The Bitcoin Primer
--
A First Principles Guide to Money, Technology and the Case for Bitcoin
Where do we begin?
Depending on who you ask, Bitcoin is a scam, a bubble, a revolution, or a life-line. Most people don’t come to it with a blank slate. They come with a mix of headlines, opinions, and half-formed questions. It’s used by criminals. It’s too volatile. It’s too risky. I’m too late. Someone told me about it years ago and I missed it. Can’t another one just be created? If it really mattered, the government would shut it down. It doesn’t scale. It has no intrinsic value. How do you value something without cash flow? Crypto gets hacked all the time. Who created it, and is there a backdoor? What about quantum computing? If there are only 21 million, how can there be enough for everyone?
If you’ve had any of these thoughts, you’re not alone. In fact, this is exactly where most people begin. These questions, concerns, and objections often act as a barrier that prevents people from going one step further. Not because they aren’t valid questions, but because they tend to stop the conversation before it really starts.
A better way to approach something like Bitcoin, or any big new idea, is with a mindset that allows you to explore it without being pulled too far in either direction. Not blind belief, and not immediate dismissal. Something more balanced. Curiosity, skepticism, humility, and a degree of neutrality. That combination gives you the ability to examine something on its merits, to test it against your existing understanding of the world, and to decide for yourself what holds up and what doesn’t. It also protects you from being swept up in something that could harm you, while still keeping you open to ideas that might actually matter.
This approach becomes especially important when the topic you’re exploring is money. Money is one of those things that most of us use every day without ever really questioning it. It sits quietly in the background, shaping how we work, how we save, how we think about the future, and how society organizes itself. Because it feels so familiar, we rarely stop to ask whether it could work differently, or whether the system we operate within has trade-offs we don’t fully understand.
This piece is meant to offer a simple framework to start thinking about those questions. It will walk through what money has looked like over time, how our current system functions, how technological progress interacts with that system, and where Bitcoin might fit into the picture. Along the way, I will point to additional resources if you want to explore further. This is not meant to be exhaustive, and it is not meant to be definitive. It reflects my current understanding of money, technology, and Bitcoin.
It is also not financial advice. It is simply an invitation to think a little more deeply about the systems we participate in every day.
Because if you don’t understand the problem, or even recognize that there might be one, it becomes very difficult to see Bitcoin as anything more than speculation or noise. But if Bitcoin is attempting to compete as a form of global money, then the more useful place to begin is not with Bitcoin itself, but with a much simpler question.
What is money?
Part 1: What is Money?
I like to think of money as a packet of information that is exchanged to satisfy our coincidences of wants. Money became a useful tool once we evolved beyond favours and barter. It is a representation of our time and energy in extracted form. Information that can move across time and space with as little distortion, dilution or interference as possible. This information is stored in, or moved with, many different vehicles today and in the past. More simply put, you save with it today, spend it tomorrow and it facilitates trade. Money is helpful because if groups of people all agree that something can hold value, we can all focus on what we do best; provide value and be compensated with money and use it to exchange our value with others, satisfying the coincidence of wants. Without money, individuals must be more self-sufficient and we all benefit less from trade.
Throughout our recorded history, humans have had many different forms of money. These monies have generally been a reflection of the current technological capability that best demonstrates something’s ability to transact with, store value in, or measure something’s value with: 1. Medium of Exchange, 2. Store of Value and 3. Unit of Account. The key characteristics of market chosen money throughout time have exemplified the following: (1) durability, so it could last through time, (2) portability so it could travel across space, (3) fungibility so it is interchangeable, (4) divisibility so it could be broken down for smaller payments, (5) verifiability so you know it’s not fake, and maybe most importantly, (6) scarcity, so the supply can’t increase quickly and diminish your money’s purchasing power.
Types of Monies Throughout Time
Throughout recorded history, different forms of money have been used, such as favours or credit, barter, cowry shells, Rai stones, animal pelts, tobacco, salt, tea bricks, spices, glass beads, cacao beans, precious metals like copper, silver and gold, and today most countries in the world operate with their own government issued fiat currencies. Throughout time, gold emerged with majority consensus to be the best and most commonly recognized form of money because it had the best set of attributes and tradeoffs for money. Gold is durable and cannot be destroyed, it is somewhat portable across space, especially if kept within a smaller geographic region or smaller sums brought with you during travel. Gold is fungible and divisible, one could melt it down to verify its purity or forge into coinage, and it is scarce because it is hard to get and requires real world physical labour and capital to produce more gold units, keeping the supply growth rate lower than other potential forms of money such as silver and copper.
The success and stability of something used as money is largely influenced by its scarcity. Throughout history, various forms of money have failed primarily because technological innovations decreased the marginal cost to produce another unit of that money, diminishing that money’s value as it became less scarce. Here are two notable examples we can draw from:
(1) Glass Beads
In parts of Africa and North America, glass beads were a prized form of currency used in trade, especially during interactions between native populations and European traders. Initially, these beads were valuable because they were rare and difficult to produce. However, when Eastern Europeans developed more efficient methods for producing these beads, the market was flooded with glass beads, causing their value to plummet because you had more glass beads chasing the same amount of goods and services. The ease of production stripped away the scarcity that upheld their value as money. The marginal cost to produce more glass beads rapidly decreased, inflating the supply and making glass beads ever less scarce. (Glass beads, East Africa, Research Gate).
(2) Rai Stones
Rai stones, large limestone discs used as currency on the Micronesian island of Yap, serve as another example. The value of Rai stones was initially based on their size and the difficulty of their transportation from other islands. However, as boat technology improved, it became easier to transport these stones. The increased ability to bring more Rai stones to Yap, inflated the supply and diminished their scarcity, leading to a decrease in their value as money. The money became easy to make more of, the supply increased, and this diminished the money’s purchasing power. (Rai Stones, Bank of Canada).
Why We Chose Gold
Gold emerged as the victor of market chosen monies over the past 5000+ years, because in my opinion, it satisfied the characteristics of money best. As I mentioned, the scarcity component is the most important characteristic, and gold has historically had a 1.5–2% inflation rate or about a 60 year stock to flow (the number of years required to replace the current supply of gold based on current mining outputs). It’s owned by the world’s superpowers, is embedded culturally around the world and has a current estimated market cap of ~30 trillion USD today.
If gold emerged as the best market chosen money, why isn’t it THE money anymore?
Money is a reflection of our technological capabilities. The telegraph was a major protocol step change for humans during a time of increasing globalization during the mid 1800’s. It effectively allowed information to move at nearly the speed of light. Through the lens of money being information, value in the form of gold could no longer be settled as fast as we could communicate. This was the beginning of gold being arbitraged. Banks started to issue paper claims on top of gold held in reserves as a physical representation or a claim to the gold itself. Effectively a faster communication layer for money was being built on top of gold to make up for its ever increasing inability to keep up as a medium of exchange. (Broken Money: Why Our Financial System Is Failing Us and How We Can Make It Better).
