Waking up this morning and seeing the price of Bitcoin at $3665, I was instantly struck with a moment of deja vu. $3,600 was the price I purchased my first bag of satoshis in August of last year.
After 15 months on the bitcoin spaceship, i’ve finally returned to earth. Only… I’m not getting off.
The adventure looked something like this.
- Dismiss bitcoin as silly internet money. “It’s digital right, so how can it be secure and not copied?”
- Realize that the whole point of Satoshi’s invention was to prevent copied coins and finally coming to the conclusion, “Shit they might be on to something here.”
- Buy BTC and read everything I can get my hands on.
- Discover ALT coins. “Wow, I thought Bitcoin was big, but these are much faster and newer. Look at these cool potential use cases. Plus they are cheaper so the upside potential must be greater, right?”
- Become a “blockchain” fanboy. “They are going to put everything on the blockchain… My clothes will be tokenized.”
- But there was that nagging voice… “Blockchain huh… Sounds like a database to me. Why does it need a token… Why not just use a database?”
- Ohhh no. I’ve been distracted by greed and bright lights. I’ve forgotten what really matters…
And what is it that matters? Having an asset that can transmit value around the world without permission or the possibility of debasement.
“It is trivial,” The economist Saifedean Ammous and author of ‘The Bitcoin Standard’ says for any of the alt coins foundations or leaders to change any aspect of their ‘coins’ monetary policy. Therefor they are not good stores of value.
Gold has been human’s primary store of value for generations because it was scarce. The price of gold could double for one reason or another and producers would only be able to marginally increase their supply because it is so difficult to mine. One society can trust storing their wealth in gold, because they can be reliably confident that another society can’t flood the market with a new supply.
Bitcoin is “strictly scarce” Ammous says, because no matter how high the price goes there will only be 21 million coins mined and the supply of new coins is mathematically governed. Currently 12.5 bitcoins are minted every 10 minutes and this will half in 2020. It is ‘The hardest money ever invented.’ If you have 21 coins, you will always have 1/1,000,000 of the total supply (and actually much more due to lost coins.)
Many coins have max supply caps though? Yes, but they could be changed with a new line of code in an instant.
How can you say the supply is fixed if Bitcoin can be forked? The longest chain is the only one that has value. Copied dollars are not dollars.
It’s slow, we’d be waiting all day at Starbucks for the confirmation? The market will most likely provide a second layer solution such as lightning, however this argument trivializes bitcoin’s potential. 30 minutes for final settlement is far far better than Visa’s 30 day or longer times for final settlement (if it ever truly is settled unalterably).
Second layers lead to centralization? You don’t need to use them to store your labour and productivity in bitcoin. They just make it easier to transact.
But… Blockstream? No one can change the supply. My stored wealth is safe.
This is the kind of running commentary i’ve had in my head for over a year and the more I learn, the more I lean towards maximalism. Reading Saifedean Ammous’ Bitcoin Standard and watching pretty much all of his subsequent lectures seemed to clarify this idea in my mind.
There are some wonderful projects in the crypto space and many will succeed as important businesses of the future. But they aren’t currencies. They aren’t stores of value and they aren’t ‘The People’s Money‘. A payment network and store of value that all can use without permission or fear of censorship and seizure.
You can watch Saifedean Ammous’ fascinating and challenging ideas on Bitcoin as the world’s best store of value and the potential for a global Bitcoin Standard in the future. A currency that all can trust, because no one controls. (Lecture starts at 4.44)
Who you’re reading:
David Black is a staff writer at The Decentral, living and writing in Chiang Mai, Thailand. He’s also the author of both fiction and non fiction books and likes to debate the finer parts of crypto currency and politics to anyone who will listen.
For questions or story ideas, you can contact David
Disclaimer: Any and all opinions expressed here are those of David Black alone. The article is for educational and/or entertainment purposes only, so please use it at your own risk.