I wrote this up a few weeks ago for a family friend who wanted to know "why Bitcoin." Hopefully it will be useful to others too.

# Why you, personally, should care about Bitcoin

Scarcity is a reality of the world. For most people in the developed world today, scarcity is not a matter of life and death. But it absolutely used to be. If you go back in time just 1,000 years, a bad crop didn’t mean “no money to buy a PS5 this year.” It meant starvation. Thankfully, in the first world, that isn’t usually the case today. And hopefully that same sentiment will extend to a larger proportion of the world population over time.

What changed? It wasn’t the land, and it wasn’t the crops spontaneously changing how they behave. It was human ingenuity. We–the human species–invented marvels of machinery. Tractors that could easily do the work of many people. Large-scale transportation and shipping to bring food where it’s needed. Improvements in fertilizer technology and irrigation systems. And if I knew more about agriculture, I’m sure much, much more.

Put a different way, the amount of human time needed as input to create the same amount of crops went down.

You may notice that I didn’t say “food is cheaper.” Cheaper gives a very specific idea to most people: the amount of dollars I spent to get the same thing has gone down. One reason I didn’t say this is because I’m talking about a time period from before the dollar existed. But there’s a much deeper reason: inflation.

The purchasing power of our money goes down over time. That’s a fact, and it’s a fact that most of us accept. Most economists actually believe inflation–in proper levels of about 2% per year–is a good thing. Inflation means that money saved today won’t have the same purchasing power tomorrow. It’s an incentive for people to spend money instead of storing it. We’re told it’s what makes the economy work.

Going back to technology: it’s not only revolutionized food. It’s revolutionized everything. I can hop in a car and drive to my kid’s school to pick him up when he’s sick, instead of walking a mile and then carrying him home. It saves me time and energy, it makes him happier. I can spend less time doing grunt work, and more time producing things of value (like writing code or, arguably, these blog posts) or simply relaxing and enjoying life.

We absolutely enjoy huge improvements in quality of life today versus 1,000 years ago. It takes less human effort to get the same results. (Plus some results, like smart phones, internet, and running water, that didn’t even exist 1,000 years ago!)

But on the other hand, especially in the past fifty years, we’ve seen inflation make the purchasing power of our money go down. How can that happen if, simultaneously, we’re able to produce more goods in the same amount of time?

The answer–at least according to Friedman-style macroeconomics–is money printing. We as a species get better at producing *stuff*. We get better at it because we all want more out of life. Someone invents a new technology, like the tractor, because he doesn’t want to break his back working in a field, or because he knows he can sell that tractor to a bunch of farmers and make lots of money so he can buy other stuff.

When the government prints money, it’s stealing a portion of the entire basket of “things humans produce.” It’s taking a slice of the pie it didn’t earn, and it’s taking it from everyone. In other words, we have two competing forces: the forces of production that increase the size of the total basket of goods, and the forces of money printing that steal those gains for the government.

“But wait!” you may claim. “The government just gives those goods to other people through welfare, defense spending, and lots of other great programs!” Ahh, my dear reader, you’ve now found how truly nefarious this money printing actually is. You see, without money printing, the only way for someone to get a slice of the pie is to produce something of value for someone else. It’s through exchange, giving something of greater value than the money someone is parting with

By giving things away for free, or having the government dictate that valuable production time be spent on things like “make more bombs for a war none of us want to fight,” we’re making the size of that pie smaller. (And, to stretch the analogy, the pie is far less tasty too.)

When the government says “we’re targeting 2% inflation,” it’s a misleading story. They aren’t just stealing 2% of your productivity. They’re stealing all of the technological gains made that would have given you a bigger piece of the pie. And they’re creating incentives that will discourage further production improvements.

# Why Bitcoin?

I have a background in both computer software and economics. I have to admit when I first saw Bitcoin, and for most of my time being in the cryptocurrency space, I only really saw the computer side of Bitcoin. Granted, it’s cool, mind-bendy stuff, and it’s fun to learn. But it overshadowed for me the far more important side: economics.

Bitcoin removes *anyone’s* ability to create money out of thin air. (It does other things too, like resist censorship, but this is the big one for today.) It forces everyone to play by an honest set of rules. It ensures that my 0.43 BTC that I saved for the past year will hopefully not only retain its value, but continue to grow in true worth. I’m grabbing a certain percentage of the entire pie, and no one can take that away from me.

Does that mean the price of BTC in dollars will always go up? No, not at all. It does mean though that a monetary system built on BTC will allow people to retain their purchasing power, without needing to resort to things like risky Wall Street investments or buying up real estate to try and capture a scarce resource.

For me, a Bitcoin world is simply a better world.