In Nazi Germany in the 30s, all the Jews had their money locked up in Germany. Bankers allowed people to launder their money out, but would take a haircut of 10%, 20%, 30% which progressively grew to 90%. At that point, nobody wanted to leave!
-- an excerpt from the Saylor Series Episode 2 - the Rise of Man through the Dark and Steel Ages, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/saylor-series-episode-2-the-rise-of-man-through-the-dark-and-steel-ages-robert-breedlove
Gold is expensive to store securely. Bitcoin is not.
Gold is very expensive and risky to transport securely in significant amounts. Bitcoin is not.
Gold can be detected and confiscated. Bitcoin cannot. (so long as the seed phrase is properly secured).
Gold's supply is flexible. It increases when prices increase, as more miners mine. Bitcoin's is not.
Gold's supply is theoretically infinite. Asteroids contain gold. Bitcoin's is not.
Gold is subject to counterfeiting. There is a lot of gold-coated tungsten in circulation; it requires special equipment and knowledge to be able to detect it. Bitcoin is not.
Bitcoin can be sent over the Internet. Gold cannot.
“We’re not even thinking about thinking about raising rates.” – Jerome Powell, Chairman of the Federal Reserve June 10, 2020
Railroads are very instrumental to logistics and the movement of armies. They therefore drove economic and political power.
The British war in Sudan was critically about taking Khartoum. The entire outcome depended on that - whether they could build a railroad to Khartoum. If they can’t build it, they can’t provision the army with all the heavy equipment.
As soon as the railroad arrived, a bunch of heavily-armed guys with explosives and Gatling guns showed up and decimated the enemy. It wasn’t a fair fight.
Similarly, in the American Civil War, the Union Pacific Railroad sealed the U.S’ control over the land.
-- an excerpt from the Saylor Series Episode 2 - the Rise of Man through the Dark and Steel Ages, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/saylor-series-episode-2-the-rise-of-man-through-the-dark-and-steel-ages-robert-breedlove
Bitcoin’s utility as a unit of account **today** depends on what you already believe about Bitcoin.
There is **no objective unit of value** that is measured with a unit of account.
It is all a matter of perspective, and relative value - how valuable is **this unit** relative to the unit of account.
Someone still lost in the dollar world looks at Bitcoin and sees wild and extreme volatility, whereas someone in Bitcoin looking back at the dollar sees a crash and subsequent bleed/stagnation.
-- an excerpt from the 1-minute version of Bitcoin is the Best Unit of Account (2014) https://www.2minutebitcoin.org/blog/bitcoin-is-the-best-unit-of-account
When the Fed creates $3 trillion in a matter of weeks by pushing a button, it consolidates the power to price and value human time. In the U.S., humans are not supposed to have that kind of power over other humans.
-- an excerpt from the Stone Ridge 2020 Shareholder Letter, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter
The benefit we get from money is the **optionality** it gives us. The **ability to defer our decisions** on what to get in exchange for our work/goods.
Someone who does not want to use money must by definition have a very good idea about what he wants to get in exchange for his value.
When one has money, then one is not committed.
This benefit explains why we would want something that is good for keeping in storage - like gold.
-- an excerpt from It's Not About The Technology, It's About The Money (2016), its 2-minute version can be found here: https://2minutebitcoin.org/blog/bitcoin-is-about-the-money-not-the-blockchain-technology
As we moved beyond traveling by foot and horse, beyond the development of affordable commercial air travel, and then, especially, beyond the internet’s Cambrian-like explosion of network power, gold’s **low spatial salability** became an acute flaw even the most ardent “goldbugs” miss.
**Gold is simply hard to transport**.
This is where the Fiat Standard shines. Though fiat’s periodic, human-nature-induced hyperinflations made it a huge step backward in terms of salability across time (storing value), it was a substantial leap forward in terms of salability across space.
However, contrary to common misconception, **Bitcoin moves much faster across space** than fiat, increasing our capacity for long-distance international settlement by about **96 times**.
It completes settlement in about an hour, rather than the current state-of-the-art 3-5 days, or longer, for final international fiat settlement.
Do not confuse the speed of your Visa payment with its final settlement. No settlement occurs when you buy your coffee at Starbucks. Rather, your bank and Starbucks’ bank generally settle 2-3 days later, with each bank taking credit risk to the other along the way, with rare, but occasionally disastrous results.
Bitcoin not only safely settles about every hour, but more importantly as a bearer instrument it has **no credit risk**.
Bitcoin’s protocol and network topology renders national borders irrelevant, which is especially empowering to the world’s most vulnerable and unprepared for fiat hyperinflations (e.g. Venezuela, Turkey, Lebanon).
From this perspective, Bitcoin is better at being fiat than fiat – it’s **even more salable across space** and, because it’s not debt like fiat, **has no credit risk**.
-- an excerpt from the Stone Ridge 2020 Shareholder Letter, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter
Due to **group psychology**, newcomers arrive in waves. Bitcoin's current adoption trend is to increase in value on an exponential trend line with said waves.
