The Decentralized Alternative to Central Banking
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Average rating4
A comprehensive and authoritative exploration of Bitcoin and its place in monetary history When a pseudonymous programmer introduced “a new electronic cash system that’s fully peer-to-peer, with no trusted third party” to a small online mailing list in 2008, very few people paid attention. Ten years later, and against all odds, this upstart autonomous decentralized software offers an unstoppable and globally accessible hard money alternative to modern central banks. The Bitcoin Standard analyzes the historical context to the rise of Bitcoin, the economic properties that have allowed it to grow quickly, and its likely economic, political, and social implications. While Bitcoin is an invention of the digital age, the problem it purports to solve is as old as human society itself: transferring value across time and space. 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. Exploring what gave these technologies their monetary role, and how most lost it, provides the reader with a good idea of what makes for sound money, and sets the stage for an economic discussion of its consequences for individual and societal future-orientation, capital accumulation, trade, peace, culture, and art. Compellingly, Ammous shows that it is no coincidence that the loftiest achievements of humanity have come in societies enjoying the benefits of sound monetary regimes, nor is it coincidental that monetary collapse has usually accompanied civilizational collapse. With this background in place, the book moves on to explain the operation of Bitcoin in a functional and intuitive way. Bitcoin is a decentralized, distributed piece of software that converts electricity and processing power into indisputably accurate records, thus allowing its users to utilize the Internet to perform the traditional functions of money without having to rely on, or trust, any authorities or infrastructure in the physical world. Bitcoin is thus best understood as the first successfully implemented form of digital cash and digital hard money. With an automated and perfectly predictable monetary policy, and the ability to perform final settlement of large sums across the world in a matter of minutes, Bitcoin’s real competitive edge might just be as a store of value and network for the final settlement of large payments―a digital form of gold with a built-in settlement infrastructure. Ammous’ firm grasp of the technological possibilities as well as the historical realities of monetary evolution provides for a fascinating exploration of the ramifications of voluntary free market money. As it challenges the most sacred of government monopolies, Bitcoin shifts the pendulum of sovereignty away from governments in favor of individuals, offering us the tantalizing possibility of a world where money is fully extricated from politics and unrestrained by borders. The final chapter of the book explores some of the most common questions surrounding Bitcoin: Is Bitcoin mining a waste of energy? Is Bitcoin for criminals? Who controls Bitcoin, and can they change it if they please? How can Bitcoin be killed? And what to make of all the thousands of Bitcoin knockoffs, and the many supposed applications of Bitcoin’s ‘block chain technology’? The Bitcoin Standard is the essential resource for a clear understanding of the rise of the Internet’s decentralized, apolitical, free-market alternative to national central banks.
Reviews with the most likes.
This book is misleading because of it's mixture of accuracy (what is money, gold) with opinion and factual inaccuracies. I personally view that mixture of a accurate facts with skewed ones more negatively as it's more deceptive.
The best way to treat it is, the first and last parts of the book are most accurate, while the middle is a narrow, fringe opinion that is far from the general consensus. There's a lot of cherry-picking evidence (ignoring other important evidence that doesn't fit the author's narrative well).
For the title of the book, and how little the author talks about it, the Bitcoin chapters were mostly reasonable. I think a lot of the other material in the book has to been evaluated with a lot of skepticism.
Some interesting questions to ponder related to the book:
- In 2018, Platinum has less total supply (~10,000 tons), has a current growth rate of 2% (~200 tons/year) and has the same industrial uses as gold (electronics). Why shouldn't platinum be better than gold for money?
- In 2018, ~3,200 tons of gold was mined in a year (https://www.gold.org/goldhub/data/historical-mine-production) which marks an increase from amounts in the book by ~30%. This also applies to previous years (2016, 2017) being roughly around ~3,200 tons. Is this production (slowly?) adapting to demand of Gold?
- How can the Modern Austrian School of Economics make sound arguments when critics argue the school averse to mathematics, statistics; rejects empirical data, and scientific method? (The Author hints at this referring to Keynesian towards Scientism)
- Commodity money is always inflationary (at least, until max supply is reached), but with Fiat Money, one can also perform deflationary policies. Isn't it possible to separate the argument that Fiat Money is bad from the Keynesian policies?
- Bitcoin has a way to “destroy” currency: to lose the private key wallet that holds it. Doesn't that make it not like Gold since it's less than indestructible? (its estimated that, about 23% of bitcoin is currently lost forever
- Bitcoin also has a significant energy cost. Doesn't this imply that Bitcoin has a passive maintenance cost equivalent to the energy use of some countries as an effective tax on the system to use it?
- Wouldn't an economy on the Gold Standard, while also having advanced credit/borrowing systems still be susceptible to problems of Fiat Money?