Over time these gold reserves held in storage started to have multiple pieces of paper claims issued against the same 1 oz gold deposit, known as fractional reserve lending. Banks that did this, could offer better interest rates, lower fees and could effectively have a competitive advantage over other banks that simply kept their gold reserves at par with their paper promises, making it harder to compete without fractional lending on gold they did not have. Each bank would choose somewhere between 1:1 and 10:1 reserves and were essentially betting against a run on the bank, which is when enough people claimed their gold at once, and this would effectively render them bankrupt. For example, with 10:1 paper to gold reserves, only 10% of people would need to claim their gold for that bank to have zero gold against their paper claims. With some banks simply trying to compete, mixed with greedy short sighted banks, people were getting word of what was happening. Runs on the banks started to happen in waves and unsuspecting depositors were losing some or all of their savings at once. Individuals made decisions based on their own preferences and perceived risk when deciding where to bank. In a free market this should have sorted itself out. Some banks would have gone under and consumers would have moved more of their business to more conservative banks, but as we know today, this did not happen.
The evolution of money and banking couldn’t continue to evolve on top of gold because of its physicality and inability to keep up with the speed of commerce. In order to protect depositors from the risks created by fractional banking, the United States created the Federal Reserve in 1913, which began operating in 1914 as a lender of last resort.. (Creature of Jekyll Island, by G. Edward Griffin).
Central banks would provide liquidity with different mechanisms to banks should there be a bank run, allowing them time to shore up and become solvent once again, and this protected depositors. You could say this didn’t fix the underlying problem of gold being the money and I would agree, however there wasn’t yet a solution for creating better money that could be scarce and also have enough velocity to facilitate global trade. Absolute scarcity with unlimited velocity did not yet exist.
If History is a Teacher
Throughout history, our ability to mine gold has steadily improved. Every generation gets better tools, better techniques and better ways of finding and extracting it. That trend doesn’t stop. As AI, robotics and automation accelerate, the marginal cost of producing an additional ounce of gold could continue to fall over time. More on this later.
As the cost to produce gold decreases, the supply increases. And as supply increases, scarcity is diluted. That erosion doesn’t happen overnight, but over long periods of time it matters. Gold’s ability to store value has always depended on how hard it is to get. Once that hardness weakens, so does its monetary role.
People like to jump straight to science fiction and talk about mining asteroids decades from now, but we don’t even need to look that far ahead. There are vast quantities of gold that are currently uneconomical to extract or undiscovered, including large deposits on the ocean floor. As technology improves and energy becomes cheaper, what is uneconomical today becomes inevitable tomorrow.
We’ve seen this movie before. Glass beads were once money, until someone figured out how to produce them cheaply and in large quantities. At that point, their scarcity vanished and so did their usefulness as money. Gold has lasted much longer because it was harder to inflate, not because it was immune to inflation.
If history teaches us anything, it’s that money fails when it can be made more easily than people expect and we make the mistake of projecting the past rate of change forward. We already know gold can no longer function as a medium of exchange in a world where information moves at the speed of light, and now, as technology advances, the very scarcity that once made gold valuable is beginning to come under pressure as well.
If I were trying to undermine my enemy who stored their wealth in something that could be inflated, I would find a way to do it.
Part 2: Your Money Today
After World War II, the global economy was in ruins and the United States emerged as the dominant industrial and financial power. In 1944, representatives from forty-four countries met in Bretton Woods, New Hampshire to design a new monetary system. Under the Bretton Woods agreement, the US dollar was pegged to gold at $35 an ounce, and other currencies were pegged to the dollar. In effect, the dollar became a proxy for gold, and the United States became the custodian of the world’s monetary anchor. (The Bretton Woods Monetary System).
This worked well at first. The US held the majority of the world’s gold reserves, had a strong manufacturing base, and exported real goods to the rest of the world. Dollars flowed out, but confidence remained because those dollars could, at least in theory, be redeemed for gold.
Over time, however, a structural problem emerged. For the world to have enough dollars to settle global trade, the United States had to run persistent trade deficits and export dollars abroad. But the more dollars that accumulated outside the US, the weaker the promise of gold convertibility became. This tension is known as the Triffin Dilemma. A reserve currency must be supplied to the world, but supplying it eventually undermines confidence in its backing. (Triffin Dilemma).
As decades passed, the US found itself forced to choose between defending the dollar’s gold peg or maintaining its role as the world’s reserve currency. You can’t do both forever.
At the same time, a strong dollar made US manufacturing less competitive. It became cheaper to offshore production and import goods rather than make them domestically. Industrial capacity slowly hollowed out. The middle class, once anchored by manufacturing jobs, began to erode. Dollars flowed overseas, gold flowed out of US vaults, and foreign governments increasingly questioned whether the US could honor its promises.
By the late 1960s and early 1970s, the system was cracking. Speculators and foreign governments began demanding gold in exchange for dollars. Faced with the choice between losing the nation’s gold reserves or breaking the promise, President Nixon closed the gold window in 1971. What was framed as a temporary measure became permanent. The dollar was no longer redeemable for gold. The world moved fully onto a fiat standard. Video clip, August 15, 1971 — Richard Nixon Closes the Gold Window.
This moment, often referred to as ‘The Nixon Shock’, explicitly removed the last physical constraint on money creation. From that point on, the US government and central bank could create new units of currency without any direct link to gold. The measuring stick was no longer fixed. It could now be adjusted as needed.
In the years that followed, a new system emerged to reinforce global demand for dollars. Through agreements with key oil-producing nations, energy exports were priced in U.S. dollars. In return, those countries effectively fell under the umbrella of U.S. military protection, helping secure trade routes and regional stability. This gave rise to what became known as the petrodollar system.
Countries now needed dollars not just for general trade, but specifically to purchase energy. Those same dollars were then recycled back into U.S. Treasury bonds, cementing Treasuries as the world’s primary reserve asset and allowing the United States to finance persistent deficits at lower interest rates than any other country could sustain (Exorbitant Privilege, Barry Eichengreen).
This is the system we live in today.
There are now more than 160 fiat currencies issued by central banks around the world. A fiat currency is not money in and of itself. It is a claim, enforced by law, backed by the credibility and taxing power of a government. In the US, nearly every dollar in circulation is effectively a liability of the Federal Reserve and is lent into existence through debt.
So What’s the Problem?
The problem with money that can be created without constraint is not whether it will be created, but how much. In a debt-based fiat system, inflation is not an accident. It is a requirement. Old debts must be serviced with new money, and new money must be worth slightly less to keep the system from unwinding through defaults. Inflation is simply an expansion of the money supply used to measure goods and services. It distorts the ledger of who owns what by quietly increasing the denominator beneath your savings.
If you own one percent of the money supply and the supply doubles while the amount of real goods and services stays the same, you now own half the purchasing power you did before, half a percent. No new doctors, engineers, oil or lumber were created. Only the measuring stick changed.
Governments vary in discipline, debt levels and public trust, but they all share one thing in common. Their fiat currencies must lose purchasing power over time.
The US dollar remains the world’s reserve currency and is still the most widely used and trusted globally. The US represents roughly four percent of the world’s population, yet a significant portion of global trade and financial activity is denominated in dollars. Over the past century, the dollar’s money supply has grown at an average rate of around seven percent per year, though the inflation rate is targeted to report at around 2%.
