The Bitcoin Standard [1/11]
Ready to mine some crypto-knowledge, real and still? πͺ Let's explore "The Bitcoin Standard," a peak not yet fulfilled! ποΈ Though not atop the crypto throne, its insights are well-known, offering a relevant, robust stand. π
In the currency's fast-paced chase, Bitcoin secures a special grace. π The book's wisdom is not a fleeting trend; it's a deep dive into a topic we comprehend.
π Chapter by chapter, with insight and light, into Bitcoin's essence and its future bright. β¨
1. Money π΅
2. Primitive Money πΊ
3. Monetary Metals πͺ
4. Government Money π³
5. Money and Time Preference β
6. Capitalism's Information Systems πΌ
7. Sound Money and Individual Freedom π½
8. Digital Money π»
9. What is Bitcoin Good for? β
10. Bitcoin Questions π§©
Bit-curious or a crypto-pro? Join the crypto show! π Your thoughts, your views π³. What other books or topics set your mind aglow? Share your wishes below. π
Did you dive into my last series and give it a cheer ("Algorithms to live by")? π If you've missed, never fear, check the previous posts! If this series makes you feel wise and cool, give a like, give a share! π
#TheBitcoinStandard #Bitcoin #Cryptocurrency #BookReview #FinanceWisdom #Blockchain
The Bitcoin standard - Money [2/11]
This chapter lays the foundation for the golden principles of our monetary voyage. We are about to delve into three cardinal characteristics of Money, forming the backbone of narrative of the book. π§
1οΈβ£ **Store of Value**: π¦π
Like real estate and gold, money serves as a vault for value, preserving worth across time. Unlike fleeting fashions and perishable possessions, true store of value stands firm, like gold, never old! π
2οΈβ£ **Hard and Easy Money**: π¨π΅
Hard money is a solid stand, like gold coins made by hand; it's tough to craft, like a golden graft. Easy money's quite the contrast, printing more is easy.
3οΈβ£ **Unit of Account**: π·οΈπ²
Money's not just about the spend, but how we compare, and what we intend. A unit of account, so precise, it measures value without thinking twice. Compare the USD which is easy to use to compare against any other good (say X USD against a car). But a house, unique and grand, is harder to weigh against the car. π πΉ
Of particular interest, the authors omit an essential characteristic of money **Payment Fluidity**: its role in everyday transactions. Be it the immediacy of settling a restaurant bill or the ease of an online transfer. In the world of money today, transactions should settle instantly. π
If this chapter intrigued your financial thirst, don't miss out on the previous series! Dive in deeper and give a like, or better yet, share it wide. Join the conversation with
The Bitcoin Standard - Primitive Moneys [3/11]
Chapter two takes us on a voyage to Yap Island, introducing the remarkable Rai stones (https://en.wikipedia.org/wiki/Rai_stones). A tale of stone and tone, where these limstone rocks were once a highly valued currency! ποΈπͺ¨
1οΈβ£ **Used as Currency**: π°
In an era of primitive means, these stones were the money of dreams. Large, hefty, and unique, a currency for the island's peak.
2οΈβ£ **Hard to Acquire**: βοΈ
They were rare and tough to find, a quality that kept value aligned. Difficult to mine, they were the island's precious dime.
π **The Shift in Value**: π
But then came a twist in the plot, new methods to carve, and value was lost. Once rare, then common, the Rai stones' worth fell. It's a lesson profound and true: scarcity breeds value, abundance makes it lose. For money, too much is a vice; scarcity and hardness are the secret spice.
π‘ **Financial Lessons and Principles**: π§
These ancient stones teach a lesson that resonates in the modern financial session. Interest rates, inflation, and value determination are all in play, the hardness or easyness of the money play a large role.
Join me as I continue to unravel this fascinating journey. Why not revisit the previous series? Give it a like, share the wisdom, and let's keep the conversation rolling with #TheBitcoinStandard, #PrimitiveMoneys, #FinancialWisdom, and #YapIsland #RaiStone #Bitcoin
The Bitcoin Standard - Monetary Metals [4/11]
π§ **A Glimpse into Monetary Metals:** In Chapter 3 of "The Bitcoin Standard," we dive into the world of monetary metals. Gold, copper, zinc, and others make their appearance, and the authors decode why gold and silver shine as currency, leaving other metals in the shadows.
