The Bitcoin Standard

A comprehensive and authoritative exploration of Bitcoin and its place in monetary history When a pseudonymous programmer introduced "a new electronic cash system that's fully peer-to-peer, with no trusted third party" to a small online mailing list in 2008, very few people paid attention. Ten years later, and against all odds, this upstart autonomous decentralized software offers an unstoppable and globally accessible hard money alternative to modern central banks. The Bitcoin Standard analyzes the historical context to the rise of Bitcoin, the economic properties that have allowed it to grow quickly, and its likely economic, political, and social implications. While Bitcoin is an invention of the digital age, the problem it purports to solve is as old as human society itself: transferring value across time and space. Author Saifedean Ammous takes the reader on an engaging journey through the history of technologies performing the functions of money, from primitive systems of trading limestones and seashells, to metals, coins, the gold standard, and modern government debt. Exploring what gave these technologies their monetary role, and how most lost it, provides the reader with a good idea of what makes for sound money, and sets the stage for an economic discussion of its consequences for individual and societal future-orientation, capital accumulation, trade, peace, culture, and art. Compellingly, Ammous shows that it is no coincidence that the loftiest achievements of humanity have come in societies enjoying the benefits of sound monetary regimes, nor is it coincidental that monetary collapse has usually accompanied civilizational collapse. With this background in place, the book moves on to explain the operation of Bitcoin in a functional and intuitive way. Bitcoin is a decentralized, distributed piece of software that converts electricity and processing power into indisputably accurate records, thus allowing its users to utilize the Internet to perform the traditional functions of money without having to rely on, or trust, any authorities or infrastructure in the physical world. Bitcoin is thus best understood as the first successfully implemented form of digital cash and digital hard money. With an automated and perfectly predictable monetary policy, and the ability to perform final settlement of large sums across the world in a matter of minutes, Bitcoin's real competitive edge might just be as a store of value and network for the final settlement of large payments a digital form of gold with a built-in settlement infrastructure. Ammous' firm grasp of the technological possibilities as well as the historical realities of monetary evolution provides for a fascinating exploration of the ramifications of voluntary free market money. As it challenges the most sacred of government monopolies, Bitcoin shifts the pendulum of sovereignty away from governments in favor of individuals, offering us the tantalizing possibility of a world where money is fully extricated from politics and unrestrained by borders. The final chapter of the book explores some of the most common questions surrounding Bitcoin: Is Bitcoin mining a waste of energy? Is Bitcoin for criminals? Who controls Bitcoin, and can they change it if they please? How can Bitcoin be killed? And what to make of all the thousands of Bitcoin knockoffs, and the many supposed applications of Bitcoin's 'block chain technology'? The Bitcoin Standard is the essential resource for a clear understanding of the rise of the Internet's decentralized, apolitical, free-market alternative to national central banks.

SAIFEDEAN AMMOUS, PHD, is a Professor of Economics at the Lebanese American University, and member of the Center on Capitalism and Society at Columbia University.

About the Author xi Foreword xiii Prologue xv Chapter 1 Money 1 Chapter 2 Primitive Moneys 11 Chapter 3 Monetary Metals 17 Why Gold? 19 Roman Golden Age and Decline 25 Byzantium and the Bezant 28 The Renaissance 29 La Belle Époque 34 Chapter 4 Government Money 41 Monetary Nationalism and the End of the Free World 43 The Interwar Era 47 World War II and Bretton Woods 53 Government Money's Track Record 60 Chapter 5 Money and Time Preference 73 Monetary Inflation 81 Saving and Capital Accumulation 90 Innovations: "Zero to One" versus "One to Many" 96 Artistic Flourishing 98 Chapter 6 Capitalism's Information System 105 Capital Market Socialism 109 Business Cycles and Financial Crises 113 Sound Basis for Trade 126 Chapter 7 Sound Money and Individual Freedom 135 Should Government Manage the Money Supply? 136 Unsound Money and Perpetual War 145 Limited versus Omnipotent Government 149 The Bezzle 155 Chapter 8 Digital Money 167 Bitcoin as Digital Cash 168 Supply, Value, and Transactions 177 Appendix to Chapter 8 191 Chapter 9 What Is Bitcoin Good For? 193 Store of Value 193 Individual Sovereignty 200 International and Online Settlement 205 Global Unit of Account 212 Chapter 10 Bitcoin Questions 217 Is Bitcoin Mining a Waste? 217 Out of Control: Why Nobody Can Change Bitcoin 222 Antifragility 230 Can Bitcoin Scale? 232 Is Bitcoin for Criminals? 238 How to Kill Bitcoin: A Beginners' Guide 241 Altcoins 251 Blockchain Technology 257 Acknowledgements 273 Bibliography 275 List of Figures 282 List of Tables 284 Index 285