@ JackTheMimic
2025-02-05 01:48:55
#### **(Because Most People Don’t Understand Money)**
#### The requisite knowledge needed to know whether $100 or $100,000 per Bitcoin is relatively speaking “a lot,” is what value means. One way to measure value is through a universal yardstick we call “Money.” The question of “What is money?” is perhaps one of the most overlooked and under answered in our day and age. There is even an entire podcast dedicated to that question with the eponymous title, hosted by Robert Breedlove. That podcast often delves into the more philosophical underpinnings whereas I hope to approach this with a more practical answer.
**Money is a technology.**
Money is the technology with which we interact with one another to reorganize goods and services to the place and time they are best suited. Most money of the past has been tangible (though not a requisite feature), scarce, recognizable (read: verifiable), durable, portable, and divisible. These features one might call the “Attributes of Money.” These attributes are absolutely essential for a money to maintain its status as a money. (Those of you who understand the U.S. Dollar system maybe scratching your heads right now but, believe me, I will address that elephant in due time.) These attributes, you may notice, are not a yes or no but more of a gradient. A money can be MORE portable than another yet, less durable. One more divisible but not scarce whatsoever. The point being they must have, in some capacity, these attributes or they simply aren’t money.
**One of These Things is Not Like the Other**
| | **Bitcoin** | **Gold** | **Dollars** |
|-----------------|:----------------------------------------------------------------------------------------------------------------:|:------------------------------------------------------------------:|:--------------------------------------------------------------------------------------------------------------------------------------------------:|
| **Scarcity** | 21 million coins <br />is the maximum supply | Unknown- the <br />supply grows roughly 2% per year | Also unknown to anyone outside of the Federal Reserve, Trillions and counting |
| **Recognizability** | Each coin is verifiable to it's genesis on the timechain | Each molecule of gold has distinct physical verifiable properties | If the Federal reserve says it is a valid note, it is (Unless you are an enemy of the United States) |
| **Durablility** | Each "Bitcoin" is information stored on a globally distributed network | Doesn't Rust and as far as can be measured Au197 is stable forever | Can be destroyed by any means that effect fabric and centralized databases |
| **Portability** | Available wherever data can be store- Anywhere | Can be moved at 9.81 Newtons per Kilogram- Methods may vary | Can be moved physically with fabric notes- Digitally with express permission from a US accredited banking institution |
| **Divisibility** | Currently can be divided into 100 million parts called Sats (can be further subdivided by adding decimal places) | Can be divided to the Atomic level (Though not practical) | Can be divided (without dilution) by adding new denominative bills or coinage<br />Can be divided (with dilution) by printing new bills or coinage |
| | **Bitcoin** | **Gold** | **Dollars** |
You may think with all of the great functionality of Bitcoin that the phrase "One of these things is not like the other" refers to BTC. No, I was referring to the Dollar. It is the only one on the list that was a currency that was substituted as some kind of faux money. It asserts itself, or rather the Federal Reserve asserts it, as money, de facto.
**Dollars are NOT money.**
Dollars are (allegedly) a currency. If money is a specific technology, currency is the financial infrastructure that allows that technology to reach and be used by the most number of people possible. This requires a firm tether between the asset being used as money and the currency used as a claim to that money. For example: If I hand you a chicken, you have a chicken. But, if I hand you a coupon that is redeemable for a chicken, you do not have a chicken. You have a claim to a chicken that is only as good as the party making that claim. Bringing it back to money again, dollars (Prior to 1971) were redeemable for gold at a rate of $35 per ounce. This is that strong tether that pegged dollars to gold and physical reality itself. Without a proof of work, mining, . Until…
**WTF Happened in 1971?**
The Nixon shock happened. Briefly, The U.S. took in Europe’s gold in the 1940’s to keep it out of Hitler’s hands. The U.S. made an agreement to peg the dollar to Europe’s gold. The U.S. over printed dollars in relation to the gold holdings. Around 1971 France (among others) called the U.S. out for devaluing the dollar and thus European currencies. So, Nixon “Temporarily” suspended the convertibility of dollars to gold. Now, here we all are like Wile E. Coyote having run off of the golden cliff clutching our dollars in our arms and 54 years later we still haven’t looked down to see the truth.
**Dollars Aren’t Backed by Anything**
This is why no country in the world today has a money standard. Seemingly they all forgot the number one rule of issuing currency, it must be backed by something. Now, you may hear dollar proponents say “The U.S. dollar is backed by the full faith and credit of the United States!” Another way of saying that is, “We said it is worth something, so it is!” This fiat (by decree) mentality creates a plethora of perverse incentives. The ever growing supply disallows users of the Dollar to save without inccuring the penalties of inflation.
**Just a Few Examples of How You're Being Crushed**
Because your dollar loses value:
- It pushes people to spend them on assets that seem to appreciate (as the dollar debases) but are truly staying stagnant.
- It pushes people to gamble on securities hoping the perceived value is enough to beat the inflationary curve.
- It pushes people away from saving for their future and the future of their families.
- It creates insane credit incentives so that people borrow way more than they can afford today knowing that dollars will be cheaper in the future. (Effectively a short position)
- It pushes people to spend less and less time making and maintaining their families as it becomes more expensive to keep a similar lifestyle to which it was founded.
These are just a few of the terrible consequences of not knowing that trading a currency with no monetary backing has on a society. Most may blame this soley on the ability to print currency by a central bank but, that is not the only factor. If the fed printed dollars against gold, people would simply take the best rate they could get and remonetize themselves with the gold. But because there is no monetary escape hatch guaranteed by the issuance of dollars, I.E. no one has to take your dollars in exchange for their Bitcoin or gold, you are left at the mercy of the market.
**One Day, People Will Stop Accepting Your Dollars**
Those lementing the high price of Bitcoin might want to thank their lucky stars that Bitcoin still has a rational number next to the "BTC 1=$?" sign. One day you will have to exchange something of actual value to the spender (no longer a seller). Your product, good or service, will be the only thing that anyone might be willing to part with their Bitcoin over. That is what makes a money, the most salable non-consumable good, whose only funtion is to back a financial structure that facilitates trade.
**Bitcoin is Capital**
Capital is a broad term that can describe anything that confers value or benefit to its owners, such as a factory and its machinery, or the financial assets of a business or an individual. Bitcoin being the latter creates the financial structures from which you build upon. You use capital to hold, transfer, and grow value. You do not do this with cash. Cash is a depreciating asset when you don't use it to gain goods or services for yourself or your business. This misconception around the equivalance between cash and money (financial capital) is what tricks people into believing Dollars are money. And what's worse is that even some of our greatest heroes have done this.
**Slay Your Heroes, Within Reason**
Unfortunately due to a mixing of verbiage that have **very distinct** differences, the title: "Bitcoin: A Peer-to-Peer Electronic Cash System" is technically inaccurate. Bitcoin doesn't fit the definition of **cash**, which is a liquid asset that can be easily converted into its equivalent value. In short, Satoshi misspoke. In reality, owning Bitcoin UTXOs (with private keys) means you already possess the asset, not just a claim to it. When you spend Bitcoin, the recipient receives the actual asset, not a promise of it. When you receive Bitcoin, you have final settlement on that transaction. Fundamentally Bitcoin is not cash, electronic or otherwise.
# Bitcoin is Money.