π **Market Demand** Defined as the "demand for consuming or holding the good for its own sake," market demand becomes the foundation for understanding these metals in our monetary system. π
π¦ **Monetary Demand** This concept, referring to the "demand for a good as a medium of exchange and store of value," is as vital to our economy as a vault is to a bank. π°
βοΈ **Balancing Act with Metals:** The main idea: if a good is easy to produce, its price balances between market demand and supply. Say zinc, copper and the other metals are relatively easy to produce to impact its price. The two concepts that help to understand this are: 1) The stock-to-flow ratio (amount of good produce / total amount of good) and 2) price elasticity of supply (change in quantity produced / change in price). Gold's low stock-to-flow ratio (we produce 1.5% of the total amount of gold) is an important characteristic to be considered as a sort of currency because changing the price of gold is not easy as for other metals/currencies.π₯
The book also continues with the evolution from Rome's shifting coin standards (reducing the size of coins to increase the number of coins) to the silver-gold standards. Reaching the late industrial revolution when exchanges become more prominent due to fast communication and needs from the people.
π **Remember the Golden Rules:** Stock-to-flow and price elasticity of supply are the main concepts here. They'll return in the Bitcoin narrative. ποΈ
Explore the previous posts, like, and share! Drop a comment below!
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The Bitcoin Standard - Government Money [5/11]
πΈ A Shift in the System πΈ
In the fourth chapter of "The Bitcoin standard" the authors discuss government money. The discuss with the use of printing money and finally the full creation of fiat money when Nixon in 1971 removed the convertibility of USD to gold. Just like Rome's coins lost value over time due to changing the standards of coins (see the previous post), hyper-inflation took flight when government printed excessive money to support to unsustainable projects β¨. The authors explicitly argue that the world wars are due, in part, to governments' ease in financing.
π¦ The Use of Fiat Money β Why It Stands Tall π¦
Taxes, regulation β they anchor fiat money as the nation's primary currency! It's widely accepted since everyone pays taxes, and mandated by banks, payment systems, stores. Here's the rationale: if everyone has to pay taxes, everyone must accept fiat money. Further, your bank does not accept silver coins, but USD or your country's currency, isn't it? π
π§ The Mind Behind the Ideas β Friedrich Hayek π§
Meet Hayek β the intellectual force whose ideas shape how we view money today. A thought-provoking quote: "I don't believe we shall ever have good money again before we take the thing out of the hands of government ... all we can do is by some sly roundabout way introduce something they can't stop" - Hayek, 1984. π
π¬ Join the Conversation π¬
I invite you to dive deeper into these fascinating concepts with me. Like, comment, or share, and let's explore together with analytical flair π. Don't hesitate to explore my other posts, where we unravel the intricacies of finance, economics, and more. See you there!
