The Bitcoin Standard: The Decentralized Alternative to Central Banking

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Saifedean was a professor of Economics at the Lebanese American University from 2009 to 2019. He holds a PhD in Sustainable Development from Columbia University, a Masters in Development Management from the London School of Economics, and a Bachelor in Mechanical Engineering from the American University of Beirut. the importance of sound money can be explained for three broad reasons: first, it protects value across time, which gives people a bigger incentive to think of their future, and lowers their time preference. The lowering of the time preference is what initiates the process of human civilization and allows for humans to cooperate, prosper, and live in peace. Second, sound money allows for trade to be based on a stable unit of measurement, facilitating ever‐larger markets, free from government control and coercion, and with free trade comes peace and prosperity. Further, a unit of account is essential for all forms of economic calculation and planning, and unsound money makes economic calculation unreliable and is the root cause of economic recessions and crises. Since the move from El Salvador, the leaders of developing countries, including Mexico, Argentina, Paraguay, Brazil, and Panama, have hinted at following suit. This shift has come to be known as the ‘El Salvador effect’.

A lot of the argument hinges on the notion of time preference – that a sound money which can’t be inflated away incentives people to think longer term.I have personally no idea if the world would be a better or worse place today if we had continued with a free market and following the Austrian school of economics. Saifedean's views of the golden past are probably simplistic and the problems of today's globally connected and overpopulated world are probably far more complex than the author (or anyone on the planet) could possibly understand - BUT I can see with my own eyes that my generation's buying power is absolutely ridiculous compared to my parent's generation, despite us working significantly longer hours in supposedly much higher classed and higher paid jobs.

In conclusion, the Bitcoin coders face a strong incentive to abide by consensus rules if they are to have their code adopted. The miners have to abide by the network consensus rules to receive compensation for the resources they spend on proof‐of‐work. The network members face a strong incentive to remain on the consensus rules to ensure they can clear their transactions on the network. This is grade F stuff. Keynes is branded an authoritarian despot for arguing for individual liberty and freedom against the everyday suffocating threat of revolution and war. It’s not clear whether the wanton misrepresentation of Keynes’ thinking—and by implication, everything he allegedly represents as the Antichrist of ‘unsound money’—is due to ignorance, or mendacity. Perhaps Ammous has a high time preference when it comes to studying what Keynes actually wrote. Some compensation for fans of Keynes is that Ammous is nearly as dismissive of Milton Friedman and the “Friedman brand of libertarianism.” It’s Rothbardian anarcho-capitalism or bust. The Bitcoin standard owes its workings to Satoshi, the creator of Bitcoin, but the concept was popularised in 2018 by Dr Saifedeam Ammous, an Assistant Professor of Economics at the Lebanese American University. In his book, The Bitcoin Standard, Ammous lays out the inefficiencies and flaws of the central banking system, and so too the fiat monetary system, arguing for the adoption of Bitcoin as legal tender. What is the Bitcoin standard?Note: Even in a highly liquid cross chain world, you still need to denominate transactions in one currency for mental accounting purposes. When economic decision making is geared toward the future, it is natural that all manner of decisions are geared toward the future as well. People become more peaceful and cooperative, understanding that cooperation is a far more rewarding long‐term strategy than any short‐term gains from conflict. People develop a strong sense of morality, prioritizing the moral choices that will cause the best long‐term outcomes for them and their children. A person who thinks of the long run is less likely to cheat, lie, or steal, because the reward for such activities may be positive in the short run, but can be devastatingly negative in the long run. Although gold was supposedly demonetized fully in 1971, central banks continued to hold significant gold reserves, and only disposed of them slowly, before returning to buying gold in the last decade. We now have a tiger by the tail: how long can this inflation continue? If the tiger (of inflation) is freed he will eat us up; yet if he runs faster and faster while we desperately hold on, we are still finished!