Skip to main content

The Bitcoin Standard by Saifedean Ammous

 An uneven and at times repetitive book, but yet a book that absolutely must be read by anyone who wants to learn about Bitcoin and why Bitcoin matters. 


Some chapters sing out with a compelling bull case for Bitcoin and offer lay readers an excellent rendering of monetary history. In other chapters the author gets bogged down in repetitive economic hand waving, while blaming everything bad about modernity (and I mean *everything* up to and including Miley Cyrus's twerking) on leaving a sound money standard. 

Most reasonable readers--and certainly anyone who's at least ankle deep in learning about Bitcoin--would agree on the value of sound money and the value of holding monetary authorities to a sound money standard.

But for Saifedean the lack of a sound money is a hammer in his hand... and the entire world is a nail. I've found this to be a problem for many Bitcoiners, especially Bitcoin maximalists, hence the often used phrase "Bitcoin solves this" used (only partially tongue in cheek) to address any and all problems of modernity. 

One could describe Ammous' near obsession with "stock to flow ratios" as another hammer, and in this case Bitcoin, or rather Bitcoin's future price, is the nail. There's a problem with using a stock to flow analysis to predict Bitcoin's price, because the halvenings (and when they will occur) are already well-known and well-mapped out, thus likely already incorporated in Bitcoin's price. I don't put much "stock" in this method of valuing Bitcoin. 

But these are minor criticisms compared to the real value of this book: it gives the reader a complete paradigm for how to think about Bitcoin, how to think about money, and how to think about preserving wealth in an imperfect world of loose monetary policy imposed by centralized and highly fallible monetary authorities. 

A few more bullet points: 

1) Excellent discussion of time preference, a very useful concept unfortunately not taught in schools, nor understood by the very people who would most benefit from this ultimate cheat code to life.

2) Keynesianism and monetarism, interestingly, are not much different from the democrat/republican paradigm that falsely divides ideology into two opposing factions (but really one-party rule) of modern pseudo-democracy.

3) Ammous creatively (and justifiably) reframes Keynes's famous maxim "In the long run we are all dead" as a high time preference statement of "libertine irresponsibility." He's right! Only a genuine narcissist wouldn't care about the state of the world after he or she was dead.

4) Intriguing thoughts at the end of the book where the author explores potential applications (or rather lack thereof) of blockchain technology, persuasively arriving at the conclusion that blockchain is a lot less useful than people think it is, except it's extremely useful for the specific application known as Bitcoin.

More Posts

The Late George Apley by John P. Marquand

This book at first strikes a reader like the humor writing of Mark Twain: nowhere near as funny as it sounds. But gradually it becomes clear that this is a subtle, nuanced satire that does something extremely difficult: it satirizes an elite social class without being cruel, it somehow satirizes with affection and sympathy. The Late George Apley is a pseudo-biography of a person who never existed, but who represents a typical member of the Boston aristocracy during a crucial period: when that aristocracy lost its near-total control of Boston's social and political environment at the onset of modernity. We get a tour of Boston Brahmin culture from before the Civil War right up to the 1930s (this was the "current day" for this 1936 novel), and we see how this culture, clannish, exclusive and powerful for generations, passed into obscurity as Boston became overwhelmed with mass immigration, as government became increasingly corrupt and bureaucratic, and as the city grew int

The Genealogy of Morals by Friedrich Nietzsche (trans. Francis Golffing)

Of the three essays of The Genealogy of Morals  I recommend the first two. Skim the third. Collectively, they are extremely useful reading for citizens of the West to see clearly the oligarchic power dynamics under which we live. Show me a modern Western nation-state where there isn't an increasing concentration of power among the elites--and a reduction in freedom for everyone else. You can't find one. Today we live in an increasingly neo-feudal system, where elites control more and more of the wealth, the actions, even the  thoughts  of the masses. Perhaps we should see the rare flowerings of genuine democratic freedom (6th century BC Athens, Republic-era Rome, and possibly pre-1913 USA ) for what they really are: extreme outliers, quickly replaced with tyranny. The first essay inverts the entire debate about morality, as Nietzsche nukes centuries of philosophical ethics by simply saying the powerful simply do what they do , and thus those things are good by definition. La

Merchants of Grain by Dan Norman

[Recommended for investing geeks and students of power structures. Everyone else can take a pass.] Certain industries or companies need to be "visible" and in the public eye. See, for example, story stocks like Nvidia, or branded consumer products companies (which require name recognition and habit formation in order to sell product), or any company run by a celebrity CEO. Think of this as one level of visibility. Note also: any publicly traded company--even if it has a name or a CEO nobody's ever heard of--must file financial reports and other filings. To have access to public equity markets and have your stock trade on an exchange, your company has to "come in and register" (to borrow the phrase from incompetent SEC Commissioner Gary Gensler), and this means putting a lot of information about your business out in the open. Now anybody can look at your filings, see your profitability metrics, see who your managers and directors and large shareholders are, and s