To the problem of Inflation, there is a solution. And it’s perfect in every way imaginable.
At first glance, Inflation seems hopeless. It constitutes an insidious, pernicious cancer growing on society at large, draining what’s left of our prosperity, mortgaging our future, and continuously eroding our material and spiritual well-being. This is not some spontaneous, uncontrollable force arising from God, or nature, or capitalism — it is a direct result of our governments’ and banks’ choices to inflate our currency for their own gain. Such actions are made possible by our use of Fiat money — money that our government can will into existence with a couple of keystrokes, which they have done to our detriment since we imposed this counterfeit system upon ourselves.
So, where is the fix? It’s tempting to look for solutions in the political domain. After all, we have a system of self-government, and through democracy we should be able to elect people into office who will represent our will and end our suffering. But, if you’ve paid attention to which candidates make it onto the ballot, and what actions our governments have taken regardless of which parties are in power, you ought to know better. Inflationism has continued under every administration, driving more citizens into poverty and debt, and funding our ongoing international misadventures. Despite this issue being the root of our suffering, it is seldom mentioned in debates, interviews, or party platforms. Of all the wild promises our candidates make, not one of them would dare to promise an end to Fiat money. This is not a coincidence, nor is it a conspiracy — it’s simply due to the fact that our politicians’ aspirations cannot be accomplished without massive money printing. Thus, if there is a fix for this problem of Inflation, it will not come from within government, but from outside of it. And there is a fix.
Bitcoin is the most misunderstood invention I’ve ever encountered. The first several times I heard of Bitcoin, I entirely missed the point. I first thought it to be a sort of payment processing alternative — like, PayPal or Venmo. Later I understood it was a “blockchain” application, but only one of several thousand blockchain applications, all of which promised to change the world just like everything else that comes out of Silicon Valley. I wrote off Blockchain as another gimmicky technology that has nothing to do with me, and Bitcoin as one horse in an unpredictable and unimportant race. I thought I was done with Bitcoin, but little did I know, Bitcoin was not done with me.
Recently, as I became aware of the tyrannical nature of our monetary system, poisoning every aspect of our lives with inflation, my mind was fixated on this question of what to do about it. My friend Tony had grappled with this very question and come to Bitcoin as the answer. He sent me a copy of The Bitcoin Standard, which lays out the case for why Bitcoin is the ultimate form of money, and along the way it explores everything wrong with our current monetary system and how we got here. From the historical account of the evolution of money, to the impacts of inflation on everyday life, to the nature of Bitcoin as the solution to one of humanity’s oldest problems, every page of this book sang to my soul. To Tony, and to the author of this book, Saifedean Ammous, I owe an enormous debt of gratitude.
What is Bitcoin?
I am not about to attempt to fully explain Bitcoin. A lot of great work has been done on this already, and I would encourage anyone to feed their curiosity on YouTube. I’ve personally found that the more I learn about Bitcoin, the more breathtaking I find it and the more I want to know. But, if you just want to know why Bitcoin matters, you don’t need a full understanding of the technology (the same way that you don’t need to understand the inner workings of computer networking to understand why the internet matters). Thus, here is a quick and dirty explanation of Bitcoin.
Bitcoin is digital cash, run by a decentralized group of volunteer participants, each one operating a “node”. Every node keeps a copy of the blockchain, which is the ledger showing every single Bitcoin transaction since Bitcoin’s genesis in 2009. When one person sends Bitcoin to another, that transaction is broadcast to the group, validated, and added to the blockchain. No actual “thing” changes hands — the transfer is entirely digital. However, thanks to cryptographic functions (very clever math that makes Bitcoin work), it’s impossible for such a transfer to be forged. Thus, if you have the private key to a Bitcoin address, and the blockchain shows a Bitcoin associated with that address, you own that Bitcoin.
If you got lost anywhere in that explanation, just stick with “Bitcoin is digital cash”, which is the most important thing to know. Except one other thing…
Bitcoin is the only verifiably scarce asset ever known to exist. There will only ever be 21,000,000 Bitcoins in the world. Eighteen million or so have been created already, with the remainder scheduled to be created between now and 2140. This limitation is built into the protocol of Bitcoin and could only be changed via broad consensus from the nodes, who would be choosing to de-value their own money in doing so. Thus, it is inconceivable that this limit will ever be exceeded. Bitcoin is not just scarce: It is absolutely scarce. And this absolute scarcity is one of the main reasons that Bitcoin is the ultimate form of money.