π‘Tip: "Philosophize this" podcate explains some of Hayek's ideas in 20 min. It is super interesting!Β
#BitcoinStandard #FiatMoney #FinancialWisdom #Hayek
The Bitcoin Standard - Money and Time Preference [6/11]
π In the fifth chapter of "The Bitcoin Standard" π, we embark on a journey that unravels the true essence of sound money. From inflationary insights to a deep dive into saving and investing. And yes, it doesn't shy away from taking a critical look at the rampant printing of money by governments and central banks. π°
β¨ What really is sound money? At its core, it boasts three robust characteristics:
1οΈβ£ Holds its value across time (store of value)
2οΈβ£ Enables efficient trade (medium of exchange)
3οΈβ£ Offers a consistent unit of measurement (stable unit of measurement)
π Taking a global lens, is the CNY, YEN, USD, ARG, COP, EUR truly sound money? While they may have met these criteria to some extent in the past, the inflationary pressures of today paint a different picture, particularly when we assess their value retention over time. π
π Inflation: This chapter decodes inflation as the antithesis of the principles of sound money. In a world where increasing the money supply seems like an easy solution, crafting a currency resistant to inflationary pressures is challenging. Hint: Think Bitcoin's decreasing total supply. π§©
πΌ Lastly, the narrative on saving and debt unfolds. A bygone era cherished savings, but today's society seems to wear indebtedness like a badge of honor. The chapter wraps with some compelling, albeit controversial, examples highlighting the societal repercussions of inflation and unsound money. βοΈ
π’ If this piqued your interest, I'd love for you to dive deeper into my other posts. π Drop a comment, hit the like button, and don't forget to share with your network. Let's keep the conversation going! π
#Bitcoin #SoundMoney #Finance #Economics #Inflation #Savings #Debt #Currency
The Bitcoin Standard - Capitalism's Information System [7/11]
ππ In Chapter Six of the Bitcoin Standard, the concept behind the pricing of goodsis presented. Essentially, when prices dip, society reduces production of that good. A surge in price, on the other hand, nudges to amplify production. This principle is dissected across varied asset classes: commodities, interest rates, fx, and more, with Hayek steering the foundational thought. ππ
ππ To provide perspective, consider the difference between the US depression of the 1920s and the Great Depression of the 1930s. The 20s witnessed a swift recovery, while the pain of the 30s lingered for years. The key difference? During the 20s, the free market autonomously rectified bad business decisions, ensuring a rapid bounce back. The 30s, conversely, saw extended government intervention, which prolonged the crisis. ποΈβ
ππ Lastly, they delve into free trade or what Hoppe labels as "a global system of partial barter." This touches upon the unpredictability of exchange rates and the inherent cost and barriers associated with FX exchanges (reducing the free market). Naturally, governments have an inclination for citizens to lean towards the local currency over foreign ones. This creates obstacles, making it harder to adopt a more stable monetary system, as articulated by the authors (essentially Bitcoin). π±π§
π If this brief insight captivated your curiosity, I invite you to delve deeper into my other posts! Feel free to comment, share, and tap that like button. Together, let's cultivate a space for engaging discourse and knowledge-sharing. π€β¨
#BitcoinStandard #FreeMarket #EconomicHistory #TradeInsights #KnowledgeSharing
The Bitcoin Standard - Sound Money and Individual Freedom [8/11]
𧩠The seventh chapter of "The Bitcoin Standard" provides compelling support for Bitcoin from a theoretical standpoint. Building on the previous chapters, it preps the reader for the concept of the "Bitcoin Standard." The main argument? Governments have no right to manage the money supply, including printing money.
ποΈ The authors challenge conventional theories, specifically those of Keynes and the Monetarist school. Their conclusion: if governments can print money, it leads to less saving and more consumption. They make a thoughtful comparison to the Austrian school, viewing money as a commodity and advocating for deflation and seeing money as a type of commodity.
π£ The second notable concept is the authors' contention that the world wars were a result of governments overspending. With the ability to print money, they could finance massive endeavors, such as wars. The authors present other arguments, but the main takeaway: a limited government is preferable to an omnipotent one.
π° Finally, the authors posit that money is a unique commodity that doesn't benefit from increased production (i.e., printing). They argue that since money can be further divided, it is not a typical commodity. In this respect, society benefits by enrichment. This idea culminates in a an attack on the current banking system: maturity mismatch, and the moral hazard of "too big to fail."
