The Roots of Finperma: The Base Layer

Mic Check, Mic Check 1-2-1-2.

Hey Folks. Thank you for entering the conversation simply through reader participation. In this introductory post, I want to set the stage, and the pace for explaining the importance fundamentals aka The Base Layer.

Fundamentals of Humanity:

Criticized for its simplicity, Maslow’s Hierarchy of Needs provide insights into the fundamental drivers of human behavior and motivation. Taking a bottom-up approach, the (3) core drivers of this pyramid are: 1) Basic Needs (Physiological & Safety); 2) Psychological Needs (Belongingness/Love & Esteem); and 3) Self-Fulfillment Needs (Self-Actualization).

By addressing basic needs is to address survival needs: food, air, shelter, sleep (physiological needs) & protection from harm: physical safety, financial stability, health (safety needs).

Once survival and safety needs are satisfied, it is first followed by social connection needs: family & friendships, romance, networking events and integration into broader social communities (belongingness & love needs) & in the secondary by self-esteem & recognition needs: achieving goals, gaining confidence & respect, feelings of achievement (esteem needs).

Lastly, at the pinnacle of Maslow’s Hierarchy of Needs is self-fulfillment needs: pursuit of personal growth, creativity, fulfillment of one’s capabilities (self-actualization.

The only critique of Maslow’s Hierarchy of Needs approach is the idea of seamlessly stair-stepping from one need into another. The pyramid hierarchical concept is limiting, based more in fantasy than reality. History has proven that psychology and human behavior drives evolution and change in cyclical patterns rather than a consistent linear trajectory. This thought-process has led Finperma to adopt a more circular economy of needs, rather than to eschew limitations of either a bottom-up or a top-down approach. Anchored in time being the only constant, at Finperma, we hold firm belief that in order to nurture resilience requires exploration and cultivation across (8) forms of capital: 1) Financial Capital; 2) Social Capital; 3) Spiritual Capital; 4) Material Capital; 5) Cultural Capital; 6) Human Capital; 7) Intellectual Capital; and 8) Natural Capital.

At Finperma, our purpose will be realized if we can decentralize “group-think” and to promote critical thinking instead. Our platform is designed to encourage a sense of ownership, wealth, and wisdom by applying diverse mental frameworks as it pertains to the 8 forms of capital listed above. With deep conviction and motivation, the journey begins.

💡Featured Article:

As we have officially arived to Year 2024, while everyone looks ahead, it is a good time to reflect and gain perspective and time for introspection. Therefore, I present to you all: YearCompass. Click the link to download you PDF version (in your preferred language) of the document and start off 2024 with a bang! Allow yourself a few hours to complete, or if you’re anything like me, give yourself a few days to complete the 20 pages as it can really help give you some direction and focus. Seriously, click the dang link and just begin! As an early Christmas 2024 gift to yourself, you can see how far you’ve come, or what you need to improve upon. But as you ponder or reflect, always remember: In life you NEVER “lose” you only either win or you learn. Enjoy!

A little preview for those who may need to see it before believing in it, here is what you can expect to find…

💰Financial Tip:

Before we can build a foundation, financially, we must first THINK about how our foundation can and should be built and/or altered. What I mean by this, is to just first observe how you operate in the real-world. By using some sort of process of elimination. My thinking for the best way to accomplish this is to write down your goals. What are your priorities? Anything you want to learn? Is there something you’d like to change or improve upon? Any financial, mental, spiritual, emotional weaknesses? Any financial, mental, spiritual, emotional strengths? The things you are spending your money on, do they hurt you more than benefit you? Anything else you can think of?

Reflection is key to be able to identify where changes need to occur. Before we learn about building a budget, it’s important to understand your needs and your wants, to understand yourself on a deeper level. This is how the YearCompass can kickstart this process.

Therefore, Financial Tip #1 is understand the difference between a need versus a want. They are not the same thing. Understanding the distinction between a need and a want is crucial when planning and managing one’s personal finances. With clear information, intent, and purpose, understanding need versus want can lead to better decision-making. It can give clarity to prioritizing and properly allocating financial resources, which organically creates wiser spending.

Needs: Represent essential requirements.

Think: Maslow’s physiological and safety needs.

Needs are things that are essential to our survival and well-being basics. Needs can be envisioned as things that are fundamental aka the common denominator between all of humanity.

Wants: Represent non-essential desires and preferences.

Think: things that are subjective to the individual.

Subjectivity - personal feelings, tastes and opinions - are non-requirements. Wants are things that we “like to have” rather than things that we “need to have.” Wants are perceptions and interpretation rather than objectivity and permanence. According to Oxford Learner’s Dictionaries, subjectivity is defined as “the quality of existing in someone’s mind rather than the outside [external] world” - (Source: Oxford Learner's Dictionaries, 2024)

Think Tank: Why for YOU are your essential requirements and/or your non-essential desires and preferences? Are some harder to distinguish between? Ponder those blurry ones a bit deeper than the others.