The waves have a destabilizing effect on the Bitcoin exchange rate:
- speculators are unsure of the amplitude or wavelength of adoption
- amateurish punters let their excitement as well as subsequent fear overwhelm them.
Regardless, once the tide has pulled back and the weak hands have folded, the price is a few multiples higher than before the wave.
-- an excerpt from Speculative Attack (2014), its 2-minute version can be found here: https://2minutebitcoin.org/blog/bitcoin-speculative-attack-on-the-dollar-2014
Another massively underappreciated reason for why Bitcoin is volatile - it's decentralized!
Centralized sectors have low volatility because it takes just a handful of actors to suppress it.
This was literally one of the reasons Rockefeller established the oil cartel he had - the volatility would otherwise hurt the sector too much.
Of course the stock market won't have volatility when there is a centralized exchange that stops trading for 15 minutes if the S&P drops 7% in a day (this is real, google it).
Of course the bond market won't have volatility when there are only a handful of big institutional players trading it.
Under Communism we also had no price volatility... until it collapsed.
We have been diluted to believe that lack of volatility is natural and a mark of health. It's the opposite.
As you go mine fiat today, remember that there is a greater mission out there - the adoption of sound money (Bitcoin) and the elimination of the crime against humanity - the profoundly unfair fiat money system.
Thank you for contributing to this cause.
The State always grows. Participating in the democratic process only empowers it as devotees reward it through votes in exchange for entitlements.
Bitcoin challenges the State’s most treasured privilege: **the ability to finance itself through inflation and seignorage**, as well as other repressive tools a large fraction of the world lives under - **capital controls** and **local exchange rate manipulation**.
This predictably enraged the State-dependents.
It is no coincidence that Bitcoin’s most hysterical critics overwhelmingly benefit from the state:
- academics, beneficiaries of the rampant government-guaranteed student loan bubble
- (ex-) politicians, who always turn their political clout into personal wealth
- journalists who were disrupted by the internet and reduced to simply peddle State messaging
- economists, forced to peddle Keynesian narratives for grant and tenure
- an excerpt from the 2-minute version of A Most Peaceful revolution, originally posted at
https://2minutebitcoin.org/blog/bitcon-a-most-peaceful-revolution
The haunting memory of bank runs from the past should serve as a stark reminder that banks are not as bulletproof as they seem.
In 1929, the stock market crash marked the beginning of the Great Depression, leading to widespread panic and a series of devastating bank runs.
In just the first few months of 1933, over 5,700 banks failed, and depositors lost approximately $140 billion (in today's terms) of their savings. By the end of 1933, 11,000 had failed.
Fast forward to 2001, when Argentina faced a massive economic crisis. A run on banks led to the government freezing bank accounts and converting dollar-denominated accounts to pesos at a fixed rate, causing many people to lose a significant portion of their savings. In just a few months, the country witnessed a decline in GDP by 11%, and the unemployment rate skyrocketed to over 20%.
The threat of economic collapse and bank runs is still very real today. In a world where central banks continue to print money at an alarming rate, and financial systems teeter on the brink of collapse, the security of your savings is anything but guaranteed.
Hidden taxation through inflation is also an advantage in war.
A country that taxes a lot through printing massive amounts will collect more money than one that only taxes through income. Said country can allocate more to military purposes and win a war against the other country.
The game theory of a world-wide sound-money standard is unstable - once one player abandons it, it incentivizes others to do so as well.
A similar dynamic was the rise of the nation-state itself – it proved stronger than the feudal state due to having larger national armies, and that forced feudal states to turn nation-states too.
-- an excerpt from the 2-minute version of An Honest Account of Fiat Money (2018), originally posted in https://www.2minutebitcoin.org/blog/an-honest-account-of-fiat-money-2018
In many countries, it is illegal for women to have a bank account, or even work, while the men learn, earn, and create independence for themselves.
Trapped in a restrictive, oppressive, domestic cage, these women have historically been forced to do as they’re told, with no freedom to make a living, develop professional skills, or cultivate a sense of self, let alone create financial independence.
Bitcoin is fixing this. Leveraging Bitcoin’s growing network, and their smartphones, these women can, and do, find jobs online – secretly for now – and get paid. In Bitcoin.
They become copy editors and transcriptionists. They proofread, do data entry, and take surveys. Remotely, and quietly, they do anything that’s doable online. Bitcoin offers them an exit option, an offramp.
Bitcoin demolishes their cage. Today, gradually.
In the hundred-plus countries of authoritarian, repressive and inflationary regimes, primordial forces are being unleashed in a one-way torrent of increasing human liberty, one impoverished, caged human at a time.
While lurching in fits and starts for now, the power of the movement is unstoppable because it rides upon, and accelerates, our Darwinian propulsion towards freedom and survival, enabled by sound money.
Fate-changing topological shifts – the Arab Spring, Brexit, Bitcoin – can quickly render the powerful weak, and the powerless strong.
-- an excerpt from the Stone Ridge 2020 Shareholder Letter, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter
Some criticize Bitcoin for not generating any sort of income.
They don't understand that money is inherently a speculative asset - speculating on the fact of whether other people would adopt it, at which point its value rises.
