The Bitcoin Standard: The Decentralized Alternative to Central Banking was written by Saifedean Ammous. He starts with a brief history of money, from local currencies like beads to gold to cryptocurrency, and later makes a compelling argument for the adoption of a new monetary standard: The Bitcoin Standard. I read this at the recommendation of Stephen Wealthy to learn more about crypto, and learn I did! Here are some of my favorite quotes.
"Those who are able to save their wealth in a good store of value are likely to plan for the future more than those who have bad stores of value."
"[W]ith every passing generation displaying the intellectual complacence that tends to accompany wealth, the siren song of con artists and court-jester economists would prove increasingly irresistible for more of the population, leaving only a minority of knowledgeable economists and historians fighting an uphill battle to convince people that wealth can't be generated by tampering with the money supply."
"No pure fiat currency exists in circulation without any form of backing."
"[W]e find that the major and most widely used national currencies have a lower annual increase in the supply than the less salable minor currencies."
"It was the abandonment of sound money and its replacement with government-issued fiat which turned the world's leading economies into centrally planned and government-directed failures."
Keynesian economics: "Saving reduces spending and because spending is all that matters, government must do all it can to deter its citizens from saving."
"With no standard of value to allow an international price mechanism to exist, and with governments increasingly captured by statist and isolationist impulses, currency manipulation emerged as a tool of trade policy, with countries seeking to devalue their currencies in order to give their exporters an advantage."
"[T]he currencies that are most accepted worldwide, and have the highest salability globally, have a higher stock-to-flow ratio than the other currencies, as this book's analysis would predict."
"Hyperinflation is a form of economic disaster to government money."
"History has shown that governments will inevitably succumb to the temptation of inflating the money supply."
"It is ironic, and very telling, that in the era of government money, governments themselves own far more gold in their official reserves than they did under the international gold standard of 1871-1914."
"Government control of money has turned money from being the reward for producing value to the reward for obedience to government officials."
"[S]ound money [is] the money that is chosen by the market freely and the money completely under the control of the person who earned it legitimately on the free market and not and other third party."
"A sound money, on the other hand, makes service valuable to others the only avenue open for prosperity to anyone, thus concentrating society's efforts on production, cooperation, capital accumulation, and trade."
"[I]t is a highly salable free-market option that is resistant to government meddling."
"[I]t protects value across time, which gives people a bigger incentive to think of their future, and lowers time preference."
"And because consumption is necessary for survival, people always value present consumption more than future consumption, as the lack of present consumption could make the future never arrive. In other words, time preference is positive for all humans; there is always a discount on the future compared to the present."
"This is the essence of investment: as humans delay immediate gratification, they invest their time and resources in the production of capital goods which will make production more sophisticated or technologically advanced and extend it over a longer time-horizon."
"Not only does investment require delaying gratification, it also always carries with it a risk of failure, which means the investment will only be undertaken with an expectation of a reward."
"[T]he reality if that the most important economic decisions to any individual's well-being are the ones they conduct in their trade-offs with their future self."
"[T]he burden of taxes is more likely to reduce savings than consumption."
"Sound money, chosen on a free market precisely for its likelihood to hold value over time, will naturally have a better stability than unsound money whose use is enforced through government coercion."
"Capitalism is what happens when people drop their time preference, defer immediate gratification, and invest in the future."
"Debt is the opposite of saving."
"Rather than witness their savings accumulate and raise the capital stock, this generation has to work to pay off the growing interest on its debt, working harder to fund entitlement programs they will barely get to enjoy while paying higher taxes and barely being able to save for their old age."
"Prices, then, are not simply a tool to allow capitalists to profit; they are the information system of economic production, communicating knowledge across the world and coordinating the complex process of production."
"As a society's time preference increases, people are less likely to save, interest rates would be high, and producers find less capital to borrow."
"The business cycle is the natural result of the manipulation of the interest rate distorting the market for capital by making investors imagine they can attain more capital than is available with the unsound money have they been given by the banks."
"The central bank's meddling in the capital market is the root of all recessions and all the crises which most politicians, journalists, academics, and leftist activists like to blame on capitalism."
"Imagining that central banks can "prevent," "combat," or "manage" recessions is as fanciful and misguided as placing pyromaniacs and arsonists in charge of the fire brigade."
"[D]evaluing a currency may make a country richer nominally, or increase the nominal value of its exports, but it does nothing to make the country more prosperous."
"No matter the level of incompetence, negligence, or failure, government agencies and employees rarely ever face real consequences."
"Banking has evolved into a business that generates returns without risks to bankers and simultaneously creates risks without returns for everyone else."
Government jobs: "Money being handed out to unproductive people will attract a lot of people who want to do these jobs, driving up the cost of doing these jobs in time and dignity."
"It became increasingly impractical to accumulate capital and wealth without the permission of the government issuing that money."
"Bitcoin is the first example of a digital good that is scarce and cannot be reproduced infinitely."
"As long as Bitcoin is growing, its token price will behave like that of a stock of a start-up achieving very fast growth."
"Each human has a limited time on earth, and that is the only scarcity we deal with as individuals."
"The more humans exist on earth, the more technologies and productive ideas are thought of, and the more humans can benefits from these ideas and copy them from one another, leading to a higher productivity of human time and improving standards of living."
"Bitcoin is the cheapest way to buy the future, because Bitcoin is the only medium guaranteed to not be debased, no matter how much its value rises."
"[Bitcoin] is a simple technological fix to the modern pestilence of governments surviving by exploiting the productive individuals who happen to live on their soil."
"[T]he real advantage of Bitcoin lies in it being a reliable long-term store of value, and a sovereign form of money that allows individuals to conduct permissionless transactions."
"Bitcoin's lack of stability does not seem like a fatal flaw that would prevent its growth and adoption given that all its alternatives are also relatively unstable."
"[T]he defense of the Bitcoin network is not just that attacking it has become expensive, but that the attack succeeding renders the attackers loot worthless."
"Bitcoin will likely increase individuals' freedom while not necessarily making it easier for them to commit crimes."
"No single altcoin has demonstrated anything near Bitcoin's impressive resilience to change, which is down to its truly decentralized nature and the strong incentives for everyone to abide by the status quo consensus rules."
"No coin other than Bitcoin can lay credible claim to being outside the control of anyone else."
"It is possible that Bitcoin will grow to displace many financial intermediaries. It is also possible that Bitcoin will stagnate or even fail and disappear."