Because fiat currencies lose value by design, they struggle to carry purchasing power forward through time. Currency has to be invested in stores of value. It moves into assets like real estate and equities, which coincidentally have risen at roughly the same 7% pace over long periods.
This is not a coincidence. This is the monetary architecture we’ve built our modern world on.
Who Are the Winners and Losers?
The Cantillon Effect describes how the injection of new money into an economy has a localized an uneven effect on labour rates, goods & services and assets. This phenomenon occurs because money is not distributed evenly across an economy, and those closest to the new money coming in benefit disproportionately. Over time this leads to broad inflation, especially asset inflation, as the new money eventually gets parked with assets. Below is a chart from the Federal Reserve Bank of St. Louis (FRED) illustrates how when M2 increases (new money coming in) it disproportionately benefits banks, large companies and asset holders and does not evenly trickle through the economy to everyone. Remember, there is no such thing as creating new money. What’s happening is the ledger of ‘who owns what’ is being distorted. Purchasing power is effectively transferred away from savers of the currency, wage earners, bond holders and future generations and being transferred to those closest to the new money. (Wealth centralizes. The Cantillon Effects, Research Gate).
A reminder; this isn’t the fault of the banks, big companies or asset holders. They are participants within a system and are just doing what they are incentivized to do. They are like kids being raised by bad parents who reinforce their behaviour.
Downstream Consequences
In a fiat currency system, monetary expansion erodes real purchasing power over time, pushing essential goods, housing and financial assets further out of reach relative to wages.
Seb Bunney, in “The Hidden Cost of Money,” details how this produces downstream social consequences: younger generations delay family formation, birth rates fall, nihilism and gambling increases, homeownership becomes inaccessible without heavy leverage and entrepreneurship becomes riskier as the cost of living and the capital required to participate in the economy continually rises. Where previous generations could support a family and buy a home on a single income, today’s system demands two incomes just to maintain a similar standard of living, which often is still accompanied by persistent debt. The result is a society with less optimism, lower fertility, short term thinking, free floating anxiety, higher crime rates and reduced time and financial bandwidth for creative or productive pursuits.
Layered onto this, is Ray Dalio’s long term debt cycle framework from, “Why Nations Rise and Fall,” which gives us the scoreboard for national health: productivity growth, education, competitiveness, indebtedness, capital flows, internal cohesion and polarization. Chronic fiat debasement and debt accumulation weaken these pillars simultaneously and debts grow faster than a nation’s output, inequality fuels internal conflict, capital flees toward harder assets or safer jurisdictions and long-term investments in productivity and human capital are crowded out. Over decades, these trends do not just distort markets, they alter demographics, culture and geopolitical standing, setting the stage for societal stagnation or decline.
Vote Harder
Maybe politics is the answer. Maybe I just need to vote harder. Maybe it’s those socialist democrats that are the problem, or maybe it’s that egomaniac Trump. F Trudeau! Better turn on the news and download today’s talking points for the next time you debate your political rival.
But when you step back and look at the data, something interesting appears. The chart below shows which U.S. administration was in power over each 4–8 year term, how much the national debt increased during that period, and how many times the debt ceiling had to be raised or suspended.
The pattern becomes hard to ignore. Regardless of which party holds power, the trajectory looks the same. The debt continues to rise.
That suggests the problem isn’t primarily political. It’s structural. We are operating inside a monetary system that requires perpetual expansion of debt and money supply in order to function. A system like that cannot be fixed from within the very rules that sustain it.
As your country’s public debt accumulates, so does the interest you pay on your debt. Currently the US brings in about 5 trillion in tax revenue, and the total interest on the debt has exceeded 1 trillion dollars annually (or about 20% of tax revenue). When you have perpetual deficits that keep increasing your total debt at a rate that outpaces your GDP growth and tax revenues, it becomes a problem. Add in war, pandemics, and natural disasters, a country’s debt and interest payments can get blown out quickly. Especially if confidence levels from your debt holders decline because they don’t think the currency you pay them back with will be worth very much in the future. If a country can’t get their interest payments under control, their currency will eventually hyperinflate.
Below are the total interest payments on debt over time since the 1950s. At the time of writing this article, the total interest on US debts exceeds the entire US military defense spending budget of roughly 900 billion.
Here is a broader context for the world reserve currency’s status for total debt, tax revenues and its largest expense items:
Medicare/Medicaid, Social Security, Defense/War and Interest on Debt, eats up the entire 5 trillion tax revenues alone. With 7 trillion in spending, that of course, leads to a 2 trillion deficit this year. But where would you cut expenses? Social Security and Medicare/Medicaid cuts would be political suicide and Defense cuts might get you suicided! Remember, if you try to cut too much on the fiscal spending side and striving for a net surplus, this doesn’t give the massively indebted economy the stimulus it needs to keep prices rising. If you slow the economy by not creating more money from debt creation, you can start a cascading of defaults that would make 2008 blush. It could lead to the unwinding and collapse of our entire global financial system. Probably not good. Remember, fiat money is lent into existence.
Maybe We Can Work Our Butts Off and Pay it Back?!
Okay, so maybe the answer is simple. Maybe we just grow our way out of this. Work harder, increase productivity, collect more taxes and slowly pay the debt down over time. That’s the intuitive answer and it feels reasonable when you think about household debt.
The problem is, we’re not even looking at the full bill.
Most people focus on the national debt because it’s visible and easy to quote. What gets far less attention are the promises that don’t show up cleanly in that number. These are called unfunded liabilities.
Unfunded liabilities are future financial commitments the government has already made, by law, without having the money set aside to pay for them. They include programs like Social Security, Medicare, Medicaid and veterans’ benefits. These aren’t abstract ideas. Tens of millions of people have structured their lives around these promises and politically they are extremely difficult to reverse.
When you add these unfunded obligations to the official national debt, the scale of the problem changes dramatically. Depending on assumptions and time horizons, estimates place total U.S. unfunded liabilities well north of $100 trillion, on top of roughly $38 trillion in explicit federal debt. That puts the full obligation somewhere north of $140+ trillion.
That is not something you pay down with a few years of fiscal discipline or faster GDP growth. It represents a structural gap between what has been promised and what can realistically be funded.
So, when we ask whether we can just work harder and pay it back, we have to be honest about what “it” actually is. This isn’t a single loan with an end date. It’s decades of compounding commitments layered on top of a system that already depends on inflation to function.
Exponents
This kind of system can persist for a long time. In fact, it often does.
A country can carry very high levels of debt as long as interest rates remain low. When borrowing costs are near zero, the interest burden feels manageable. You refinance, roll it forward, and the problem stays mostly hidden in the background. As long as confidence holds and rates stay suppressed, the machine keeps running.
The problem begins when interest rates rise.
When rates rise, the cost of servicing existing debt rises with them. And when you are sitting on tens of trillions of dollars in obligations, even small increases in interest rates translate into enormous increases in annual interest payments. What used to be manageable quickly becomes one of the largest line items in the budget.
