Book Review, Summary, Highlights, and Quotes from The Bitcoin Standard by Saifedean Ammous
With the rise in Bitcoin’s price, over the past many months, the Bitcoin maxis have come out of the woodwork again to tout the imminent rise of BTC and the downfall of the Dollar.
Seeing as I own some Bitcoin, and believe it to be a solid asymmetric bet (and the only one I take as a Boglehead), I wanted to learn more about WHY so many people (online at least) are pro-Bitcoin to the extreme.
Was I missing something?
I decided it was worth the time to “study more,” so I picked up The Bitcoin Standard by Saifedean Ammous.
Going into this book, I knew that upfront it was largely going to be Bitcoin propaganda.
And surely it is Bitcoin propaganda, but after reading it, I think it has enough substance beyond the propaganda to make it a worthwhile read.
The Good
The Bitcoin Standard is a deep dive into the history of money and its various forms over time, how the gold standard came to be, and the pitfalls of centralized banking.
The book does a really good job of helping you to understand the pros/cons of our current monetary system.
The Bitcoin Standard is LESS about Bitcoin and MORE about the history of money and the gold standard.
It also does an excellent job of explaining what Bitcoin is and what it isn’t.
There’s also a great overview of digital money and a section that walks through the flaws with both Bitcoin and other blockchain technologies.
Bitcoin can be understood as a sovereign piece of code, because there is no authority outside of it that can control its behavior. Only bitcoin’s rules control Bitcoin, and the possibility of changing these rules in any substantive way has become extremely impractical as the status-quo bias continues to shape the incentives of everyone involved in the project
– Saifedean Ammous, The Bitcoin Standard
In the end, after reading this book, you’ll come out knowing more about Bitcoin, digital money, the Austrian school of economics, and more about monetary policy and centralized banking.
The Bad
Using history as its basis, the author attempts to support his sole thesis that: Bitcoin is the perfect form of hard money that can replace centralized banking and solve economic instability.
Only the main issue is that the author is very biased against centralized power, centralized government, Keynesian economics, and for some strange reason modern art.
He then cherry-picks historical references to prove his points.
For example, the author covers monetary collapses from Roman times to the present day and he does a good job of showing money’s role in every collapse.
But he’ll leave out critical details to make it seem like each collapse was solely based on the devaluation of the currency.
And then he’ll make a sweeping and quotable statement such as “Human civilization flourished in times and places where sound money was widely adopted, while unsound money all too frequently coincided with civilizational decline and societal collapse.”
Surely money has played a large role in human civilization, but as history, professor Yuval Noah Harari says in Sapiens, “It is common nowadays to believe that the market always prevails, and that the dams erected by kings, priests and communities can not long hold back the tides of money. This is naive. Brutal warriors, religious fanatics and concerned citizens have repeatedly managed to trounce calculated merchants, and even to reshape the economy. It is therefore impossible to understand the unification of humankind as a purely economic process.”
So the pro-Bitcoin economist says that sound money was THE reason civilization was allowed to prosper, but the historian says that it is naive to think that money and economics have been the end all be all that have turned the tides of history.
The author’s various anti-government biases also show up in nearly every section:
The digital revolution will destroy the power of the modern state over its citizens, reduce the significance of the nation-state as an organizing unit, and give individuals unprecedented power and sovereignty over their own lives.
– Saifedean Ammous, The Bitcoin Standard
Of course, it’s perfectly OK for the author to purport his viewpoint, but in my opinion, society functions best with a balance between centralization and decentralization.
That is why the United States has been so successful despite our numerous flaws. There is a balance between the states and the nation.
The federal government cannot exert control over the states without the states exerting control back.
No one branch of government can operate unrestrained by the other two branches.
The author rails very heavily against government intervention with monetary policy, and while I agree on many accounts, I think that wishing and hoping for a more individually sovereign world perhaps akin to something in the novel Snow Crash, seems like a poor trade-off.
In the end, many of the passages in this book left me scratching my head, questioning their accuracy, or having to research for more information on a given topic.
My Current Thoughts on Bitcoin
Bitcoin was built specifically to be to be the hardest and soundest form of money.
It is built so that no one person or group would ever have any control over the supply, distribution, or even success or failure of Bitcoin.
It is possible that Bitcoin will grow to displace many financial intermediaries. It is also possible that Bitcoin will stagnate or even fail and disappear.
– Saifedean Ammous, The Bitcoin Standard
In my opinion, Bitcoin is probably here to stay. It has too much utility, and durability to not stick around at this point.
It is why I own some Bitcoin, and why after reading this book I may slightly increase my investment in it.