To the problem of money, Bitcoin is not just a solution. Bitcoin is the solution. It is the most elegant and complete solution imaginable, addressing every shortcoming of every technology ever employed as money. For most of money’s history, Gold was the dominant currency. It was the scarcest commodity humans could find, providing the ability to hold value across time. But gold is not easily divisible, it’s hard to verify, and it’s hard to secure. These difficulties, eventually, are what brought us Fiat money, which solves those problems but introduces a new problem: that we must trust flawed human beings to resist an irresistible temptation; namely, the temptation to enrich themselves at the expense of others. But Bitcoin solves every one of these problems:
- It is infinitely divisible — you can transact as little as 1/100,000,000th of a Bitcoin, and that could be changed in the future to allow further division.
- It is easily verifiable — anyone with an internet connection (or satellite or even a HAM radio) can verify the authenticity of a transaction.
- It’s easy to secure — In fact, it’s seizure-proof. Nobody can access your Bitcoin unless you give them your key, which is not a physical object but an alphanumeric code.
- It’s verifiably scarce — No more than 21,000,000 will ever be found. It is guaranteed to resist inflation, providing the perfect vehicle to store value across time.
Bitcoin fulfills these requirements and it does them in an absolute, superlative fashion. Nothing can be more divisible than infinitely divisible, nothing can be more scarce than absolutely scarce, nothing can be more secure than seizure-proof, and nothing can be more easily verified than Bitcoin, which is trivial to verify and almost impossibly expensive to forge.
But it gets even better. Bitcoin offers additional benefits over other forms of money:
- It teleports! You can send Bitcoin to anyone in the world, without using an intermediary, at a very low cost, in a matter of minutes.
- It’s permission-less, censorship-resistant, and accessible to all. Nobody can stop you from using it and nobody can tell you what to do with it. You are truly sovereign over the Bitcoin that you own.
Bitcoin is One of a Kind
There’s a common misconception that Bitcoin is just one of many cryptocurrencies, and therefore it’s a matter of time before it gets overtaken by some other, more innovative technology. What’s to stop Google or Facebook, or the U.S. Government, from introducing their own cryptocurrency?
Nothing, actually. Launching a new cryptocurrency is easy. It’s been done thousands of times now. Many start-ups have taken inspiration from Bitcoin, launching some new innovative token that promises to revolutionize the world. But they cannot launch another Bitcoin.
Bitcoin is the product of an immaculate conception that cannot be replicated. Its creator, who went by the pseudonym Satoshi Nakamoto, published the idea for Bitcoin in a white paper on October 31, 2008 and produced the first block on January 3, 2009. For the first few years, Bitcoin was just a hobby project, garnering very little attention outside of cryptography enthusiasts. The coins that were produced were traded freely, with a market value of somewhere between 0 and 10 cents. Bitcoin’s fans were interested in building out the software, making it resistant to potential attack or corruption, but few of them envisioned those “coins” would ever be worth, say, $100 (click here to see the current price of one Bitcoin). They openly shared coins with others to expand the network. And as the network grew, it became more secure. As it became more secure, more people wanted to join. Eventually, people became so convinced of Bitcoin’s security that they wanted to hold Bitcoin as a store of value. Bitcoin was not money when it was launched. It became money through this emergent, gradual, and uncontrolled process.
On the other hand, any new cryptocurrency that is launched today or in the future must be jealously guarded by its initial holders because it will immediately have some perceived value. It will not circulate freely and any weaknesses in its infrastructure or protocol will be exploited by attackers right out of the gate. The historic opportunity that Bitcoin had to develop into money will never be afforded to another cryptocurrency, precisely because Bitcoin has already happened.
Put another way, Bitcoin represents the discovery of perfect money, and that discovery is only made once. As new features become available, to the extent that they would make Bitcoin more valuable as money, they will be implemented in the Bitcoin protocol. Thus, Bitcoin will continue to improve itself, maintaining its colossal distinction over every other cryptocurrency and every other potential form of money. To the uninitiated, Bitcoin is lumped into “crypto” or “blockchain” with thousands of other projects. But to the converted (including yours truly), there’s Bitcoin and then there’s everything else, and Bitcoin is what matters.