At that point, the options narrow.
To service higher interest costs without cutting politically sensitive programs, you need more revenue. To generate more revenue in a slowing economy is difficult. So instead, more debt is issued. But issuing more debt at higher interest rates only increases the total interest burden further. To prevent that burden from crushing the system, the money supply expands. That expansion comes from more borrowing, more issuance, more intervention.
It becomes self-reinforcing.
Higher debt leads to higher interest costs. Higher interest costs lead to more borrowing. More borrowing requires more monetary expansion. And more expansion gradually erodes the purchasing power of the currency that underpins the entire system.
As long as confidence holds, this spiral can stretch out over years, even decades. But the math does not disappear. It compounds quietly in the background. And eventually, the interest on the debt competes with everything else a nation wants to fund.
Let’s Tax the Rich!
According to Forbes’ 2024 Billionaires List, roughly $6.7 trillion in wealth is held by billionaires in the United States. On the surface, it feels like an obvious solution. You see headlines about billionaires on their yachts and private jets, and at the same time you see people struggling to afford healthcare, food or housing. It’s easy to conclude that the answer must be to redistribute that wealth. If we’re serious about funding healthcare, supporting those in need and reducing the national debt, maybe drastic action is required.
So, let’s follow that logic all the way through.
What if we imposed a 100 percent tax on billionaire wealth and used it to pay down the debt and reduce national interest expenses? What would that actually accomplish?
Confiscatory taxation would trigger rapid capital flight and forced liquidation of assets such as public equities, private businesses and real estate, cratering asset prices and destroying financing channels that fund innovation and employment. As capital flees to where it is treated best, entrepreneurs would have far less incentive to risk time and money to build companies, venture funding would dry up and productive capacity would contract, leading to layoffs, slower growth and a reduced future tax base. In the extreme, this policy would erode the institutional trust required for long term investment, making the economy poorer, less dynamic, and less capable of producing the very goods, services and jobs it depends on.
But let’s put the downstream consequences aside for a moment. If we were able to tax the billionaires and obtain nearly 7 trillion dollars to go against national debts, that would reduce the US public debt from 38,500,000,000,000 dollars to 31,500,000,000,000 dollars (yes, I included the number here so you would see how big it is). Assuming a 2 trillion-dollar annual deficit that would, buy us another three to four years. And yet, the underlying problem of having a debt-based money that requires inflation forever and ever, still remains. Oh ya, and don’t forget about the unfunded liabilities of over 100 trillion dollars. I think it’s clear this won’t come close to solving the problem and the second order consequences would far outweigh the benefits.
Now let’s run that example again, but with something more commonly proposed, a 1% or even 5% wealth tax on billionaires. Even if it were fully implemented, the revenue raised would barely move the needle relative to the scale of the debt and long-term obligations. It would be like throwing a suitcase off the Titanic.
Proposals like this often gain traction because they appeal to our sense of fairness and compassion for others. But, focusing on a small slice of wealth misses the larger structural issue. The real problem isn’t a handful of individuals. It’s the monetary system itself.
Part 3: Technology & Deflation
We Need Some Kind of Productivity Miracle. Maybe AI?
Take a break here. Stretch and come back with a fresh and open mind. In my opinion, this is the most difficult piece for many to grasp, but the most important. I will aim to give you a first principles understanding of how a debt-based money system that requires inflation is fundamentally at odds with ever increasing technology and productivity that wants to drive prices down — The feared Deflation.
First Principles
In a free market, entrepreneurs must compete to provide value. You, as a consumer, will buy the things that give you the most value. As a result of innovation, competition and trade, prices fall. The more people that participate in this free market, the faster prices will fall, benefiting everyone.
Our prices aren’t falling, of course, when measured in fiat currencies. Therefore, we are not living in a free market. Call it socialism, crony capitalism or communism, but it is not a free market. It is a control structure that prevents prices from falling. Said another way, the productivity that should flow to everyone in the form of lower prices, is stolen from us by increasing the money supply (harsh, I know). (The Price of Tomorrow, Why Deflation Is The Key To An Abundant Future, by Jeff Booth)
Fiat Economy
In a hypothetical situation, suppose a closed economy had one million units of money, and one million goods and services. On average, the prices of those goods and services would be one dollar each. If you were to increase the supply of money chasing those goods and services to two million, the cost of each good and service would increase to two dollars. That is inflation in a nutshell.
Free Market Economy
On the other hand, let’s look through the lens of a free market with sound money. In a free market with a fixed supply of money and, using the same example above, there are one million units of money and one million goods and services. The market price of each good and service is one dollar. Now let’s increase the supply of goods and services to two million. The cost of those goods and services is now on average 50 cents and your money is now twice as valuable.
The Natural State of the Free Market is Deflation
This may feel like repeating what was said earlier, but it is worth hearing more than once to really understand what it means.
Our debt based monetary system depends on inflation to function. It operates in tension with the natural state of a free market. As we become more productive and better at producing goods and services, prices should fall if the supply of money remains fixed.
In a debt based system, falling prices cannot be allowed. The system relies on expanding the supply of currency to sustain itself. Without that expansion, it begins to break down.
Within this framework, something that should be positive, like lower prices, increased productivity, and more leisure, is treated as a problem instead.
If only there was money that didn’t come from debt creation that had a fixed supply of units and that did not require inflation.
If only there was money that allowed the productivity from the free-market competition to flow to you in the form of lower prices.
Technology is, and always has been deflationary. Think more goods or services for fewer units of labour, or inputs. Remember, if deflation wasn’t natural, then we wouldn’t need inflation in our current credit-based money. Rational people will always vote with their money for products and services that give them the most value. Companies must do the same to compete and stay in business.
Technology repeatedly dematerializes entire industries. What once required physical infrastructure, distribution networks and high costs becomes software running on a device in your pocket.
Kodak ➤ Digital camera
Blockbuster ➤ Netflix
Analog calculator ➤ Free on your phone
Analog maps ➤Free digital maps on your phone with traffic updates
CDs ➤ Free digital music files
Books and paid education ➤ Free education and books online
Heavy tanks and fighter jets ➤ Drones
Farming by hand ➤ Commercial autonomous farming systems
Postal mail ➤ E-mail
Do you use postal mail for work communication? How about using an analog map for directions in your car instead of opening the free app on your phone? Do you go to the local library to find sources for your essay that’s due or do you just use the internet? Did you remember to rewind your VHS before bringing it back to Blockbuster or did you subscribe to Netflix? Of course you chose the product that gave you the most value. Keep in mind that if you don’t adopt the best technology, you will be at a competitive disadvantage with varying levels of consequence for your family, business, country or favourite Formula 1 car over time.
The chart on the following page helps make this visible. What it shows is not uniform inflation, but a widening divergence in prices over time. Goods and services that are closely tied to technology continue to get cheaper, even when measured in fiat terms. This is Moore’s Law and productivity at work, more output, better quality, for fewer inputs. At the same time, sectors that are heavily regulated, protected from competition, or deeply entangled with debt and monetary expansion move in the opposite direction. Their prices rise, not because they are getting better, but because inflation, scarcity by policy, and lack of competition overwhelm productivity gains.