🌱Permaculture Practice:

Permaculture - The Concept: The term and concept called “permaculture” was coined in the 1970’s by Bill Mollison and David Holgrem. The root words that formulate “permaculture” are derived from “permanent” and “agriculture” (The House & HOMESTEAD, 2021). Permaculture is an innate system of ecological observation and the application of systems-thinking for building resilience and sustainable ecosystems. Permaculture supports design concepts and processes that closely mimics and correlates patterns of nature. The rule of law in permaculture is to balance. To create balance is to create stability. A mix of systems principled in biodiversity, efficient resource use, and decentralization. All with different infrastructure, but that finds ways to harmonize.

Permaculture mainly focuses on agriculture and land use: growing food, raising animals, and to regenerate and strengthen damaged ecosystems through efficiency. Such a process encourages the building block for resilient communities in the natural world. Historically, resilient system really take center stage during periods of crisis, where the intangibility of efficiency becomes the dominant force.   

Permaculture Design: Permaculture design can be classified as both unique and an efficient design process. It constructively relies upon differing skillsets, knowledge, resources, techniques, experiences, and perspectives of the individual(s) and group(s). Permaculture is “a set of ethics at its core, principles to guide us, techniques that assist us, methodical steps in a design process to achieve our goals, and a call to action (Macnamara, What is Permaculture?, 2012, p. 2) 

12 Principles of Permaculture: The “12 principles of permaculture is at the heart of permaculture, first introduced by David Holgrem (see Figure below). Some view these principles as core design fundamentals for productivity in the permaculture arena. These core permaculture principles are relevant to permaculture as a design in order to harmonize with nature through social, ecological, and economic integration and considerations (The House & HOMESTEAD, 2021). The 12 principles of permaculture encourage guidance for addressing pressing social, environmental and economic challenges faced: biodiversity loss, food and financial security, community restoration, resilience, climate change mitigation and adaptation, economic justice, education and empowerment. Through synthesis, does currency resilience rely upon a set of core principles for functionality purposes? In permaculture and its derivative being financial permaculture are systemic in its design. Innovative design principles is a methodology that can inspire other financial and environmental endeavors, such as The Eight Forms of Capital.

What is so rewarding about these principals is its simplicity to be implemented elsewhere, beyond just nature. The 12 Permaculture Principles are universal thinking tools that guide creativity to help reshape and redesign whatever environment of one’s choosing. It can enhance definition to education, product design, finance, politics, and can bring enhanced definition to education, to finance, to . But with all design processes, many iterations are warranted before finalizing a result that facilitates satisfaction and happiness with the outcome(s).

To reiterate this idea of cyclicality, design, like money, have cyclicality to it because humans are involved. When humans are involved, that is when human behavior(s) come into play, which causes cyclicality. However, as with the (8) Forms of Capital cycling around time as a function, so to does the 12 Permaculture Principles. Think of a clock analogy when considering these permaculture principles, starting from 12 o’clock, with each “hour” representing a new principle to implement. But the purpose of these 12 principles aren’t to isolate them from one another but to harmonize them. Yes, it is important, useful, and often necessary to use one principal at a time, but not always. Sometimes they can be implemented in pairs (this is where the creativity part takes affect). However, “ the whole is greater than the sum of its parts,” and if we can learn to create balance between them, we can provide different perspectives as it relates to application(s).

🚀Bitcoin Breakdown:

How Does Blockchain Technology Work?: Blockchain is a collection of information that gets stored inside of a “block.” Once the block reaches capacity, it then attaches itself to the blockchain chronologically. If any transactions are unable to enter into a block, then attempts for entrance are postponed until the next block is created, an average of 10 minutes.

Information is secured on Bitcoin’s blockchain due to its decentralized digital ledger system. Across a variety of communicative networks, information can securely record and track anything of value. There are private blockchain networks, permission blockchain networks, consortium blockchain. However, the difference between Bitcoin versus all other forms of blockchain-based money is Bitcoin’s censorship-resistance (Gupta, Khoury, & Richardson, 2022). In the “Bitcoin Whitepaper”, Satoshi Nakamoto anonymously invented, Bitcoin, a purely peer-to-peer version of electronic cash that uses digital signatures and timestamps, known as “cryptography” to solve the Byzantine General’s problem by preventing double-spend through the extrapolation of energy for mining and nodes’ operation purposes (Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008). Reaching consensus can minimize deceit, fraud, errors, while maximizing visibility, integrity and engagement. It is imperative that you read to understand, this 9-page Bitcoin Whitepaper. This whitepaper is the foundation for the future of money (link below).

For those more non-technical folks, this statement made by the founder of Merkle Trees & a cryptography legend, may be easier to embrace.

