The Bitcoin Standard: The Decentralized Alternative to Central Banking

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Governments have control over money, meaning they have control over you. Bitcoin offers freedom from control and inflation. There will only ever be 21 million bitcoins (there are smaller denominations)--not like US dollars where the continual printing of more and more tends to devalue your money. This tension of imposing ‘liberty’ on people by seeking to deny democratic governments any policy space whatsoever underlines the whole book. The most obvious manifestation of this ideological lens is in the repeated mischaracterisation of John Maynard Keynes and his ideas. Keynes is the anti-hero in this morality play: the necessary foil for the angelic, low time preference heroes. The lambasting of Keynes is in the well-established rhetorical tradition of the Austrian School: unevidenced assertion and straw manning. Of all the faults of the book—and there are many—the wanton misrepresentation of Keynes is perhaps the most indicative of bad faith.

This analysis may help explain why Bitcoin has resisted all attempts to change it significantly so far. The coordination problem of organizing a simultaneous shift among people with adversarial interests, many of whom are strongly vested in the notion of immutability for its own sake, is likely intractable barring any pressing reason for people to move away from current implementations.With all the hype in the crypto space, it’s gratifying to read a book about Bitcoin which (apart from a brief prologue) contains only incidental mention of Bitcoin for the first two-thirds of the book. Ultimately, as you’ll gather from the title, Bitcoin plays a fairly grand role, supplanting gold as the historical reserve standard, but by building a groundwork understanding of money’s emergence, history, and evolution, Ammous makes a sober arrival at his final destination. This] should be required reading for everyone in modern society,” writes Michael Saylor, CEO of MicroStrategy, in his foreword to the latest version of The Bitcoin Standard (subtitled, the decentralized alternative to central banking) by Saifedean Ammous.

It’s a disconcerting reminder that ersatz ‘libertarian’ thought, at its edges, looks a little bit authoritarian: sound money forces you to be more morally upright. After all, the ostensible hero in this morality play is Rothbard whose ‘Ethics’ (cited by Ammous) ultimately resolve into allowing parents to starve their children to death if they wish (presumably a result of high time preference); a problem of neglect that, Rothbard tells us, could be solved through a free-market in babies. This is not classical liberalism, or even mainstream libertarianism, but the hard-core anarcho-capitalism of sociopaths.Ammous describes what BTC has become in its promoters’ eyes: “a global hard money” to store financial wealth, which third party intermediaries can hold and trade on their platforms, much like banks do now. Noting the incongruity, he writes, “While this view of Bitcoin might sound like it is a betrayal of Bitcoin’s original vision[correct, emphasis added] of fully peer-to-peer cash, it is not a new vision.” The digital-gold-as-universal-money idea had indeed been around for over a decade before the white paper. But this had little (if anything) to do with Satoshi’s white paper, and was not the problem Satoshi was trying to solve: ‘casual’ transactions (read small and uneconomic for banks) settling with electronic cash without the need for a fiduciary intermediary. It is when we get into the middle section of the book that things really get bad: it’s overly long, with ideas scattered and repeated; the only narrative thread being the twin evils of ‘unsound money’ and John Maynard Keynes. Chapter 4 on ‘Government Money’ is unscholarly in spirit. We’re told the gold standard is responsible for everything good that ever happened in the 19th century and civilisation essentially ended with the demise of the gold standard. The tale is right from the ‘fractional reserve banking is fraud’ sub-branch of Austrian economics. The legitimate—essential to capitalist growth—role of business entrepreneurs going to entrepreneurial bankers to seek fresh credit (new money created as a loan ex nihilo based on good collateral and good prospects) is completely ignored. Any expansion of money beyond gold is implied to be fraudulent and, again, destined to end in disaster. This is a fatal blind spot. Bitcoin is, after all, an electronic cash system, neither intended to, nor capable of replacing banking. Although I agree with certain aspects of this assessment, it is clearly exaggerated and oversimplified. I also don't care at all about the author's approach to persuasion e.g. to name a few: In The Bitcoin Standard, Ammous offers a take on why Bitcoin is the best version of what Austrian economists call “sound money” and why he believes that makes it the only cryptocurrency worth paying attention to.