Book Review | The Bitcoin Standard by Saifedean Ammous
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The Bitcoin Standard is Saifedean Ammous’s Bitcoin thesis. What makes the book great is that it doesn’t start from Bitcoin and draw conclusions about sound money but, rather, Saifedean reasons from first principles and comes to Bitcoin as the conclusion.
There are a few great takeaways from this book:
1) Low Time Preference
Keeping low time preference is what allows society to exist. Understanding that I (an individual) don’t have to constantly be farming and hunting my food allows me to specialize on other tasks. Which allows the individual to provide disproportionate value to society.
If Steve Jobs spent his whole life hunting food we’d all be a lot worse off.
2) Austrian vs Keynesian Economics
Saifedean dedicates part of this book to his hatred for Keynesian economics. I don’t feel as strongly and don’t know enough but he makes interesting points about how inflationary currency drives high time preference behavior which cheapens culture, art, and society.
This positions Bitcoin as the exit ramp from Keynesian economics. If you have ever wanted to play pure Austrian economics – Bitcoin forces its adopters to play by these rules. It is interesting to view Bitcoin this way – an environment to see how a programatic version of Austrian economics would play out where no central government or authority can change the rules.
I think reading this in tandem with The Deficit Myth by Stephanie Kelton will give you a cursory understanding of the differences between Austrian and Keynesian economics.
3) Bitcoin as Digital Gold
Bitcoin is shown to have all the same properties (durability, portability, divisibility, recognizability, scarcity) that make gold sound money – but with Bitcoin those properties are on steroids. Bitcoin can’t be destroyed, it is much more portable than gold, it is infinitely divisible, it costs much less to verify that what you have is in fact Bitcoin, and as of 2024 Bitcoin will have a higher stock to flow ratio than Gold.
These properties of hard money are important because it stops foreigners (with harder money) from cheaply producing our money and then coming in and buying our country (as happened in Africa when they were using beads as money, and in India and China who were on the silver standard in a world with other nations on the gold standard).
The countries with easy to produce money were easily taken advantage of economically by countries with hard to produce money (this advantage didn’t stop governments with hard to produce money from getting addicted to stimulus – which will forever be politically convenient). In Rome they would lower the % of gold in a coin and today, JPow adds some extra 0’s at the end of a government database.
All of this ties together to present Bitcoin as the digital version of gold that promises to either:
reform the financial system that has been interfered with by governments and Keynesians (however you feel about them aside)
create an entirely separate monetary system where we can see, in real time, whether the tenants of Austrian economics or Keynesian economics are more valuable (based on real market cap figures).
Looking at the USD/BTC chart, it doesn’t look great for the dollar.