It’s time for the Bitcoin Standard to speculate. How will Bitcoin’s status as a store of value and even as a global reserve currency evolve in the future? As assets and networks prove their worth as new alternatives to traditional finance, the world will It will make us look at Bitcoin in a new light.
To conclude Chapter 9, Dr. Saifedeen Amos explores Bitcoin’s possible role as an international payment and global unit of account.
Recall that The Bitcoin Standard was published in 2018. Most of what you’re about to read are predictions that came true. But first…
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The Bitcoinist Book Club has two different use cases.
1.- Put together a must-read book for cryptocurrency enthusiasts for superstar executive investors in action. one by one. chapter by chapter. We read them so you don’t have to read them, and only provide the meaty parts.
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So far, we’ve covered:
- prologue When Chapter 1
- primitive money (Chapter 2)
- why gold? (Chapter 3part 1)
- history (Chapter 3part 2)
- Gold Standard (Chapter 4part 1)
- government money (Chapter 4part 2)
- money and hyperinflation (Chapter 4part 3)
- Time settings (Chapter 5part 1)
- capital accumulation (Chapter 5part 2)
- price (Chapter 6part 1)
- unhealthy money (Chapter 6part 2)
- economic thought (chapter 7, part 1)
- Inflation (chapter 7, part 2)
- digital money (chapter 8, part 1)
- Proof of Work (chapter 8, part 2)
- buy the future (chapter 9, part 1)
So let’s go back to the Bitcoin standard: “Chapter 9, Part 2: Instant Payments”
This section begins by structuring the Bitcoin network as “a new independent alternative mechanism for international payments that does not rely on any intermediaries and can operate in complete isolation from existing financial infrastructure.” increase. And he establishes Bitcoin as one of the most important properties of an asset. “
Now it’s time for the first prediction. This has not happened:
“Bitcoin can be seen as the new reserve currency for online transactions. We issue and each individual can be audited in real-time.We have an online verification and reputation system that allows us to ensure that the intermediary’s holdings, and that inflation has not occurred.”
Additionally, there doesn’t seem to be a need for other tokens. Bitcoin itself is divisible enough.However, a project like Fedimint Ammous may be too ahead of its time by proposing a token backed by Bitcoin.
Bitcoin standard for instant settlement
The book recognizes one of Bitcoin’s key advantages, offering instant final settlement. And so do large payments “over long distances and across borders.” As a means of payment, Bitcoin not only competes with central banks and traditional financial institutions, but “its verifiable records, encrypted security, and resistance to third-party security It is advantageous compared to financial institutions.”
Next, Bitcoin Standard predicts the Lightning Network as follows:
“The number of transactions in the bitcoin economy could be as large as it is today, but the settlement of these transactions is a ledger of bitcoin that is immutable and highly reliable for individual consumer payments. will not be done.”
BTC price chart for 09/12/2022 on Bitstamp | Source: BTC/USD on TradingView.com
Can Bitcoin Become a Global Account Unit?
This section begins with a description of the problem. When the world abandoned the gold standard, it “destroyed the ability of people to make indirect exchanges using a single medium of exchange”. It leads to the “growth of the large-scale foreign exchange industry” that does not generate even
The market looks ripe for Bitcoin adoption, but there are a few issues.
“The persistence of Bitcoin’s value volatility is at least many times its current value, until it grows into a proportion of the world’s population that holds and accepts Bitcoin, acting as a unit of account. will hinder the
While using gold, the world had a monetary standard that was “independent of the control of any single government or authority.” And Bitcoin promises a return to that ideal state. However, “for this potential to be realized, Bitcoin needs to be adopted by a very large number of people around the world, perhaps indirectly through its use as a reserve currency.”
For a moment it seemed like the time was near, but it was a mirage. we are far away we are very early
Bitcoin Standard Predicts Need for Something Stable
The book predicts that bitcoin will one day “become stable in value because the daily trading volume is small compared to its holdings.” However, this is not guaranteed, as “pecuniary status is a spontaneous product of human behavior, not a rational product of human design.” However, it’s not as bad as it sounds.
“It may seem like a better technology for money in theory, but in practice it doesn’t always succeed. Bitcoin’s volatility may cause financial theorists to dismiss it as a currency medium.” But monetary theory cannot override the spontaneous order that emerges in markets as a result of human action.”
As Bitcoin adoption grows and money flows into the system, “the level of demand for Bitcoin will become much more predictable and stable, leading to stability in the currency’s value”. is expressed as infinity.
“If Bitcoin achieves any kind of stability in value, it will be better than the current use of national currencies for global payment settlement, because national and government With its value fluctuating based on the circumstances of the world, reserve currencies of the world give the issuing country an “extraordinary privilege”. “
What The Bitcoin Standard is trying to say is that Bitcoin could, after all, become the neutral currency for global payments that the world desperately needs. It may even be the only option with the necessary characteristics to fill the role. If you want, we have Bitcoin. I am validating block by block.
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