How does Bitcoin Fix This?
Through most of human history, the currency we use has not been imposed by government, but chosen by people. Over centuries, gold emerged as the dominant form of money because people used it as money. Governments minted coins out of gold because gold was money — not the other way around. It’s only in the modern Fiat era where this causality has been turned upside down. Governments create “money” and use the threat of violence to enforce its value: In some countries, you can go to prison for using other currencies; even in the U.S., legal tender laws make it mandatory for creditors to accept U.S. Dollars. And all forms of money have been subject to seizure and censorship — for example, try sending $20,000 worth of gold or silver from any country to any other country and see how that works out. For the last 100 years, our choice of money has been dictated to us and enforced on us. But Bitcoin fixes this.
Bitcoin is not only the perfect form of money, but it’s a money that we, the people — all of the people, are free to choose. Even the most powerful government without any constitutional restraints will have great difficulty stopping you from owning and using Bitcoin. The more people adopt it, the harder it becomes to stop. And, since Bitcoin is the perfect form of money and it can be freely chosen, it’s conceivable, maybe even inevitable, that Bitcoin will become the dominant form of money for everyone on this planet, putting an end to Inflation. How’s that for hope?
And Bitcoin does not need to replace the currencies we use in everyday commerce to do its work. We can buy our groceries and pay our bills with Fiat money. The currency used in these transactions is not important, so long as people are free to exchange that currency for real money. Thus, in the U.S. today, there’s no reason to abandon your checking account and credit cards in favor of using Bitcoin for your everyday needs (although it can be fun). Rather, the power of Bitcoin is in buying and holding it — using it as a store of value, as a reserve asset. Spend your money in Fiat currency, keep your money (or some of it) in Bitcoin.
I’m not giving investment advice — make your own decisions and do your own research — I do think the fundamentals of Bitcoin are incredibly sound and thus it makes for a great wealth accumulation tool. But viewing Bitcoin strictly as an investment is tragically missing the point, which is this: The act of trading in dollars for Bitcoin is participating in a peaceful revolution, eroding governments’ access to the weapon of Inflation with which they’ve proven so eager to brutalize their own people. Investment goals aside, if you really want to make your voice heard on something that matters, buy Bitcoin.
Bitcoin’s Moment of Truth
We live in a world dominated by narratives. Today, there’s a virus lurking out there, and it seems that half the world believes lockdowns are necessary and the other half doesn’t. One would think that the internet’s provision of information would resolve this disagreement, but alas, it doesn’t. Not only does the internet provide an arsenal of evidence and opinions with which any argument can be constructed, but the evaluation of arguments is corrupted by political agendas, rendering the entire idea of intellectual discourse to be a hopeless farce. Thus, not only do we have competing narratives, but it seems there is no way (or willingness) to honestly test these narratives against reality.
For the last 100 years, this has been the case with economics and politics. The narrative that the Inflation we have is rather low and harmless, and that Inflation is good because it encourages spending, has dominated all journalism on the topic and our economics education at all levels, and it has dictated our public policy. This narrative ushered in our adoption of fiat currency, and thus it’s accompanied by the idea that “money is whatever the government says is money”. To support this grand narrative, its peddlers point to charts consistent GDP growth and stock market growth, explaining that life is always getting better, and crediting this ever-improving world to our government-run monetary system. This narrative is rarely challenged — it’s endorsed by both political parties — and it’s been impossible to test against reality. That is, until Bitcoin.
Until Bitcoin, any arguments against our monetary system were purely theoretical. Many brilliant, courageous economists have made elegant arguments against Inflationism, with some even achieving wide circulation. Friedrich Hayek was awarded the Nobel Prize in Economics for such an argument in 1974. However, none of these ideas were actually put into practice, because they constituted a radical alternative that violated the interests of those in power. Such a radical alternative would never see the light of day. That is, until Bitcoin.
