Saifedean emphasized that Bitcoin operates as hard money, meaning its supply cannot be arbitrarily increased by anyone, contrasting sharply with traditional fiat currencies. He pointed out that to create Bitcoin, every participant must adhere to the same stringent protocols, with the cost of production remaining consistent across the board. This inherent limitation on supply significantly influences its value stability, making it a reliable store of wealth in contrast to inflationary currencies.
2. Fixed Money Supply Fuels Growth
Saifedean highlighted an essential observation from Bitcoin's history: despite the economy growing exponentially, the Bitcoin supply increased merely by around 50% over ten years. This observation supports the idea that economic growth does not necessitate an expanding money supply. He argued that a fixed supply of money could promote a stable economic environment, allowing value to appreciate without fostering inflationary pressures.
3. Reimagining the 20th Century with a Gold Standard
In his upcoming book, Saifedean presents a thought experiment envisioning a 20th century under a gold standard instead of fiat. He proposed that this scenario would lead to more predictable economic outcomes, including decreased prices for goods like houses and cars, which would enhance affordability for everyday consumers. The narrative draws parallels to how prices have inflated over time due to the nature of fiat currency, suggesting a much more stable and affordable world under a gold standard.
4. Economic Implications of Fiat Money
Saifedean discussed how the transition to fiat money post-1915 led to unprecedented inflation and the emergence of concepts like unemployment, which were virtually non-existent before that era. He claimed that the ability to print money has distorted both economic and social constructs, making individuals and governments less accountable. By alleviating the consequences of financial decisions, fiat money creates systemic issues that would not have arisen under a gold standard.
5. The Future Without Central Banks
Saifedean proposed a future where central banks are abolished, leading to improved governmental efficiency. Without the ability to print money, governments would be compelled to operate within their means and respond to citizen needs more effectively. He painted a picture of governments adapting to become more service-oriented, where competing for citizens’ allegiance would drive them to enhance public satisfaction rather than resort to coercive fiscal strategies.
6. Economic and Technological Progress
Through the lens of technological advancements, Saifedean posited that the absence of fiat currency would catalyze better investment in sectors like energy. He suggested that lower costs for energy, driven by sustainable long-term investments freed from inflationary concerns, could result in universal access to affordable electricity. This would enhance productivity and quality of life globally, which has been hindered under the current fiat environment.
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