But I’m not convinced that Bitcoin will end up fully backing the Dollar or any other major currency any time soon.
I do, however, think Bitcoin will continue to be used to help send money seamlessly across borders despite government intervention.
This should, on the whole, help to work around government regimes hellbent on doing nefarious things like invading their peaceful neighbors or committing genocide.
It at the very least provides an option that we didn’t have before Bitcoin.
And I do think that Bitcoin could probably end up being held by governments along with gold. But I doubt that any government will entirely want to give up its ability to inflate and control the money supply.
Do I think that Bitcoin will be our currency of choice in the next 50 years? No.
Bitcoin itself, ironically can’t be used as currency:
As Bitcoin continues to evolve in the direction of having a higher market value with higher transaction fees, it starts to look more and more like a reserve currency than a currency for everyday trading and transactions.
– Saifedean Ammous, The Bitcoin Standard
Bitcoin is a grand idea and if we had a “world currency” that was backed by Bitcoin completely, it would create an even playing field for trade and equal distribution of talent and resources.
I certainly hope we do get there, but I also don’t think it will happen as quickly as many in the Bitcoin community think.
Bitcoin may be the hardest and soundest form of money, but it’s also not guaranteed to be around in 5, 10, or 20 years.
Only time will tell!
AR’s Book Score: 8 out of 10
Best Quotes from The Bitcoin Standard
It was not money that government decreed gold as money; rather, it was only by holding gold that governments could get their money to be accepted at all.
– Saifedean Ammous, The Bitcoin Standard
With the simple suspension of gold redeemability, governments’ war efforts were no longer limited to the money that they had in their own treasuries, but extended virtually to the entire wealth of the population. For as long as the government could print more money and have that money accepted by its citizens and foreigners, it could keep financing the war.
– Saifedean Ammous, The Bitcoin Standard
Hyperinflation is a form of economic disaster unique to government money. There was never an example of hyperinflation with economies that operated a gold or silver.
– Saifedean Ammous, The Bitcoin Standard
The problem with government-provided money is that its hardness depends entirely on the ability of those in charge to not inflate its supply.
– Saifedean Ammous, The Bitcoin Standard
Should a currency credibly demonstrate its supply cannot be expanded, it would immediately gain value significantly.
– Saifedean Ammous, The Bitcoin Standard
Government can confiscate money from the banking monopolies it controls, inflate the currency to devalue holders’ wealth and reward it to the most loyal of its subjects, impose draconian taxes and punish those who avoid them, and even confiscate bills.
– Saifedean Ammous, The Bitcoin Standard
Civilization is not about more capital accumulation per se; rather, it is about what capital accumulation allows humans to achieve, the flourishing and freedom to seek higher meaning in life when their base needs are met and most pressing dangers are averted.
– Saifedean Ammous, The Bitcoin Standard
Prices, then, are not simply a tool to allow capitalists to profit; they are the information system of economic production, communicating knowledge across the world.
– Saifedean Ammous, The Bitcoin Standard
Whenever a government has started on the path of inflating the money supply, there is no escaping the negative consequences.
– Saifedean Ammous, The Bitcoin Standard
The fundamental scam of modernity is the idea that government needs to manage the money supply.
– Saifedean Ammous, The Bitcoin Standard
Gold became the prime money of every civilized society precisely because it was the hardest to product
– Saifedean Ammous, The Bitcoin Standard
As Bitcoin continues to evolve in the direction of having a higher market value with higher transaction fees, it starts to look more and more like a reserve currency than a currency for everyday trading and transactions.
– Saifedean Ammous, The Bitcoin Standard
Bitcoin’s advantage lies not in competing with these payments for small amounts and over short distances; Bitcoin’s advantage, rather, is that by bringing the finality of cash settlement to the digital world, it has created the fastest method for final settlement of large payments across long distances.
– Saifedean Ammous, The Bitcoin Standard
Bitcoin is straightforward to use, but virtually impossible to alter. Bitcoin is voluntary, so nobody has to use it, but those who want to use it have no choice but to play by its rules.
– Saifedean Ammous, The Bitcoin Standard
The idea that millions, let alone billions, could use the Bitcoin network directly for carrying out their every transaction is unrealistic.
– Saifedean Ammous, The Bitcoin Standard
A global monetary return to gold might be the most significant threat to Bitcoin, yet it is both unlikely to happen and unlikely to destroy Bitcoin completely.
– Saifedean Ammous, The Bitcoin Standard
– Saifedean Ammous, The Bitcoin Standard
More from Saifedean Ammous
- Website: saifedean.com
- Twitter: @saifedean
- Instagram: @saifedean
- Facebook: @saifedean
- Youtube: @saifedean