The key point here is that a fixed-supply money's upside is practically unlimited, because its value is not bottlenecked by something small like the income it produces.
- Some even go as far as to say that something like Ethereum at least generates an income from staking it - but that is simply not true. Ethereum's model has it dilute the supply of other shareholders at the expense of those who stake it.
Critics:
> Bitcoin offers no social benefit beyond speculation
Bitcoin offers little social benefit to westerners in first world countries, but can be a lifeline for people in opressive regimes, unbanked third world countries, etc.
The western media typically under-reports this and we are understandably blind to some of these problems (e.g see [this panel](https://youtu.be/hrRy05w2rNc?t=4251) from the Oslo Freedom Forum)
For example, bitcoins have been used as a medium of exchange by [girls in Afghanistan](https://www.reuters.com/article/crypto-currency-afghanistan/feature-salaries-to-remittances-afghans-embrace-crypto-amid-financial-chaos-idUSL8N2QU39A), by [Russian political opposition when their bank accounts get frozen](https://www.reuters.com/article/us-russia-politics-navalny-crypto-curren/bitcoin-donations-surge-to-jailed-kremlin-critic-navalnys-cause-data-idUSKBN2AB2GR), by [Nigerian merchants and protesters](https://www.theguardian.com/technology/2021/jul/31/out-of-control-and-rising-why-bitcoin-has-nigerias-government-in-a-panic), by [people getting capital out of China](https://www.cnbc.com/2020/08/21/china-users-move-50-billion-of-cryptocurrency-out-of-country-hinting-at-capital-flight.html), by [people getting their money out of Venezuela, Iran, Palestine, and elsewhere](https://www.theinvestorspodcast.com/bitcoin-fundamentals/bitcoins-international-impact-w-alex-gladstein/), by [under-banked people in El Salvador](https://medium.com/ziglumoney/how-bitcoin-could-bank-the-unbanked-of-el-salvador-917c3588857c), and more. It’s also used in developed markets for some natively-online services, [such as Substack](https://www.prnewswire.com/news-releases/substack-is-now-accepting-bitcoin-payments-on-the-lightning-network-powered-by-bitcoin-payment-processor-opennode-301360039.html) or [buying VPNs](https://www.vpnmentor.com/blog/best-vpns-buy-bitcoin-crypto/), and many others.
(from [this](https://www.lynalden.com/lightning-network/))
Gold has been a reliable store of value because of its scarcity and historically low annual supply growth of only 1-2%/year. There has never been a “gold hyperinflation.” Indeed, gold has held its value over the centuries, while hundreds of other monies have come and gone.
However, gold’s supply is not impervious to its demand. If, hypothetically, gold went to $100,000/oz tomorrow (up more than 50x overnight), we can be sure enormous resources would immediately shift to gold mining, and the miners would find some way, somehow, to accelerate its supply growth, driving its value down.
In contrast, there will only ever be 21 million Bitcoin. Bitcoin’s annual supply growth, which asymptotically approaches zero over time, is now down to about 1%, on par with the historical annual growth in the supply of gold. While far from perfect, gold is Bitcoin’s closest real-world analogy.
However, the ultimate supply of Bitcoin is fundamentally limited by the design of the protocol itself and cannot be increased regardless of its value or the level of demand. Bitcoin is the first store of value in history for which its supply is entirely unaffected by increased demand. From this perspective, Bitcoin is better at being gold than gold – it’s even more salable across time.
-- an excerpt from the Stone Ridge 2020 Shareholder Letter, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter
Bitcoin will become mainstream.
The Bitcoin skeptics don't understand this due to:
1. their biases and lack of financial knowledge
2. being in as strong an echo chamber as Bitcoin proponents
3. rabidly searching for evidence that confirms their view of Bitcoin
4. misunderstanding how good money drives out the bad. Strong currencies like bitcoin overtake weak currencies through speculative attacks and currency crises caused by greedy investors - each pursuing their own self-interest. Not through the careful evaluation of tech journalists and 'mainstream consumers'.
-- an excerpt from Speculative Attack (2014), its 2-minute version can be found here: https://2minutebitcoin.org/blog/bitcoin-speculative-attack-on-the-dollar-2014
The majority of our innovations occur through trial and error. The tinkering impulse people have all over the world and communicating it so that we built on top of each other leads to these breakthroughs.
This all just points to the fact that free exchange and experimentation are the ways humanity can optimize for creating wealth in the world.
Almost no inventor of a new technology could foresee the major impact it would have.
A large part of science is accidental - e.g antibiotics. Further, a large part gets discovered but does not become commercialized or does not get engineered into the right solution for a long time after.
The quote “The Future is already with us, it’s just not evenly distributed!” applies very well here.
Similarly, it is an accident as to how large Bitcoin has become. It is unlikely Satoshi predicted how large it would become. But through the free, unencumbered borderless exchange of people, it morhped into what we have today.
-- an excerpt from the Saylor Series Episode 2 - the Rise of Man through the Dark and Steel Ages, its 2-minute version can be found here https://www.2minutebitcoin.org/blog/saylor-series-episode-2-the-rise-of-man-through-the-dark-and-steel-ages-robert-breedlove