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James | 1 years ago (raw) | export | reply | flag +7 
 Reading “The Fiat Standard” and listening to @saifedean this week. Exceptional explanations helping me improve my understanding of money, fiat systems, and economics. Brilliant! 

Before, I thought I understood Bitcoin and why its such an important innovation. Now I realise how shallow my understanding of the problem (hard money) was. I also didn’t fully realise what a clown-world we live in (fiat) 😅 🤡

Thanks for giving me a renewed appreciation for this Godsend money technology we call Bitcoin🙏🏼⚡️
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saifedean | 1 years ago (raw) | root | parent | reply | flag 
 Thank you 🙏🙏
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asourcefamiliarwiththematter | 1 years ago (raw) | root | parent | reply | flag 
 Bitcoin is currency, not money
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James | 1 years ago (raw) | root | parent | reply | flag +1 
 Are you sure?
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asourcefamiliarwiththematter | 1 years ago (raw) | root | parent | reply | flag 
 Consider Mises' regression theorem & Menger's theory of money (also Moldbug's thoughts on money as a mechanism of saving)

1) We start in an undeveloped market or barter economy.
2) In order to exchange my good A for what I really want B, I either need to find somebody who has B and wants A (tough) or I need to find somebody who wants A and has some good C which is more widely desired than A, which I might trade for B directly or with the aid of further intermediaries. (Menger)
2b) Alternately, in order to exchange my good A for what I really want B in the future, I might need to exchange for some more durable good D, hold D for a period of time, and exchange for B, possibly with further intermediaries. (Moldbug)
3) In either of these scenarios, the good C or D has trade value to begin with because of its real uses and physical properties. Gold for example is a ductile metal & easily reshaped. As it becomes widely recognized that the good is desirable for savings or trade, it becomes generally accepted - money.
4) The exchange ratio of gold for various goods (prices) yesterday forms the basis of exchange ratios (prices) today. (Mises)

So if the king introduces a new paper money out of the blue nobody will know how to price it. Historically I am not aware of any currency that was introduced in this way - the Euro for example started as a weighted basket of European currencies.

Bitcoin has no industrial or consumption use, but only trade value. It seems to be a substitute for dollars which are a substitute for gold. When the current fiat regime dies I fully expect Bitcoin to die with it. Outside of areas with a functioning precious metal economy (eg Utah goldbacks) I expect a reversion to barter. I don't believe I will have any difficulty getting people to accept metal disks. Scarce, durable, and obviously valuable commodities should be easier to spend than anything else.

But why would people accept Bitcoin in such a scenario? Right now, acceptance is driven by fiat markets. If I'm a business owner I don't need my supplier to take Bitcoin because I can just convert to fiat. If fiat dies, I can only take Bitcoin if my supplier does, and so can he, and so on. The only people still taking it will be True Believers.