The Bitcoin Standard
Bitcoin was introduced as the world’s first truly immutable, decentralized and sound money in 2008. The system operates through a distributed peer-to-peer network and relies on processing power for transactions verification.
The Bitcoin Standard details how and why Bitcoin operates, as well as its implications for our collective future.
What is the Bitcoin Standard?
In 2008, when an anonymous programmer presented “a peer-to-peer electronic cash system that’s fully peer-to-peer with no trusted third party” to a small mailing list online mailing list, few took notice. Ten years later and against all odds, this upstart autonomous decentralized software is slowly emerging as an unstoppable global alternative hard currency solution to central banks. Saifedean Ammous’ book The Bitcoin Standard describes this revolutionary technology and its likely economic, political and social impacts.
The Bitcoin Standard is an essential book for anyone interested in the future of money and its potential to transform society. This book makes an irrefutable case that Bitcoin is the first sound money free from government meddling that meets all salability criteria set forth in commodity and fiat monies: dividability, portability and store of value.
Ammous’s clear and concise writing style make this book essential reading for those interested in the future of global financial system.
However, the book does not adequately address some key issues. Ammous fails to address concerns raised by economists that Bitcoin’s limited supply–which he praises for its stability and resistance to inflation–will eventually lead to undesirable deflation. Furthermore, Ammous fails to discuss more technical debates such as mining power centralization or whether its incentive system can survive once 21 million Bitcoins have been released and miners only get compensated with transaction fees as payment for mining power.
Although The Bitcoin Standard may contain some deficiencies, it remains an essential read for anyone curious about the future of money and its revolutionary implications on society. By providing readers with an introduction to money’s history and principles that govern it, this book shows why Bitcoin stands above other existing options and may become the world’s primary medium of exchange and store of value.
Why does the Bitcoin Standard matter?
Bitcoin provides an innovative financial framework and serves as the ideal alternative. It is secure, scarce and not supported by any central government entity. Gold-backed money collapsed due to two key problems – recessions and debt – during World War One. Therefore, an alternative form of currency is more stable. Government interventions into the economy distort markets and drive up prices, leading to boom-bust cycles with long-term damaging repercussions for economies. Bitcoin’s limited supply, which will never go beyond 21 million units, works against cheaters by eliminating any incentive for hackers and potential value increasers to waste time hacking into its system and approve blocks that would raise its value. Breaking its security would only reduce demand and decrease value over time.
Bitcoin uses blockchain technology, which offers security through transparency; each transaction is verified and recorded on an open ledger, making this highly salable across space, scale and time as it can be accessed by anyone with internet connectivity. Over nine years, it has operated successfully as an alternative form of money and remains compelling as an investment vehicle.
The Bitcoin Standard provides a comprehensive examination of the economic properties that have made bitcoin successful and their implications for global finance. This book should be essential reading for anyone hoping to comprehend a decentralized, free-market alternative to central banks which could bring enormous freedom and prosperity benefits for individuals.
This book stands out not only due to its academic and technical content, but also because of its effortless style of writing and reading. An ideal introduction to Bitcoin and its potential as the global unit of account, The Bitcoin Standard should be read by students, investors and policymakers.
How would the Bitcoin Standard be implemented?
Bitcoin provides humanity with a solution to one of its greatest challenges – how to move economic value across time and space. Utilizing digital technology’s potential in doing this effectively creates an alternative monetary system in place.
Bitcoin’s cost-effective ad-supported model – in which people exchange Bitcoins for goods and services without incurring transaction fees to the network – makes it highly cost-efficient, which could make it the new world standard for digital money – this would have significant ramifications on both the global economy and politics.
But before Bitcoin Standard becomes the foundation of global financial system, there are still hurdles that need to be cleared. First, widespread acceptance among both the general public and banking sector must occur before high net-worth individuals and institutions take an interest. Once this occurs, central banks could potentially take interest as a solution for inflationary fears and other monetary policy considerations.
One reason this could happen is due to Bitcoin’s backing by gold, long recognized as an effective store of value. Furthermore, its technical characteristics of sound money (divisible, scarce and secure) make it an effective safeguard against cheaters – even if an attacker expended immense efforts in an unsuccessful effort at hacking into its blockchain they would still lose most of their wealth.
However, Ammous does not devote enough space to explaining why some economists suspect Bitcoin could cause unwanted deflation if it replaces fiat currencies, nor the more technical arguments over whether its limited supply (which he praises as essential to sound money) might lead to monetary crises. More research and debate should occur here before moving forward with adopting Bitcoin Standard; otherwise it will have great potential to transform our global economy by decreasing financial crises risk, streamlining money transfer worldwide, and giving people greater control of their own assets.
What are the challenges to the Bitcoin Standard being implemented?
Saifedean Ammous envisions a future where cryptocurrency Bitcoin replaces fiat currencies as the world’s reserve currency, serving to store value, settle international payments, and back the currencies of individual countries. He believes this system would be possible due to Bitcoin’s unique properties – scarcity, durability and divisibility being key examples.
However, Bitcoin Standard faces several hurdles. First and foremost is growing big enough to replace traditional currencies in the global economy; secondly is breaking through resistance of government and financial institutions who don’t want rely on decentralized currencies such as banks; finally it needs to find ways of making international transactions quick and cheap.
Though challenging, Ammous’s Bitcoin Standard remains an attractive proposal for how the world can move towards a more stable monetary system. His book draws upon history to explain why sound money is desirable, why governments lost control over monetary matters, and what this can teach us about its future prospects.
Ammous proposes in his book that Bitcoin Standard is an effective alternative to fiat currencies due to being unaffected by inflation or government mismanagement risks, and serves as an efficient store of value with which international payments can be settled quickly and safely.
Ammous’ vision for how cryptocurrency can alter global finance is unmistakable; unfortunately, his book contains several flaws which prevent it from becoming the definitive text on this topic.
One of his many blind spots was failing to acknowledge the role that credit played in the history of money. Another is his limited view of what constitutes money, excluding commodities not supported by central banks and governments and instead emphasizing paper currencies issued by sovereign nations as true money.
However, The Bitcoin Standard remains an indispensable reading material for anyone interested in the future of money. Utilizing historical examples to prove why cryptocurrency may revolutionize global financial systems is truly inspiring.