The faster AI, robotics, autonomous driving, abundant energy, 3D printing, chatbots, and so on, accelerate and converge, the stronger the deflationary force grows. Exponential technologies converging with other exponential technologies. The rate of change is exponential. Again, we often make the mistake of projecting the past rate of growth into the future because our brains cannot possibly grasp exponential growth.
Example:
If you could, how thick do you think a regular 8.5 x 11 piece of printer paper would be if you folded it over on itself 41 times? How about 50 times? Be dramatic with your guess.
The answer is, that after 41 folds, that piece of paper’s thickness would reach from earth to the moon. After 50 folds it would reach the sun.
If your estimate was way off, that’s the point. We are very good at thinking in straight lines and very bad at understanding compounding, which is why exponential technologies tend to feel gradual, and then sudden when it’s right in front of us.
What Will Happen to Jobs?
What will happen to jobs as technology can perform the tasks we currently pay people to do?
The important thing is to not get caught up on the timeline of the disruption and more so think directionally. Will something that is performed by humans eventually be replaced by lines of code written by other lines of code? Robots building other robots? Robots programmed with AI? First, simple tasks, then more complex, as the AI learns and the robots become more capable and different robots purposely built for specific tasks. Can we forever retrain our doctors, engineers, plumbers, marketing departments, soldiers, baristas, teachers and manufacturers with new skills faster than technology exponentially advancing every second of every day, globally? Of course not.
This won’t happen overnight, of course. Using AI as an example, first we will use it to enhance our current capabilities and dramatically increase our personal and team productivity and output levels. What we are doing is effectively training different AI models to do our jobs. AI is the sum of our inputs or data constantly error correcting. Companies that harness the power of AI, will outcompete and make obsolete the ones that don’t. Small, nimble companies with few employees, will be able to disrupt and outcompete large ones in one aspect or eventually all aspects of their business. This process is called creative destruction. Companies that are large, bureaucratic, calcified and less nimble, will have a hard time moving at the speed of tech and are not incentivized to disrupt themselves or their own competitive moats and profit margins. For example, Amazon started off as an online book store competing against the likes of Chapters and Indigo. Now, they are dematerializing all retail locations that previously had shoppers come to their store and physically purchase products.
Technological advancements will chaotically, in no particular order, disrupt the way we do things, putting tremendous pressure on our labour force and employment rates. Knowing the historical average unemployment rate in the US is about 6%, let’s take a look at the United States’ largest job sectors in terms of total labour:
Healthcare: ~17.7 million people (11%)
Truck and cab drivers: ~4 million people (2.5% of total workforce)
Retail workers: ~15 million people (9% of total workforce)
Manufacturing: ~14.5 million people (8.5% of total workforce)
Accounting, bookkeeping, data entry: ~1.7 million people (1% of total workforce)
Finance and Banking: ~8 million people (4.7% of total workforce)
When this many jobs sit downstream of accelerating technology, it becomes clear that the economic and monetary systems supporting them are about to be stress-tested in ways we haven’t seen before.
Does an Increase in Productivity Lead to Chaos?
As our unemployment rate climbs from disruptive technologies and people are laid off without income, this will accelerate prices falling. This is bad from the lens of this system because mortgages will begin to default, tax revenues would decrease and societal debt obligations would begin to roll over. Our current system must increase the supply of money faster than the increasing supply of goods and services, otherwise prices fall and this system collapses. Just imagine how angry and upset everyone will be. Who will be to blame? What will the proposed solutions be? All from a system that can’t fix itself from the system.
Let’s revisit the previous example. There is once again a current supply of one million units of money and one million goods and services. However, because we became more productive from technology at making goods and providing services, the total output or supply of goods and services is now two million. As we learned previously, prices would get cut in half. To prevent this, the supply of money has to increase to at least two million units in order to keep pace with the faster productivity and so, this system must forever keep increasing the amount of money in circulation at a faster rate than the goods and services are growing.
Protecting The Host
Under a progressively more fragile fiat system, governments are pushed toward policies like Universal Basic Income, taxing automation and robots, taxing the wealthy and regulating large firms under the banner of ‘systemic importance’. More control over the money itself will be required. Not because governments and the people that are in it are inherently evil, but because from the lens of that broken system not printing more money and stick handling inflation higher, would lead to total economic and societal collapse. In practice, these policies amount to subsidizing non production and shifting the burden onto those still creating real economic value. The transfer payments that enable this, are financed through deficit spending and debt issuance, which compounds interest obligations and accelerates currency debasement faster. It is the equivalent of putting money into someone’s right pocket while silently removing it from their left through inflation and financial repression.
These interventions distort free market incentives and require ever greater extraction from productive individuals and enterprises. Eventually, everyone demands free money from the state and from their perspective, why wouldn’t they? Jobs vanish, homes become unaffordable and the cost of feeding a family outpaces wages. The system continues until the players no longer want to participate because the ‘200 dollars from passing go’ barely lasts a single turn.
Historically, that is the moment when the game resets through war, revolution or upheaval, after which, the new regime solemnly promises to never debase the currency again. And so, the cycle repeats. This is the history of money, over and over again.
Summing this all Up, Simply.
Money is just information we save until we need to use it. We earn it today for the value we create and later exchange it for the value others create. It exists to solve the coincidence of wants so we don’t have to barter and can instead specialize, do what we are best at, and use money as the bridge between our work and everyone else’s. Some monies do this job better than others. ‘Ceteris paribus’, the scarcer the money, the further into the future it can carry your purchasing power.
Fiat currencies, by contrast, are issued by central banks and lent into existence. New money comes from debt creation. For the system to function, that debt has to be inflated away over time, meaning your units must be quietly devalued so that old loans and obligations are easier to pay back in weaker money. Inflation is not a bug; it is a design requirement of debt-based fiat.
Now layer on exponential technology. If our money system requires inflation to survive but our technology is driving ever greater productivity (which is naturally deflationary), then to keep prices from falling, we must expand the money supply even faster. That expansion comes from more debt. So, as technology gets exponentially better at producing goods and services, our total debt and interest burdens also grow exponentially to offset that progress and keep the illusion stability.
In a fixed supply, sound money world, it would look very different. If technological deflation were, say 5% a year, then on average, society should be getting 5% wealthier every year. It would compound annually as prices fall, and your saved money would buy more over time. Instead, with a system where money supply (M2) has grown around 7% annually, that natural 5% tailwind becomes about a 12% swing in the other direction; that is the 5% you should be gaining, plus the 7% that is effectively being siphoned from you through inflation. That is the spread between the world we could have, and the world we actually live in.
If you have made it this far, and I have managed to spark some curiosity, the next step is to keep learning. I would encourage you to watch, contemplate and digest the three carefully selected videos below. They will go deeper into the nature of this problem and, not to get ahead of ourselves here, but why Bitcoin might be the tool that finally aligns our money with us. A shift from zero-sum, to abundance.