Before giving you my personal core thesis on all topics relating to Finperma (coming in v.2: The Roots of Finperma: D3c0d!ng Finperma), it is important to first lay the foundation for “What is Money?”  

The Functions of Money:  For money to be resilient and efficient, historically, it needs to consist of three functions: medium of exchange, unit of account and store of value. These three functions give value a standard, along with an ability to be traded between a buyer and a seller.

Function #1 - Medium of Exchange: The use-case for money as a medium of exchange is “a common ground for determining value.” (Desjardins, 2015). For a system to function as a medium of exchange, it must represent a standard of value, where all involved parties must accept that standard of value as valuable. The way that a medium of exchange functions is derived solely on trade. Using a medium of exchange allows for greater efficiency in an economy and stimulates an increase in overall trading activity (Chen, Investopedia, 2020). However, the purposes of a medium of exchange are to: 1) facilitate exchange, 2) stored value, 3) maintain a common language and 4) measurement of account.

Facilitate Exchange: The primary purpose of medium of exchange is to assist a sale or purchase (Corporate Finance Institute, 2022). It serves as a way for buyers and sellers to bypass a barter system, thus greatly increasing the efficiency of trade by eliminating the need for a double consequence of wants (someone who has what the other wants and wants what the other has) (Rice University, 2022). This process is done through money being a unit of account.

Store of Value: A medium of exchange that functions as a store of value serves its intended purpose when it can be saved, retrieved, and exchanged for some time in the future, and without losing its value. The utility of money being that it “can be spent or exchanged at a later date without penalty.” (Desjardins, 2015). How money retains its value on a longer-term basis is solely through its privilege of being widely accepted by the masses as both a savings and spending tool for current and future expenses. Money as a medium of exchange and a store of value enables business to save money to later invest in growth and expansion, or for individuals to save money for retirement and other purposes. Money stored for future economic throughput leads to greater economic stability and economic growth (Rice University, 2022).

Maintain A Common Language:  A medium of exchange converts worldwide exchanges into common terms to enable smooth trade transactions. Regardless of the location, the dynamics of money is easily understood by the participating parties (Corporate Finance Institute, 2022). Used for navigating various exchange rates, a medium of exchange has utility as a standardized denominator, which can prevent confusion.

Measurement Unit: The medium of exchange can also serve as a unit of account for calculating the medium’s worth when it is presented in uncommon terms (Corporate Finance Institute, 2022).

Function #2 - Unit of Account: The use-case for money as a unit of account is that it “can be used to compare goods using a common system.” (Desjardins, 2015). Money serves as a unit of account, which allows for a consistent means of measuring the value of things. When individuals and businesses communicate the value of a good or service in units of money, they are transferring a measurement of information of what another person is likely to have to pay to obtain that particular good or service (University of Minnesota Libraries, 2023).

Function #3 - Store of Value via The Properties of Money

Durability: Arguably, the most significant characteristic of “good money” is its stability. Fundamentally, money needs to maintain the same value and purchasing power over long durations of its utility, without losing its integrity. If the value of money continues to change, it will lose its function as a measure of value and a standard for deferral payment. “The money has to be strong enough to keep its usefulness in future exchanges and to be reused several times. For this reason, high-quality papers are used for printing paper money while precious metals are used for making coins” (Chukwuemeka, 2022). Events that spark inflationary or deflationary movements make exchange more difficult to value. It is the longevity of money that gives money functionality, in both material quality and a capability to transact.

Portability: Money needs to be easily transmitted, convenient to carry, and have the ability to be exchanged in either domestic or foreign currencies. Portability of money refers to its ease of use, regardless of location or circumstance. Money as a technology has advanced portability measurements with the innovation of banknotes, then credit cards, and now digital currencies. In contrast, although commodities such as gold and silver are valuable in their own right, they are less portable due to their weight and size. Density in the sphere of money causes grave difficulty to be transported and exchanged, making it lack in portability. All forms of money than people choose to use most can be carried in one’s pocket, some more securely than others.

Divisibility: For money to be divisible, it must have the capacity to be broken down into smaller units of value. Within the current fiat system, banknotes and coins range from higher values to lower values making it effectively divisible. Money having the ability for division, makes it easier for both buyer and seller to exchange goods and services at different values.

Fungibility: Money that is fungible refers to the property of money itself. For money to be fungible, it needs to obtain the ability for each denominated unit to be interchangeable with another unit with the same denomination. “Fungible assets simplify the exchange and trade processes, as fungibility implies equal value between the assets” (Frankenfield, 2022). For example, “in finance and investing, commodities, common shares, options, and dollar bills are examples of fungible goods. The term "fungible" is not identical with barter or liquidity” (Kenton, 2022).

