2. What is bitcoin
Bitcoin’s monetary uniqueness
What is bitcoin good for?
Implications
Individual
Political
Capital markets
Energy markets
Outline
3. Bitcoin is a peer-to-peer software for operating a payment network with its
own native currency that is protected from unexpected inflation, without
having to rely on any trusted third parties.
Its significance lies in two main properties:
1) The hardest money ever discovered or invented
2)The only working alternative to central banks for international payment
settlement
What is bitcoin?
4. Anything can be used as money if its
held as a store of value and used in
exchange
But rising monetary demand raises the
price of the money
Rising price incentivizes more
production of the money
Excess production brings the price
down, making it a useless store of value
But rising monetary demand raises the
price of the money
Only things that are hard to make
succeed as money in the long term
Why does Bitcoin matter?
5. What have humans used as money?
Cattle
Lime Stones
Rare seashells
Glass beads
Metals
Precious metals
Government money
Cigarettes in prison
What do they all have in common (when they work)?
Hard to make
6. Gold: the hardest money wins
Gold’s monetary role is due to its high stock-to-flow ratio: existing stockpiles are
always many multiples of annual production
8. The more something is chosen as a
store of value the more its production
increases at the margin…
EXCEPT BITCOIN
When Bitcoin is chosen as a store of
value, its value goes up, but more
production is not possible
Instead, the difficulty of mining new
bitcoin increases, making Bitcoin harder
to produce
This incentivizes more processing power
to produce Bitcoin, making the network
more secure.
Bitcoin’s monetary uniqueness
9. Bitcoin vs Every other money
Store of value
demand
Network
becomes harder
to attack
Store of value
demand
Price rises
More profitable
mining
Supply increases
Price drops
Store of value
demand
Bitcoin
survives longer
Price rises
Network
becomes harder
to attack
More
profitable
mining
More
hashpower
goes to mining
Bitcoin’s monetary uniqueness
10. Difficulty adjustment is the most amazing technology in bitcoin:
It protects the network from inflation
Ensures the supply is auditable and verifiable by all network members
Converts people’s inevitable incentive to increase bitcoin’s supply into network
security
Bitcoin is an all-conquering juggernaut of economic incentives
Whereas everyone competes to inflate all other moneys, people compete to secure
bitcoin.
How secure is Bitcoin
11. The processing power to secure only 500,000 transactions per day:
100 Exahashes/s
∼ 10,000,000 x the world’s top supercomputer
∼ 1,000,000 x the world’s top 500 supercomputers combined
∼ 10 trillion x your laptop
The same transactions can be done on a single computer. But Bitcoin does it without
relying on anyone or anything.
How secure is Bitcoin
12. No single point of failure
No single piece of critical hardware or infrastructure
No single critical individual or organization
Bitcoin cannot be stopped—a protocol always open to anyone who wants it
Around every 10 minutes, a new block of transactions is released. Has never failed.
Has never confirmed a fraudulent transaction
How secure is Bitcoin
13. The hardest money ever invented
Available worldwide for anyone who can receive 2MB of data every 10 minutes
Purely voluntary, does not need regulation, enforcement, or police
Chosen and valued freely on the market: sound money.
Bitcoin’s monetary uniqueness
14. First strictly scarce liquid asset
Before Bitcoin, the only thing that was truly scarce was human time. The Ultimate
Resource, according to Julian Simon
The only limit on how much of a resources we have is how much time we dedicate
to it
Anything chosen as a store of value had the imperfection that its supply will
increase in response, causing a loss of the value stored
1. Store of Value:
What is Bitcoin good for?
15. Only two things are genuinely scarce: time and bitcoin
For the first time, you can store the value produced from your scarce time in a store
of value that is equally scarce.
Our most advanced technology for transferring the value of time into the future
1. Store of Value:
What is Bitcoin good for?
16. What is Bitcoin good for?
If it continues to not die, demand for Bitcoin will rise indefinitely.
Hard money is not optional: you cannot isolate yourself from the consequences of
others using money harder than yours
Bitcoin transactions cannot possibly handle consumer payments for everyone who
needs hard money
Over time, Bitcoin on-chain transactions might increase, but only marginally.
Bitcoin off-chain transactions can increase infinitely.
As liquidity and people willing to accept Bitcoin as payment increase, the contours of
an alternative global settlement system will begin to develop
2. A decentralized free market alternative to central banking
17. Bitcoin transactions need several minutes to be initially confirmed, and that’s useless
for consumer payments
But Bitcoin transactions provide finality of settlement in an hour, and that’s much faster
than current central bank clearance
Bitcoin won’t and can’t scale for mass payment numbers
Bitcoin will scale through rising value for transactions
2. A decentralized, free market alternative to central banking
What is Bitcoin good for?
18. Similar to gold scaling via the gold standard: Everyone wanted to get paid in it
because it is the hardest money, but transaction costs were too high
Bitcoin second layer solutions are similar to financial instruments backed by gold
Will it face gold’s fate? Maybe, but the key is that the cost of running a bitcoin full node
is far lower than running a ‘gold full node’, i.e. an international gold clearance bank
What is Bitcoin good for?
2. A decentralized, free market alternative to central banking
19. The hardest money ever invented is available everywhere
International payments are now possible without having to go through governments
and central banks
The 21st century global digital free market will grow around Bitcoin, The Internet’s
Decentral Bank, running on hard money: The Bitcoin Standard
What are the implications to individuals, politics, and capital markets?
What does global hard money mean?
20. Easy money loses value & encourages short-termism and consumerism
Hard money gains value & encourages long-termism and capital accumulation
Easy money = artificially low interest rate = incentive to borrow more and save less
Low time preference
What would a Bitcoin standard look like?
21. Low time preference “initiates the process of civilization”
Hard money Saving Capital
accumulation
Higher productivity Better material
living standards
Hard money and time preference
23. Hard money and capital markets
Easy money is simply the central
planning of the capital market
Central planning always fails
Easy money and interest rate
manipulation are the cause of business
cycles, inflation, and recessions
Hard money is the solution to the
business cycle
24. The twentieth century uninvented one of the humanity’s most remarkable
achievements: a global neutral money.
We now have a system of ‘partial international barter’
Fluctuations in currency prices are more important than fundamentals for businesses
FX market around $1,860trillion, around 25x global GDP.
Ending global barter
Hard money and capital markets
25. Hard money and capital markets
Politically neutral censorship-free settlement
Separates politicians’ morality from people’s money
Automated monetary policy
A free market in money, savings, capital, and investments.
26. Energy markets
Bitcoin creates a global liquid market in electricity
Cheap energy anywhere can be monetized: a global subsidy for energy production
Will lead to massive investment in off-grid energy sources
Finance initial capital investment for development around stranded energy sources
Will kill energy subsidies, great for efficiency
27. Online courses & research:
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