Lyn Alden, author of the best-selling book 'Broken Money', joins the podcast to discuss difficulties in creating a good monetary system, the impact of technology and corruption, and the potential of Bitcoin as an alternative solution. They also explore the challenges of using gold for industrial purposes, Bitcoin's role in fixing the monetary system, and the petro dollar system's impact on the international market.
Technological advancements, such as the telegraph, have influenced the evolution of money and the centralization of transactions.
The current monetary system is broken due to corruption caused by centralized transactions and abstracted ledgers.
Technology, including Bitcoin, has the potential to create new possibilities for monetary systems that align with different political philosophies.
Money serves as a shared accounting mechanism to record, store, and exchange value in economies, whether in the form of physical commodities or digital currencies like Bitcoin.
Deep dives
The Role of Technology in Money
The podcast discusses how the advancements in technology, such as the telegraph, have influenced the evolution of money. It highlights that technology plays a crucial role in shaping what we use as money and even how we think about money. The telegraph, for example, enabled information to flow quickly, leading to the rise of credit-based ledgers and the centralization of transactions, ultimately impacting our monetary systems. Bitcoin is seen as the first realistic attempt to break the trend of broken money caused by technological advancements, offering an alternative to corrupted centralized systems.
The Broken Nature of Current Monetary Systems
The podcast argues that current monetary systems are broken, primarily due to the corruption that arises when transactions are centralized and rely on abstracted ledgers. It explains that as technology facilitated faster transactions, centralization became the norm, contributing to a century and a half of corruption in these centralized systems. The podcast points out that this corruption stems from the fact that systems became more efficient than the settlements themselves, leading to an environment where those systems are easily manipulated. Bitcoin is presented as the first viable solution to break away from this broken money trend by introducing a decentralized ledger through which transactions can occur without the need for intermediaries.
The Influence of Technology on Political Structures
The podcast explores how technology, particularly advancements in information sharing, has shaped not only economic systems but also political structures. It contends that with the emergence of technologies like the telegraph, new political structures became viable. The ability to quickly disseminate information allowed for the rise of more extensive democracies and enabled different types of governance models. The podcast suggests that similar to political structures, technological advancements, specifically Bitcoin, have the potential to create new possibilities for monetary systems that align with different political philosophies.
Exploring Money as an Accounting Mechanism
The podcast delves into the concept of money as an accounting mechanism. It discusses how different theories and historical developments have shaped our understanding of money as a ledger. The podcast highlights that money serves as a shared accounting mechanism among individuals and societies to keep track of values and enable the various activities and economics of daily life. It showcases how money, whether it be in the form of physical commodities like gold or digital currencies like Bitcoin, functions as a tool for recording, storing, and exchanging value within economies.
Bitcoin and its Competition with the Dollar
Bitcoin is a more compelling case for savings compared to traditional assets like gold. It offers a bear asset with zero terminal supply, making it harder for stocks to outcompete in the long term. Bitcoin's liquidity and accessibility give it a global portable money advantage, making it attractive for savings and transactions. While some view Bitcoin as a risk asset, smarter investors also see it as an optionality asset for global transactions and wealth mobility. As Bitcoin continues to survive challenges and gain liquidity, it presents a viable competitor to the traditional monetary system.
The Power of Cash Balances and Bitcoin's Optionality
Bitcoin's optionality through features like the Lightning Network increases its perceived value for users. The ability to make unsensible transactions, move wealth across jurisdictions, and hold Bitcoin as a bearer asset is valuable. The importance of cash balances extends beyond just being a medium of exchange. It includes the liquidity and conversion points provided by Bitcoin, enabling individuals to have more control over their financial autonomy. The availability and liquidity of Bitcoin across various markets make it a powerful tool for optionality.
The Role of Centralization and History of Money
Through the chapters on free banking and central banking, a historical pattern of centralization is observed. Banks serving as honeypots for control led to increased centralization of monetary systems over time. However, Bitcoin's decentralized nature challenges this pattern by placing the enforcement point on individuals instead of institutions. This shift reduces the control governments and central banks have over money. The evolving technology of money played a crucial role in shaping politics, public finances, and privacy expectations. Bitcoin presents an alternative to centralization, empowering individuals and offering a new vision for the future of money.
Bitcoin's Role in Human Rights and Global Adoption
Bitcoin has the potential to improve human rights by offering individuals more autonomy in their financial lives. It provides tools for self-custody, censorship resistance, and global payments. By breaking down currency barriers and offering a decentralized alternative, Bitcoin empowers people in countries with economic instability or oppressive regimes. Additionally, Bitcoin's open-source nature and potential for wealth accumulation make it attractive to individuals from various socio-economic backgrounds. Promoting Bitcoin as a tool for freedom and empowerment can help drive its global adoption and ensure a future that benefits all.
Lyn Alden joins us to discuss her new best-selling book, Broken Money, available now in cloth hardcover from TheSaifHouse.com!
Enjoyed this episode? Join Saifedean's online learning platform to take part in weekly podcast seminars, access Saifedean’s four online economics courses, and read his writing, including his new book, Principles of Economics! Find out more on saifedean.com!
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