Feel free to explore my other posts, comment your thoughts, like, and share! Engaging with your perspectives always brings valuable insights. π
#Bitcoin #MonetaryPolicy #AustrianEconomics #Banking #Deflation
The Bitcoin Standard - Digital Money [9/11]
In Chapter 8 of "The Bitcoin Standard," the authors delve into the transformative qualities of Bitcoin as the pinnacle of digital money. This chapter isn't just an introduction; it's an insightful fusion of traditional financial systems and groundbreaking digital assets.π₯
π€ Cash & Intermediaries: The Old Guard
Traditional payment systems are often categorized into two: cash payments and intermediary-based payments. The former has the virtue of privacy and directness, while the latter offers risk mitigation by smoothing out potential hiccups in transactions. πΌ
π Bitcoin: Best of Both Worlds
According to the authors, Bitcoin ingeniously combines the advantages of both. Like cash transactions, it allows for privacy and peer-to-peer exchanges without a middleman. Simultaneously, it addresses the inherent risks that typically require an intermediary. How? Through cryptographic verification and decentralized transaction approval, guaranteeing the integrity of each transaction. π―
π Core Concepts & Capabilities
Bitcoin operates on a peer-to-peer network, is not controlled by a centralized authority, and its supply is capped. This results in a unique combination of scarcity, and digital agility. π
βοΈ Balancing Act: Bitcoin in Context
In the concluding remarks of the book, Bitcoin is pitted against both traditional currencies and gold. What sets Bitcoin apart? Itβs not just a currency or a commodity; it's an unprecedented financial instrument that merges the benefits of both. Its restricted supply mechanism forbids any institution or individual from inflating its value recklessly. π‘οΈ
π Whether youβre new to the digital currency landscape or a seasoned investor, Chapter 8 of "The Bitcoin Standard" serves as an indispensable guide to understanding why Bitcoin is not merely another asset; itβs the future of digital money. π
Feel free to explore my other posts for more insights into the intersection of mathematics and marketing. Comments, likes, and shares are always welcome! π€
#Bitcoin #DigitalCurrency #FinancialInnovation #PeerToPeer #Decentralization #Cryptography #MathematicsInMarketing π
The Bitcoin Standard - What is Bitcoin Good For? [10/11]
The ninth chapter of "The Bitcoin Standard" offers a multifaceted look at Bitcoin's potential as a groundbreaking financial asset. It explores Bitcoin as a store of value, a tool for individual sovereignty, a solution for efficient international transactions, and a potential global unit of account. Let's dive in.
π’οΈπ° **Store of Value**
Traditional commodities like copper, gold, and oil have inherent limits in extraction, which helps them preserve their purchasing power. Unlike fiat currencies, Bitcoin also serves as an excellent store of value. Why? Because it's mathematically limitedβ21 million coins, and that's it.
π‘οΈποΈ **Individual Sovereignty**
Bitcoin offers something revolutionary: sovereignty detached from geopolitical constraints. It relies solely on internet and computational power, not on governments or centralized institutions. The framework is theoretically robust, drawing from Rothbard's "The Ethics of Liberty" (https://en.wikipedia.org/wiki/The_Ethics_of_Liberty) and Timothy May's exposition on the cypherpunk movement (https://en.wikipedia.org/wiki/Cypherpunks_(book)).
ππ **International & Online Settlements**
Sending USD, EUR, or other currency internationally? Get ready for inefficiencies, costs, and intermediaries. Bitcoin offers a paradigm shiftβtransactions without counterparty risk. Institutions, listen up: even if you're skeptical, owning Bitcoin is a hedge against its success.
π±π **Global Unit of Account?**
The authors cautiously hint that Bitcoin could potentially dethrone gold or USD as a global unit of account. With its unique features, Bitcoin might just set the standard for exchanging any currency globally.
ππ¬ **Let's Discuss!**
Enjoyed the read? Have insights or criticisms? Comment below, and let's dive deeper into the fascinating world of Bitcoin. Don't forget to like and share!
#Bitcoin #Cryptocurrency #StoreOfValue #IndividualSovereignty #FinancialInnovation #UnitOfAccount
π The Bitcoin Standard - Bitcoin Questions [11/11]
We've come to the end of our deep dive into "The Bitcoin Standard." Rather than summarizing this chapter, I invite you to buy the book and engage in the comments:
Link to the book's website: https://saifedean.com/tbs
π Key Questions Explored in The Bitcoin Standard π
π 1. Is Bitcoin Mining a Waste? π
π 2. Why Nobody Can Change Bitcoin? π
π¦Ύ 3. Antifragility π¦Ύ
βοΈ 4. Can Bitcoin Scale? β
π΅οΈ 5. Is Bitcoin for Criminals? π΅
π 6. How to Kill Bitcoin π
πͺ 7. Altcoins πͺ
π 8. Blockchain Technology π
π€ How did you find this series? Like it? Share it! π
π£ Stay tuned for a compilation post where I'll package all chapters into a single, digestible read.
Feel free to comment, like, and share. Your engagement enriches the conversation.
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