📽️What’s The problem, produced by Joe Bryan, is one of the best videos I have come across that explains ‘the problem’ in a simple way most people can understand and is a great place to start. https://www.youtube.com/watch?v=YtFOxNbmD38
📽️”Broken Money” by Lyn Alden, explores the history of money as a technology — how it has evolved over time, why today’s monetary systems are failing, and how they contribute to inequality, instability, and misaligned incentives. The book builds the case that Bitcoin, as a decentralized and energy-backed form of money, could be a better solution for the modern world by aligning monetary policy with sound economic principles and technological innovation. https://www.youtube.com/watch?v=jk_HWmmwiAs
📽️ Here is a presentation given by Jeff Booth, Canadian tech entrepreneur, founder at Ego Death Capital and the author of, “The Price of Tomorrow; Why Deflation is Key to an Abundant Future”. He is currently one of the most sought after Bitcoin educators, advising Governments, individuals, and some of the largest firms in the world. https://www.youtube.com/watch?v=Nn2H-XKEN98&t=2s
‘Wen’ Bitcoin?
So, does everything I’ve outlined above automatically mean Bitcoin is the answer? No. Does the fact that technological progress is fundamentally at odds with a debt-based monetary system mean that Bitcoin has to be the solution? Also no. And should you take everything I have said thus far with a grain of salt and actively try to disprove it? Absolutely.
And so, in the next section when we turn to Bitcoin, my only suggestion is to approach it with openness and curiosity. If Bitcoin might be a viable path toward a better future, and if there are real advantages to understanding that sooner rather than later, then it is probably worth spending some time honestly exploring its merits.
Part 4: What If?
What if the problem isn’t human nature, politics or greed, but the money itself?
What if there was a form of money that didn’t come from debt. Money that existed in and of itself, rather than as a promise or obligation from someone else. A money that could move anywhere on earth as easily as information can, without permission, without delay, and without needing to trust an intermediary.
What if that money was perfectly scarce, not because it was hard to extract or protected by force, but because its supply was fixed by rules that could not be changed. What if it was infinitely divisible, easily verifiable, fully interchangeable, and impossible to counterfeit? What if no one, no matter how powerful, could create more of it for themselves at the expense of everyone else?
What if the rules applied equally to everyone, from the most powerful governments and financial institutions in the world, all the way down to someone earning a dollar a day, working in mines with their child strapped on their back? No special access. No preferred entry point. No one is closer to the money spigot than anyone else.
What if all of human ingenuity and hard work flowed to society the way it naturally wants to. Not by inflating asset prices, but by lowering the cost of goods and services for everyone. What if technological progress didn’t feel like a threat to survival, but a gift that gives us more time? Time for family, health, creativity, learning and solving larger problems than just staying afloat.
What if there was a new money game? One that couldn’t be gamed. One that didn’t require repeating the same cycles of debasement, inequality and eventual reset that have plagued monetary history for thousands of years.
And what if, in this system, wealth didn’t primarily concentrate with those who simply owned assets, but instead accrued to those who continually provided real value to others? One where the path to getting ahead meant making things better, faster or cheaper and lowering prices for everyone along the way.
If such a money existed, it wouldn’t just be a better way to measure value. It would be a step-change in the underlying protocol we coordinate around, more like a new operating system for human cooperation. It would shift incentives away from zero-sum games, where one group wins by quietly extracting from everyone else, toward a system where progress comes from creating real value and lowering costs for others. Time, effort and ingenuity would no longer need to be protected from debasement, and the rewards of productivity could finally flow outward rather than concentrating at the top. A money like that wouldn’t just tweak the system we have, it would force us to rethink many of the assumptions we’ve come to accept about how the world has to work.
These questions are where Bitcoin begins.
Part 5: The Discovery of Bitcoin
During the depths of the 2008 financial crisis that was brought on by decades of irresponsible banking, excess leverage, and moral hazard, something quietly emerged. While governments were bailing out banks and socializing losses, an anonymous individual or group using the name, Satoshi Nakamoto, released a short paper to a small mailing list of cryptographers and cypherpunks.
That paper was titled, Bitcoin: A Peer-to-Peer Electronic Cash System.
This wasn’t happening in a vacuum. For decades prior, people had been trying to create digital money. Projects like e-cash, DigiCash and digital gold had explored pieces of the problem, but they all failed in similar ways. They relied on central issuers, trusted intermediaries or single points of failure that could be shut down, corrupted or coerced. They missed the mark because they still required someone in the middle to be trusted.
Satoshi’s breakthrough was not one single invention, but the careful assembly of existing ideas and technologies going back decades into a system that finally worked. By removing central choke points and replacing trust with verification, Bitcoin solved the double-spend problem without relying on a central authority. The rules were embedded in code, enforced by the network itself, and visible to anyone willing to look.
Bitcoin was initially bootstrapped by Satoshi alone as the first participant. There was no company, no foundation, no venture funding and no marketing. Just code, a white paper and a network that anyone could join. Early contributors like Hal Finney recognized what was happening almost immediately and began running the software, testing it and improving it. Slowly, more developers reviewed the code. More people ran a node. More miners joined the network. Bitcoin began to harden.
Only later did it begin to have a market value.
In its early days, Bitcoin was mostly ignored or mocked. When it wasn’t being dismissed outright, it was framed as something only criminals would use. And while that narrative made for easy headlines, it missed the deeper reality. Bitcoin quietly found its first real use cases among people on the fringes. Those without access to stable banking. Those living under capital controls. Those who simply wanted to hold money that couldn’t be diluted, censored or confiscated and yes even criminals.
Some people were uniquely primed to see it early. Gold bugs who understood that gold had lost its ability to function as money in a digital world. Austrian economists who understood sound money and incentives. Cypherpunks who had spent years thinking about privacy, sovereignty and cryptography. Each group recognized a piece of the puzzle, and Bitcoin pulled them together.
In its earliest days, there was even a simple website called The Bitcoin Faucet that gave away free bitcoin to anyone curious enough to try it and get it into as many hands as possible and encourage experimentation. There was no real sense that this would become valuable. Bitcoin wasn’t something to speculate on. It was something to use.
And that’s how Bitcoin grew. Not through force or decree, but through voluntary adoption. One node, one miner, one user at a time.
Bitcoin Through the Lens of Money
Now that we’ve walked through what money is, why scarcity matters and why previous forms of money eventually failed, the only question that really matters is whether Bitcoin actually satisfies the properties of money better than the alternatives. If it doesn’t, then everything up to this point is just calling out a problem without a solution.
Throughout history, money that survived was not chosen by decree, but by markets. People gravitated toward whatever best preserved value, facilitated trade and resisted manipulation. With that in mind, let’s look at Bitcoin through the same lens we’ve used for every other form of money.
Bitcoin is durable in a way no physical money can be. It does not decay, rust or degrade. As long as the network exists and a copy of the ledger exists, Bitcoin exists. There is no physical object to destroy and no single place it lives that can be bombed, seized or shut down.
It is also incredibly portable. Bitcoin can be transported anywhere on earth at the speed of light. You don’t need armored trucks, vaults or permission from a bank. You can carry it across borders in your head if you choose. Compared to gold or even fiat banking rails, this is a meaningful upgrade.
