The Bitcoin Standard: The Decentralized Alternative to Central Banking

Government‐issued unsound money, however, can stall this process, keeping unproductive firms undead but not truly alive, the economic equivalent of zombies or vampires drawing on the resources of the alive and productive firms to produce things of less value than the resources needed to make them. It creates a new societal caste that exists accordi

For John Maynard Keynes and Milton Friedman, one of the main attractions of moving away from the gold standard was the reduction in the costs of goldmining that would ensue from switching to government‐issued paper money, whose cost of production is far lower than that of gold. They not only misunderstood that gold has very few resources going to i

Ralph Merkle, inventor of the Merkle tree data structure, which is utilized by Bitcoin to record transactions, had a remarkable way of describing Bitcoin: Bitcoin is the first example of a new form of life. It lives and breathes on the internet. It lives because it can pay people to keep it alive. It lives because it performs a useful service that

What keeps Bitcoin nodes honest, individually, is that if they were dishonest, they would be discovered immediately, making dishonesty exactly as effective as doing nothing but involving a higher cost. Collectively, what prevents a majority from colluding to be dishonest is that if they were to succeed in compromising the integrity of the ledger of

As more and more producers are bidding for fewer capital goods and resources than they expect there to be, the natural outcome is a rise in the price of the capital goods during the production process. This is the point at which the manipulation is exposed, leading to the simultaneous collapse of several capital investments which suddenly become un

Bitcoin has the supply restrictions that could make it have considerable demand as a store of value; in other words, it can have salability across time. Its digital nature that makes it easy to safely send worldwide makes it salable in space in a way never seen with other forms of money, while its divisibility into 100,000,000 satoshis makes it sal

Gold is the only traditional monetary medium that is not someone's liability, and is free of counterparty risk, but moving gold around is an extremely expensive operational task, fraught with risks.

The bezzle can appear seductive from outside, thanks to the generous regular paychecks and the lack of actual work involved, but if there's one lesson economics teaches us, it is that there is no such a thing as a free lunch. Money being handed out to unproductive people will attract a lot of people who want to do these jobs, driving up the cost of

But as the size of the market grows, along with the sophistication and the depth of the financial institutions dealing with Bitcoin, this volatility will likely decline. With a larger and more liquid market, the daily variations in demand are likely to become relatively smaller, allowing market makers to profit from hedging price variations and smo