Scarcity: Scarce money refers to the limited availability of a currency. The less scarce money is, the less valuable it becomes. Using gold’s stock-to-flow ratio, with gold inheriting a low stock-to-flow ratio, signals its level of scarcity. Therefore, gold’s scarcity plays a primary role in its public acceptance as a safe and valuable form of money, having lasted for more than 5000 years. Money should be unique and hard to obtain rather than easy to obtain. Although money can be regulated to curb its circulation, “money has to be scarce enough to be of some value, but not so scarce that it is not available” (Chukwuemeka, 2022).

Acceptability: For money to have an acceptability function, it must have widespread recognition, similar to the like of the United States Dollar, gold and others like it. For money to be accepted, it must have wide acceptance by merchants and individuals as a means of payment, and be widely recognized as a store of value for merchants and individuals to be glad to accept. Acceptability is essential for a currency to function as a medium of exchange, and one that is of grave importance for community currency projects, if not the most important. Without acceptability, a currency cannot be used to transact, hold its value, or even settle debts and other obligations in many cases.

📚Hand-Picked Recommendation(s):

Schumacher Center for a New Economics - “Regenerating Local Food Economies: Feeding Eight Billion”

(Source: Schumacher Center for New Economics, 2023).

Remember the Mantra: #SowSaveSustain

Love & Light,

Raven S. Richardson at Finperma

Source(s) Verification:

Jones, T. A. (2017, March 14). Maslow's Hierarchy of Needs. Retrieved from Medium: https://medium.com/thrive-global/maslows-hierarchy-of-needs-5b021e203e34

YearCompass. (2023). Close 2023, Plan 2024. Retrieved from YearCompass: https://yearcompass.com/#download

Oxford University Press. (2023). Definition of subjectivity noun from the Oxford Advanced Learner's Dictionary. Retrieved from Oxford Learner's Dictionaries: https://www.oxfordlearnersdictionaries.com/us/definition/english/subjectivity

The House & HOMESTEAD. (2021). The Principles of Permaculture (And How to Make Them Work For You!). Retrieved from The House & HOMESTEAD: https://thehouseandhomestead.com/principles-of-permaculture/#:~:text=Permaculture%20comes%20from%20the%20root,any%20input%20from%20human%20beings.

Macnamara, L. (2012). What is Permaculture? In L. Macnamara, People & Permaculture (p. 2). Hampshire, England: Permanent Publications.

David, L. (2020, October 11). Scribd. Retrieved from David Holgren's 12 Permaculture Principles: https://www.scribd.com/article/480488058/David-Holmgren-s-12-Permaculture-Principles

Gupta, A., Khoury, E. E., & Richardson, R. S. (2022). When Blockchain Meets Supply Chain. Grenoble: Grenoble Ecole de Management - Operations Management.

Nakamoto, S. (2008, October 31). Bitcoin: A Peer-to-Peer Electronic Cash System. Retrieved from Bitcoin Project: https://bitcoin.org/bitcoin.pdf

Desjardins, J. (2015, December 15). Infographic: The Properties of Money. Retrieved from The Money Project: https://money.visualcapitalist.com/infographic-the-properties-of-money/#:~:text=Divisible%3A%20Can%20be%20divided%20into,to%20withstand%20being%20used%20repeatedly

Chen, J. (2020, November 30). Investopedia. Retrieved from Medium of Exchange: Definition, How It Works, and Example: https://www.investopedia.com/terms/m/mediumofexchange.asp

Corporate Finance Institute. (2022, December 28). Corporate Finance Institute. Retrieved from Medium of Exchange: https://corporatefinanceinstitute.com/resources/economics/medium-of-exchange/

Rice University. (2022). Principles of Economics. Retrieved from Defining Money by Its Functions: https://pressbooks-dev.oer.hawaii.edu/principlesofeconomics/chapter/27-1-defining-money-by-its-functions/

University of Minnesota Libraries. (2023). Principles of Economics. Retrieved from What is Money?: https://open.lib.umn.edu/principleseconomics/chapter/24-1-what-is-money/

Chukwuemeka, E. S. (2022, February 04). 5 Functions and Characteristics Of Money. Retrieved from BScholarly: https://bscholarly.com/functions-and-characteristics-of-money/

Frankenfield, J. (2023, February 12). What Is a Hash? Hash Functions and Cryptocurrency Mining. Retrieved from Investopedia: https://www.investopedia.com/terms/h/hash.asp

Kenton, W. (2022, April 18). What Are Fungible Goods? Meaning, Examples, and How to Trade. Retrieved from Investopedia: https://www.investopedia.com/terms/f/fungibles.asp

YouTube. (2023, December 21). Regenerating Local Food Economies: Feeding Eight Billion | Schumacher Conversations. Retrieved from YouTube: https://www.youtube.com/watch?v=i1Nc7c9YGJo&t=8s