The Bitcoin Standard: Decentralizing Banking and Empowering Individuals

The Bitcoin Standard is a game-changer in the world of finance, allowing individuals to take control of their own money and transactions.

The traditional banking system is often centralized and controlled by governments and financial institutions, but Bitcoin offers a decentralized alternative.

By using blockchain technology, Bitcoin enables secure and transparent transactions without the need for intermediaries.

This means that individuals can make payments and store value without relying on banks or other financial institutions.

The Bitcoin Standard is a comprehensive and authoritative exploration of Bitcoin and its place in monetary history. It's a book that delves into the historical context of Bitcoin's rise, its economic properties, and its likely economic, political, and social implications.

Author Saifedean Ammous takes the reader on an engaging journey through the history of technologies performing the functions of money, from primitive systems of trading limestones and seashells, to metals, coins, the gold standard, and modern government debt.

The problem Bitcoin purports to solve is as old as human society itself: transferring value across time and space. This is a fundamental issue that has been addressed in various ways throughout history.

Bitcoin is a decentralized, distributed piece of software that converts electricity and processing power into indisputably accurate records. It's a digital form of gold with a built-in settlement infrastructure.

The book explains the operation of Bitcoin in a functional and intuitive way, making it accessible to readers who may not have a technical background. With an automated and perfectly predictable monetary policy, Bitcoin's real competitive edge might just be as a store of value and network for the final settlement of large payments.

Bitcoin's decentralized nature means that users can utilize the Internet to perform traditional functions of money without relying on or trusting any authorities or infrastructure in the physical world. This is a significant departure from traditional monetary systems.

The Bitcoin Standard offers a comprehensive exploration of Bitcoin and its place in monetary history. It analyzes the historical context to the rise of Bitcoin, its economic properties, and its likely economic, political, and social implications.

The book shows that the problem Bitcoin solves is as old as human society itself: transferring value across time and space. This is a fundamental challenge that has been addressed in various ways throughout history, from primitive systems of trading limestones and seashells to modern government debt.

Bitcoin is a decentralized, distributed piece of software that converts electricity and processing power into indisputably accurate records, allowing users to perform traditional functions of money without relying on authorities or infrastructure. This makes it a form of digital cash and digital hard money.

Bitcoin offers a decentralized alternative to central banking, shifting the pendulum of sovereignty from governments to individuals.

Ammous' book, The Bitcoin Standard, explores the historical context of Bitcoin's rise and its economic properties that allowed it to grow quickly.

The problem Bitcoin solves is as old as human society itself: transferring value across time and space.

Bitcoin is a decentralized, distributed piece of software that converts electricity and processing power into indisputably accurate records.

This allows users to perform traditional functions of money without relying on or trusting any authorities or infrastructure in the physical world.

Bitcoin is best understood as the first successfully implemented form of digital cash and digital hard money.

Its automated and perfectly predictable monetary policy makes it a store of value and network for the final settlement of large payments.

Bitcoin's real competitive edge might just be as a digital form of gold with a built-in settlement infrastructure.

As a decentralized alternative to central banking, Bitcoin challenges the government monopoly on money and offers a world where money is fully extricated from politics and unrestrained by borders.

The Evolution of Money is a key concept in understanding the history of currencies. Money is chosen for its salability, specifically its divisibility, transportability, and capacity to store value.

Throughout history, humans have turned from one form of money to another because the problem of salability has not been solved. Gold, for example, was not able to solve these issues and ended up being centralized, leaving it vulnerable to dilution by government.

The stock-to-flow ratio is a key measure of a good's salability across time. A high stock-to-flow ratio suggests that the good is more likely to maintain its value over time. Commodity money, like gold or silver, has both market demand and monetary demand.

Gold's historical failure is that it could only become more salable through centralization with financial institutions. This led to the temptation of lending out more than they had, ultimately resulting in the creation of government fiat money.

Government money is not sound money, as it is chosen in a controlled environment and is resistant to government meddling.

Forms of Money Throughout History

These forms of money have all failed when the stock-to-flow ratio has dropped, driven by technological advancement or some other discovery. The key property that leads to something being freely used as money is salability, which can be assessed in terms of salability across scales, space, and time.

Bitcoin's immutable monetary supply makes it the best medium to store value produced from the limited human time, making it arguably the best store of value humanity has ever created. This is because there will always only be 21 million Bitcoin, no matter how many users adopt it, no matter the price, and no matter the technological innovation.

The stock-to-flow ratio of Bitcoin is increasing until it will be infinite, unlike any commodity in history. This means that the amount of Bitcoin in circulation is increasing at a slower rate than the amount being produced, making it a more stable store of value.

Government fiat money, on the other hand, remains our prime form of money, but it's not sound money. As Ammous argues, sound money is chosen in a free market and is resistant to government meddling.

Here are the key properties that lead to something being freely used as money:

The stock-to-flow ratio measures the amount of a resource/commodity currently in circulation divided by the amount of that resource/commodity that is produced annually. A high stock-to-flow ratio suggests that the good is more likely to maintain its value over time.

With Bitcoin, you have the freedom to send value without needing anyone's permission.

This is because Bitcoin operates on a distributed peer-to-peer network, which means there's no central coordinator to control transactions.

What this means in practice is that you can send and receive value without fear of confiscation or destruction by governments or other powerful entities.

Bitcoin's decentralized nature gives users a level of autonomy and security that traditional currencies can't match.

Individual Sovereignty is a fundamental concept in the digital economy.

Any holder of Bitcoin can send value without asking for permission from anyone.

Through a distributed peer-to-peer network, there is no central coordinator.

Unlike gold, Bitcoin cannot be destroyed or confiscated by political or criminal interests.

Bitcoin's potential as a global unit of account is an intriguing idea. It meets all the salability criteria of sound money, making it a serious rival to established fiat currencies.

Its divisible characteristics allow it to be highly salable across scales. This means it can be easily broken down into smaller units for everyday transactions.

Through its digital characteristics, Bitcoin is highly salable across space, making it a convenient option for international transactions. This is especially useful for people who need to send or receive money across borders.

With widespread adoption, Bitcoin may have the potential to become the chosen global unit of account. This could have significant implications for the global economy and individual sovereignty.

The Bitcoin Standard is a book that explores the concept of Bitcoin as a new form of electronic cash. Introduced in 2008 by Satoshi Nakamoto, Bitcoin is a purely peer-to-peer form of electronic cash that meets all the salability criteria of sound money.

Saifedean Ammous, the author of the book, argues that Bitcoin is the world's first truly immutable, decentralized, and sound money. He makes the case for Bitcoin as a sovereign digital money free from government meddling.

Bitcoin meets the salability criteria of sound money through its divisible, transportable, and store-of-value characteristics. This makes it highly salable across scales, space, and time.