For over a century, the world has been searching for a truly international means of
payment. The Bretton Woods conference in 1944 established the US dollar as the
principal international settlement currency, but there has always been a desire for a
more stable and independent global currency.
Bitcoin emerged as a potential solution after the 2008 financial crisis, offering a decentralized and borderless digital currency. In his book “The Bitcoin Standard,” Saifedean Ammous explores the potential of bitcoin as a new international monetary standard. This article will provide a captivating review of Ammous’ book, delving into the key arguments and examining its strengths and weaknesses.
Key – Points
- While bitcoin initially showed promise as an international currency, it has recently shifted towards becoming a new class of asset.
- “The Bitcoin Standard” by Saifedean Ammous offers a thought-provoking exploration of the potential for bitcoin as a new international monetary standard.
- Despite its shortcomings, “The Bitcoin Standard” sparks important discussions about the evolution of money and the role of digital currencies in shaping our financial future.
Table of Contents
Understanding the Bitcoin Standard
The Evolution of Money
Ammous begins by exploring the history of money, highlighting its importance as a
medium of exchange, unit of account, and store of value. He emphasizes that throughout history, money has evolved from primitive forms like shells and beads to precious metals like gold and silver. This historical context sets the stage for understanding bitcoin’s potential as a new form of money.
Bitcoin’s Origins and Properties
Bitcoin, introduced by Satoshi Nakamoto in 2008, was initially seen as a peer-to-peer
electronic cash system. However, it quickly exhibited properties similar to gold, such as
being traded like a commodity and operating seamlessly across borders. Ammous
argues that these qualities make bitcoin a potential replacement for gold as an anchor
for a new international monetary system.
Bitcoin’s Transition to an Asset
While bitcoin initially showed promise as an international currency, it has recently shifted
towards becoming a new class of asset. Ammous acknowledges this transition but
argues that it may be only temporary. He believes that bitcoin will eventually become the
world’s premier international currency, with its deflationary nature and secure blockchain
technology making it an attractive choice.
Assessing Ammous’ Arguments
Bitcoin’s Competitors
One of the key criticisms of Ammous’ book is his dismissal of other digital currencies as
potential competitors to bitcoin. He believes that everyone will value bitcoin’s
deflationary nature and expensive proof-of-work verification as he does. However,
history has shown that the solution with the best marketing often wins, regardless of
technical superiority. It is essential to recognize that bitcoin may face challenges from
other cryptocurrencies in the future.
Energy Consumption and Environmental Concerns
The Bitcoin Standard downplays the considerable energy cost of bitcoin mining and its potential environmental impact. While he devotes an entire chapter to explaining the unlimited nature of natural resources, he fails to consider the growing international concern about climate change. Bitcoin’s high energy demand may put it at risk of censorship as public grids deny access to miners and governments restrict mining operations. These concerns should not be overlooked when discussing bitcoin’s future as an international currency.
Critiquing Ammous’ Historical Analysis
Historical Errors and Inconsistencies
Ammous’ historical analysis is riddled with errors and inconsistencies. He falsely claims
that gold is the rarest metal in the Earth’s crust and ignores logical inconsistencies in his
arguments. Additionally, his assertion that the debasement of the Roman currency
caused the fall of Rome is questionable. Saifedean’s historical inaccuracies undermine
his credibility and weaken his overall argument.
The Impact of the Gold Standard
The Bitcoin Standard presents the classical gold standard as a time of global free trade and prosperity. However, this period was marked by significant import tariffs and rising
protectionism. The assertion that leaving the gold standard led to World War II is
unfounded, as the causes of the war were far more complex. Saifedean’s revisionist
history and failure to consider the broader socio-political factors leading to war
undermine the validity of his claims.
The Role of Government and Patronage
Ammous criticizes government intervention in the arts and suggests that patronage by
individuals with inherited wealth is superior. However, history shows that government
has always played a significant role in funding and promoting the arts. The notion that
artistic success should be determined solely by wealthy individuals disregards the
diverse and democratic nature of artistic expression.
Conclusion
“The Bitcoin Standard” by Saifedean Ammous offers a thought-provoking exploration of
the potential for bitcoin as a new international monetary standard. While the book
provides valuable insights into the history of money and bitcoin’s properties, it is marred
by historical inaccuracies, biased analysis, and a limited understanding of the broader
socio-political factors influencing economic development.
It is crucial to critically evaluate Ammous’ arguments and consider alternative perspectives when assessing the future of bitcoin as a global currency. Despite its shortcomings, “The Bitcoin Standard” sparks important discussions about the evolution of money and the role of digital currencies in shaping our financial future.