Bitcoin is divisible down to one hundred million units, called ‘Satoshis’. Think dollars and cents. This allows it to function across a wide range of economic activity, from large settlements down to very small transactions. Divisibility is often overlooked, but it is essential if something is to function as a global money.
Bitcoin is fungible, meaning each unit is interchangeable with any other unit. The network does not care who you are, where you’re from or how much bitcoin you hold. The same rules apply to every participant.
Bitcoin is verifiable in a way that no previous money has ever been. Anyone can independently verify the total supply, the validity of transactions and the rules of the system by running the software themselves. You don’t need to trust a central bank, an auditor or a government report. You can verify it directly.
But the most important of Bitcoin's properties, and the one that underpins all the others, is scarcity.
Bitcoin’s scarcity is not based on difficulty to mine, geography or the cost of extraction. It is based on rules. There will only ever be 21 million Bitcoin, and no amount of demand, fiat price appreciation or political pressure can change that without the voluntary agreement of the network as a whole. That makes Bitcoin the first form of money with absolute scarcity rather than conditional scarcity.
It’s also worth being honest about what Bitcoin is not, at least not yet.
Bitcoin is still emerging as a medium of exchange in many parts of the world, and it is not yet widely used as a unit of account. Most people still price goods and services in fiat currencies. That isn’t a failure, it’s a stage. New forms of money don’t begin as the unit people measure everything in. They earn that role over time. First by proving themselves as a reliable store of value for some, then as a medium of exchange for others. As those uses grow, network effects build, and over time the system begins to function as money.
Part 6: How Bitcoin Actually Works (Without the Technical Jargon)
Before going any further, it’s worth understanding the basics of how Bitcoin works. Not the code, not the math, but the simple mechanics and incentives that make it function and, more importantly, make it hard to break.
At its core, Bitcoin is just a distributed ledger. A public record of who sent what, to whom, and when. What makes it different from every ledger that came before it, is that no single person or institution controls it.
That ledger is maintained by thousands of independent computers around the world called nodes. Anyone can run one. A node keeps a full copy of Bitcoin’s history and enforces the rules of the system. It checks that transactions are valid, that no one is spending money they don’t have, and that no new Bitcoin are created beyond what the rules allow. There is no head office and no master copy. The network agrees on reality by consensus.
A helpful way to think about Bitcoin’s security is as ‘a wall’. And not just any wall. Something closer to the Great Wall of China, but digital.
Imagine a wall with no single weak point. It doesn’t protect one city or one border, it stretches everywhere. Every time a new stone is laid, the entire wall becomes stronger, not just the section where the stone was placed. That’s how Bitcoin works. Each new block added to the ledger doesn’t just record new transactions, it reinforces every block that came before it.
To rewrite Bitcoin’s history, you wouldn’t be attacking one section of the wall. You would need to outbuild the entire wall, faster than the rest of the world combined, while they are actively reinforcing it in real time. And you wouldn’t just need to do it once. You would need to keep doing it, continuously, forever.
This is where the economics matter.
Bitcoin is secured by a global free market. Miners around the world compete to add blocks, constantly innovating their hardware, chasing cheaper, stranded and wasted energy, and driving efficiency higher. This competition doesn’t stop. It doesn’t pause. It doesn’t coordinate around a single actor.
If two attackers were to attempt to rewrite the ledger without colluding, the weaker of the two would immediately be forced into a defensive position. They would still be spending energy, but instead of advancing, they’d be losing ground as the honest network continues to move forward. Even for a single, powerful attacker, the cost of sustaining such an effort quickly becomes prohibitive.
Bitcoin’s security doesn’t rely on secrecy or trust. It relies on economics and incentives. The cheapest and most profitable thing to do is to follow the rules, not break them. The system is designed so that honest participation is rewarded and attacks are punished by overwhelming cost.
Over time, as more blocks are added and more energy is committed, the wall grows thicker, longer and harder to challenge. History becomes increasingly expensive to change. That is what gives Bitcoin its finality. Not because it’s impossible to attack in theory, but because in practice, it is irrational to try.
Mining is how new entries are added to this ledger.
Miners are simply participants who bundle recent transactions into blocks and compete to add the next block to the chain. They do this by expending real-world energy to solve a cryptographic puzzle. This process is often misunderstood, but its purpose is simple. It makes rewriting history extremely expensive. Once a block is buried under more blocks, changing it would require redoing all that work again faster than the rest of the network combined.
Here is a visual of Bitcoin’s security over time:
This is why Bitcoin is sometimes described as a timechain rather than a blockchain. Each block represents a slice of time, locked in by energy and linked to every block before it. Transactions don’t just happen, they happen in order, and that order becomes increasingly final as time passes. Bitcoin is Time, Gigi.
Bitcoin also has a built-in feedback mechanism called the difficulty adjustment. Roughly every two weeks, the network automatically adjusts how hard it is to add a new block so that blocks continue to be produced about every ten minutes, regardless of how much computing power is added or removed. If miners flood in, it gets harder. If miners drop out, it gets easier. No committee decides this. It’s automatic. This is how Bitcoin maintains a steady, predictable rhythm in an unpredictable world.
And then there is the supply.
As we already mentioned, Bitcoin has a fixed supply of 21 million units. New Bitcoin are issued as rewards to miners, but that issuance is cut in half roughly every four years in an event known as the halving. Early on, new Bitcoin were created quickly. Over time, the rate slows. By the year 2140, no new Bitcoin will be issued at all and the miners’ revenue will be replaced with transaction fees over time.
This schedule is known in advance. It does not respond to price, politics or economic conditions. The rules don’t change based on who is in charge. That predictability is the point.
Put all of this together and you get something genuinely new. A monetary system with no central authority, bound by energy, synchronized by time, governed by transparent rules and capped by absolute scarcity. It runs continuously, globally, without needing permission from anyone.
Once you understand these basics, the layered design of Bitcoin starts to make sense. The foundation is slow, conservative and incredibly hard to change on purpose. Everything else builds on top of that.
Built in Layers
One of the most common misunderstandings about Bitcoin is the expectation that it should do everything, for everyone, right now. Cheap payments, instant settlement, privacy, massive throughput, global commerce, all at the base layer. That expectation misses something fundamental about how successful protocols actually evolve.
Bitcoin, like the internet before it, is built in layers.
When the internet was first invented, it was slow, clunky and limited. It wasn’t designed for streaming video, smartphones or global e-commerce. Its only real job was to move packets of information between computers in a way that was decentralized, resilient and hard to shut down. Speed and convenience came much later.
For decades, the internet’s base layer changed very little. That stability was not a flaw, it was the feature. Because the foundation was reliable and neutral, innovators could safely build on top of it. It wasn’t until roughly forty years later that high-speed internet emerged, unlocking entirely new layers of functionality. That’s when applications like Google, smartphones, cloud computing and modern commerce exploded into existence. None of that would have worked if the base layer had been constantly changing or centrally controlled.
Bitcoin follows the same design philosophy.
