2. Endosymbiosis Transition: An individual capable of photosynthesis was “swallowed” by another pre-historic individual. In doing so the pre-historic individual acquired its own photosynthesis mechanism. This combined organism is believed to be the ancestor of modern plant cells.




  1. #176 — Robert Breedlove: Philosophy of Bitcoin from First Principles. Podcast Notes
  2. Ron Maimon (, Is Stephen Wolfram’s NKS, an attempt to explain the universe with cellular automata, in conflict with Bell’s Theorem?, URL (version: 2014–11–22):
  3. Jason Smith, The price mechanism as information bottleneck, URL(version: 2017–10–05):
  4. Flack Jessica C. 2017. Coarse-graining as a downward causation mechanism. Phil. Trans. R. Soc. A.3752016033820160338
  5. Tishby, N.; Zaslavsky, N. Deep learning, and the information bottleneck principle. In Proceedings of the 2015 IEEE Information Theory Workshop (ITW), Jerusalem, Israel, 26 April–1 May 2015; pp. 1–5.
  6. Smith, E., & Morowitz, H. J. (2016). The origin and nature of life on earth: the emergence of the fourth geosphere. Cambridge University Press.
  7. What Are the Six Characteristics of Money?
  8. 72 | César Hidalgo on Information in Societies, Economies, and the Universe
  9. An Interview with Eric Weinstein
  10. New Theories on the Origin of Life with Dr. Eric Smith
  11. Inevitable Life?
  12. What Is an Individual? Biology Seeks Clues in Information Theory.
  13. How a single-celled organism almost wiped out life on Earth — Anusuya Willis
  14. The mysterious origins of life on Earth — Luka Seamus Wright
  15. What Is The Metabolism-First Hypothesis For The Origin Of Life?
  16. P. N. MALANEY, The Index Number Problem: A Differential Geometric Approach, PhD Thesis, Harvard University Economics Department, 1996.
  17. Gabriel Peyré, Mathematical Foundations of Data Sciences.(2019)
  18. Goodfellow, Ian, et al. Deep learning. Vol. 1. №2. Cambridge: MIT press, 2016.
  19. Arthur, W. Brian. The nature of technology: What it is and how it evolves. Simon and Schuster, 2009.
  20. Judson, O. The energy expansions of evolution. Nat Ecol Evol 1, 0138 (2017).
  21. A New History for Humanity — The Human Era
  22. When Time Became History — The Human Era
  23. Why Civilization Is Older Than We Thought
  24. The Growth Lab at Harvard University. The Atlas of Economic Complexity.



My research interests include Hierarchical Assembly, Computational Design and Digital Fabrication.

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Keith Patarroyo

My research interests include Hierarchical Assembly, Computational Design and Digital Fabrication.