Harder Than Gold. Faster Than Fiat

Good Afternoon Everyone,

I’ve spent the day on the road driving from Melbourne to Moruya for skydiving event i’m coaching at this weekend. It’s about a 9 hour drive. I was pleasantly surprised when i loaded up youtube to find a new discussion with Dr Saifedean Ammous and Lex Friedman on Lex’s podcast.

Here is a link to the podcast. I cannot recommend this enough. It’s is easily the best pod i’ve listened to this year. One of the best I’ve ever listened to, and without question my new go-to to orange pill anyone new to bitcoin.

This podcast was the perfect companion for a long drive as it was over 4hours long and went deep into economics and specifically differentiating between the fraudulent Keynsian version as well as the perspective of the Austrian school of economics.

Obviously bitcoin was at the heart of the discussion, and both Saifedean’s books were discussed and unpacked as well as some phenomenal explanations and clarifications on why shitcoins are shitcoins, why proof-of-work is so profound and why proof-of-stake systems are essentially a scam.

One snippet from the conversation that i wanted to zoom in on was Saifedean’s clarification on why bitcoin is the superior monetary good humans have ever invented.

It can be summed up in simple terms as the title suggests:

“Harder than gold and faster than fiat”.

Saifedean delivers perhaps the best explanation I’ve heard of bitcoin when asked to explain what bitcoin is. Here is how he responds. Also as i’m on the road there is no audio from me today, so I’ve included audio from the conversation as quoted below.

“Bitcoin is a software and it's a distributed software to operate the peer-to-peer network between members who are all equal on the network - they're all peers - and what this software does is that it allows you to operate a payment network between those peers and that payment network has its own currency and that seems like just a simple software game, but the reason this is such a big deal, is i believe bitcoin is the most advanced form of money ever invented and the reason for that comes from two properties that this network has.

The first one is that the currency is the hardest money ever invented. It's the money whose supply is the most resistant to inflation. it's the first monetary asset that we've ever invented that is guaranteed to be fixed in its supply that cannot be increased beyond a certain number. So there's only ever going to be 21 million bitcoins and that's a qualitative leap forward in our technologies of money.

All of our monies leak essentially because people can always make more and more and more of them. The best money is the one that leaks the least which is gold because it only leaks one and a half percent. In other words your share of the gold stock is diluted by one and a half percent every year. Ideally you'd like it to be zero.

Bitcoin is currently at around one point eight percent headed towards zero, so it's the first money that we've ever had that goes to zero in terms of terminal supply. So there'll never be more than 21 million bitcoin.

I think that's a huge deal because as i said earlier money is always whatever is the hardest to make and now bitcoin is the hardest thing to make, and then the second property which is extremely important as well is the fact that it operates without the need to trust in anybody.

It doesn't have a party that is in charge of it. It doesn't have a central authority. As i said it's peer-to-peer so it only has users - it doesn't have any admins. There's no authority in charge of bitcoin that can take your bitcoin; that can stop you from using bitcoin; that can change the rules of bitcoin.

They can't make more of it so it's fixed; it's available for anybody in the world. It's the hardest money ever invented and I think it is absolutely an enormously enormously significant invention; because if you read the fiat standard and the bitcoin standard as well, you'll see my perspective for why i think a very large number of problems in the world are caused by easy money; are caused by inflation. Are caused by government having access to essentially an infinite recourse to people's wealth.

I think bitcoin fixes this because it allows us to have money that has the saleability of gold across time meaning it holds its value across time. Like gold, but much better than gold; but also it is similar to fiat in that fiat can travel quickly - but bitcoin can travel even faster than fiat.

So it combines gold's saleability across time with fiat’s saleability across space in one immutable package that nobody can change and nobody can control.”

If that is not the most powerful explanation of what bitcoin is, then i do not know what is.

This absolutely blew me away and i’m sure i’ll continue to simmer on it for the next few days. I urge you to listen to the podcast in full when you can allocate a full 4hrs to immerse yourself in the learning. So unbelievably powerful to consider the content is freely available too!

Hope you have a great day. I’ll talk to you tomorrow.

AK

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