At its base layer, Bitcoin is intentionally slow, conservative and difficult to change. Its primary job is not speed or convenience. Its job is to be decentralized and secure. This is the layer where final settlement happens. This is where trust is minimized and rules are enforced equally for everyone. If this layer fails, everything built on top of it fails too.
Stability at the base layer is non-negotiable.
Higher layers are where speed, scale and flexibility emerge. Just as email, web browsers and video streaming did not live at the base layer of the internet, global payments and everyday transactions do not need to live at Bitcoin’s base layer either. That’s where additional layers come in.
Technologies like the Lightning Network are built on top of Bitcoin’s rock-solid foundation. These layers allow for near-instant transactions, extremely low fees and effectively unlimited throughput, while still ultimately settling back to the most secure monetary ledger ever created. In this way, Bitcoin can support global commerce without sacrificing the very properties that make it valuable in the first place.
The mistake many people make is judging Bitcoin’s base layer by standards that only make sense at higher layers. That’s like criticizing early internet protocols for not supporting video calls or social media. They were never meant to. Their job was to be reliable, neutral and hard to break.
Bitcoin’s layered design allows it to do something that has never existed before. It combines absolute scarcity at the base with unlimited velocity on higher layers. That combination is what makes it uniquely suited for a digital, trustless, global economy.
Just as the internet quietly laid its foundation long before most people realized what it would become, Bitcoin is still early in its layering process.
Article: Finding Signal in a Noisy World, Jeff Booth.
Bitcoin Is Not Crypto
Once you understand what makes Bitcoin special, decentralized, secure, leaderless, and governed by rules rather than people, it becomes much easier to see why Bitcoin is fundamentally different from everything else that gets grouped under the label, “crypto.”
There is a vast sea of crypto tokens. Depending on how you count, there are tens of millions of them. Most exist not because the world needs a new form of money, but because it is relatively easy to create a digital token and sell a story around it. They prey on confusion about what money is and what problem Bitcoin solves.
Almost all of these projects made tradeoffs at the base layer. In order to be faster, cheaper or more flexible out of the gate, they sacrificed decentralization and security. Many have founders, foundations, marketing teams and roadmaps. Someone decides the rules. Someone can change the supply. Someone can intervene when things break. Someone can rewrite the transaction history. That makes them technologies or startups, not a protocol for money.
Bitcoin deliberately chose the opposite path.
There is no CEO. No foundation. No marketing department. No one in charge of the rules or the supply. Bitcoin does not have a phone number to call or a board to appeal to. The rules are enforced by the network itself, and apply equally to everyone. That is not a weakness, it is the entire point.
Bitcoin is not trying to be a feature-rich application. It is competing to be the base layer of money for the world. That means its priorities are different. Decentralization and security come first. Everything else is secondary. If those are compromised, nothing built on top of it matters.
Most crypto tokens are not competing with Bitcoin at all. They are competing with millions of other software projects to do something faster, cheaper or more conveniently today. That’s fine, and what each person values is subjective but it’s a completely different game.
Once you see that distinction clearly, the noise fades.
Part 7: Where Do We Stand Today?
So where is Bitcoin today?
At the time of writing, Bitcoin sits just under a two trillion-dollar market capitalization. In isolation that sounds enormous. In the context of roughly nine hundred trillion dollars of global wealth, most of which continues to grow in nominal terms every year, it is still a rounding error.
Bitcoin is not competing with a single company or asset class. It is competing to become the measuring stick for all of it.
There are now tens of millions of on-chain holders worldwide. If you include those who hold exposure indirectly through exchanges, ETFs, pension funds and custodians, that number climbs into the hundreds of millions. More than two thousand institutions have some form of exposure. Over two hundred publicly traded companies hold Bitcoin on their balance sheets. Large banks now offer access. U.S. states are exploring reserves. Nation states have adopted or accumulated it.
The world’s largest asset manager, BlackRock, launched a spot Bitcoin ETF which quickly became one of the most successful ETF launches in history. Endowments that historically allocate capital to the most durable assets available, including institutions like Harvard, now hold exposure as well.
And yet, relative to global capital markets, this is still early.
To many principled Bitcoiners, the measuring stick is no longer their local fiat currency. It is Bitcoin itself. Once you spend enough time understanding it and placing value in it, it becomes your hurdle rate. In other words, you begin to evaluate every other asset not in dollar terms, but in Bitcoin terms. If an asset is rising in dollars but falling against Bitcoin, you start to question what you are really gaining.
Over time, as more people adopt Bitcoin as their reference point, monetary premium begins to migrate. In the fiat system, U.S. Treasuries became the so-called risk-free rate. Capital flowed toward what was perceived as the safest base layer. In a Bitcoin world, simply holding money again becomes a rational strategy. You don’t need to chase yield just to outrun inflation. Prices falling becomes the yield.
For Bitcoiners, houses begin to look like homes again rather than savings vehicles. You buy one to live in, not because you are forced to park excess purchasing power somewhere that won’t be diluted. The image below shows the historical median US house price measured with the strongest fiat currency in the world. As a fiat investment houses are going ‘up’ in value but are crashing in Bitcoin terms.
Bitcoin is still small relative to global wealth. But it is no longer fringe. It is a functioning, globally recognized monetary network.
For many, Bitcoin is still dismissed outright. It’s volatile, confusing, associated with speculation, easy to ignore. Most people don’t take the time to understand its value proposition because they don’t yet feel the need to. The existing system, while flawed, still functions well enough for them.
But others are starting to feel the pressure. Inflation that quietly erodes savings. Capital controls that limit movement. Rising taxes. Asset bubbles that make housing feel unattainable. Political uncertainty. Currency instability. Sanctions. Some people come to Bitcoin because they are searching for a solution. While others stumble into it organically and slowly begin pulling on the thread.
This article wasn’t written to convince you to buy anything. It wasn’t written to signal that because BlackRock, large banks or endowments hold Bitcoin, you should too. The point of mentioning those names is not to pressure you with social proof. It is simply to show that Bitcoin is no longer fringe. It deserves to be examined seriously and perhaps being on zero BTC may actually be risky.
Hopefully what this piece has done is lay a first principles foundation on what money is, and how different monies behave in the face of accelerating technology. The structural position governments around the world now find themselves in, and why something like Bitcoin would even need to exist in the first place.
Part 8: Closing
If you’ve made it this far, you have already done something most people will not. You have slowed down long enough to think about the measuring stick itself.
The world is noisy. Headlines move fast. Narratives compete for your attention. Bitcoin helps you to think clearly about money, incentives and time. It challenges assumptions that most of us never realized we were making. Whether you end up allocating more of your time and wealth into it, the process of studying it will sharpen your thinking and give you a framework for seeing the world and peering into the future.
I have left a handful of carefully selected learning resources throughout for you to get started, not to overwhelm you, but to help accelerate your curve and solidify your foundation. Take your time, enjoy the process and always remember, your actions matter and they reinforce the world you want to see.
…Oh, and all those objections I listed at the beginning like “isn’t it used by criminals?” … I’ll leave those for you to dig into.
Sean McGrattan
If this piece resonated with you, feel free to share it with someone who might benefit from it. You can get in touch on LinkedIn.
