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 Prophet of Edan by Philip Chase [The Edan Trilogy #2]

We all have our part to play and our duty to perform. This is a beautiful novel about performing your duty with honor, even in the face of almost certain failure. Author Philip Chase has an unusual gift for telling a compelling story, and The Prophet of Edan works on two levels: on the individual level, with characters we care about and root for, and on the grand, civilizational level, where entire nations  hurl themselves at each other in a desperate war of survival. And the geopolitical dramas in Philip's world of Eormenlond are downright Kissingerian --with betrayal, realpolitik and honor, all in equal measure. Now, any story with a large cast and a lot of moving parts presents the author with a structural challenge: how do you help the reader keep everybody and everything straight, but yet do it in a way that's organic to the story? After all, this is the second part of a trilogy,  and a lot happened in Book I . So I'll share an example here of what this author does,...

The Investor's Manifesto by William J. Bernstein

In just under 200 pages, The Investor's Manifesto gives you everything you need to manage your investments: * A historically grounded discussion of the tradeoffs between risk and return, * How to design an investment portfolio using index funds, including advice on withdrawal rates and how (and how often) to rebalance, * A good discussion of human psychological biases (the author uses the wonderful phrase "investing psychopathology" to describe this topic), and * How to navigate the financial services industry without getting your head handed to you. Finally, there's a chapter that summarizes everything, followed by a solid reading list for continuing your investment education, broken down by topic: theory, history, psychology, and business. Anyone wanting to reach a reasonable competence level in investing should read at least one of William Bernstein's books. This one or The Four Pillars of Investing  will suffice. Since he's not a Wall Street guy--he's...

The Rule by Larry Hite [Investing]

It is always valuable to read books from investors who use a different approach from yours. The underlying idea is to develop all-weather investing skills by studying a range of techniques and styles, so you can survive, and even thrive, in any investment environment. Author Larry Hite describes himself as a "trend-follower," and while he found most of his success in commodities, he's willing to traffic in practically anything that moves. It gets the reader to think agnostically about asset classes and sectors, since any investment anywhere can have a trend you can ride.  In other words, think about ways to widen the cast of your net while you widen your range of techniques and styles. Hite made his fortune a few different times, and suffered a spectacular blow-up when one of his employees hid trades in interest rate futures from him. It's not always the case, but usually the guys who blow up--and yet manage to get wealthy a second time--speak most knowledgeably about...