Bitcoin is poised to give the prevailing narrative a devastating reality check. The more Bitcoin succeeds, the more doubt is cast on the idea that inflation isn’t a problem, and that Fiat money suffices for money, and that the government is telling you the truth. As more people trade their US Dollars for Bitcoin, the contrast between the Fiat narrative and reality will become increasingly clear. Those still wondering which is true will have an opportunity to view the two monetary systems, side-by-side. More importantly, everyone will eventually be confronted with the choice of one or the other. Do you endorse the Fiat narrative, or the Bitcoin one? Unlike many of the useless political posturing today, there will be a cost to being wrong. If Bitcoin succeeds, those who chose to believe the Fiat narrative will pay a price as their currency gets devalued relative to Bitcoin. As such, Bitcoin’s success will be an unadulterated moment of truth.
Of course this looming indictment, and potential dismemberment, of our monetary system will be met with hostility from those who stand to lose. Governments will attempt to stifle Bitcoin, but such attempts will prove futile due to Bitcoin’s decentralized nature — it is already in the hands of millions of people, and the network is comprised of tens of thousands of independent operators (nodes) around the globe. There is nobody in charge of Bitcoin — no CEO or president or board of directors. Nobody to haul in front of congress and yell at, nobody to grill on 60 Minutes, nobody to drone strike. There is nothing to hack but individual nodes, and a successful hack would expose a vulnerability that the surviving 99.99% of nodes would be able to patch, making the network even stronger. In this way, Bitcoin is anti-fragile: The more stress it endures, the more resilient it becomes.
Not only does Bitcoin become stronger with each passing attempt on its life, but many of the world’s smartest people are dedicating their own lives to making Bitcoin more accessible and easier to use. From making small transactions easier, to improving privacy, to offering user-friendly (Boomer-friendly) “wallets” to seamlessly store and manage Bitcoin, the infrastructure of Bitcoin is being built out in a massive collective effort, yet there isn’t a single authority directing it. This beautiful mobilization of human talent and energy is building and maintaining a system that is undeniably better than the status quo, and we are free to opt into it. Why wouldn’t you?
Bitcoin is hope
The corruption of our money and its corrosive and devastating impact on our lives is incredibly depressing, but it is real, nonetheless. This is something we all feel, and I believe it is deeply connected to much of the frustration and hostility we see being expressed in so much of public life today.
But against this gloomy backdrop is Bitcoin, the perfect solution to perhaps our most fundamental problem, and its success is almost inevitable. The triumph of Bitcoin will be the triumph of Real money over Fiat money, of Economics over Inflationism, of Truth over Propaganda, of Speech over Censorship, of Sovereignty over Subjugation, of Peace over War, of Consent over Coercion, of Courage over Ignorance, and, ultimately, of Good over Evil.
Thanks for reading
I hope that you’ve enjoyed reading this, and to those who have stuck with me for all three parts of this series (Part 1 is here, Part 2 is here), I hope you’ve found it worthwhile. At the very least, I hope it’s made you think.
Thanks for inspiring
Thanks to Saifedean Ammous for writing The Bitcoin Standard, which convinced me that I’m not crazy and provided a wealth of perspective on economics and a comprehensive introduction to Bitcoin’s role as money. Since then, I’ve drawn inspiration from so many wonderful works, including essays by Robert Breedlove, Dan Held, Stephan Livera’s podcast, Andreas Antonopoulos’s YouTube videos, and the musings of @pierre_rochard, @RussellOkung, @RaoulGMI, @michael_saylor, @stephanlivera.
 The largest-valued Bitcoin transaction to date just occurred on October 26, 2020. The amount of Bitcoin sent was worth $1.1 Billion, and the transaction fee paid to the network was $3.58. https://cointelegraph.com/news/whale-alert-crypto-user-moves-1-1b-in-bitcoin
 Another monumental revelation on an October 31st was Martin Luther’s nailing of the 95 Theses to the door of the Castle Church in Wittenburg, Germany on 10/31/1517. Luther’s theses led to the separation of Church and State, and Satoshi’s thesis has the potential to separate Money and State.
 In May, 2010, Bitcoin saw its first commercial transaction when two pizzas were bought from Papa John’s for 10,000 BTC. Today that would have been a $120 million transaction.
 I don’t mean to write off other cryptocurrencies entirely. There are a lot of promising applications, but these are like startup tech companies in that some may change the world but most won’t matter, and none of them will serve as money, because Bitcoin exists.