Lyn Alden | How Bitcoin Fixes "Broken Money" | EP 125
Sep 7, 2023
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Lyn Alden, author of "Broken Money," discusses how Bitcoin can restore sound money principles to the digital era, the shortcomings of traditional banking, the benefits of a deflationary economy, and the potential synergy between Bitcoin and AI.
Bitcoin's ability to settle transactions at the speed of telecommunications and its scarcity make it a credible solution to address the gap between transaction and settlement speeds in the monetary system.
The broken nature of fiat currencies, with inflation devaluing savings and wages, and the negative impact of IMF policies on developing nations, perpetuates chaos and volatility in the current monetary system.
Bitcoin's non-inflationary nature, decentralized structure, and potential to offer a more equitable and efficient monetary system make it a promising alternative to centralized banking, with greater privacy and protection against inflation.
Deep dives
Bitcoin's Slow Monetization Process
The monetization of Bitcoin is expected to be a slow and gradual process that spans generations. As the technology gains wider adoption and acceptance, it has the potential to become a natural part of money for future wage earners and savers. However, this progress is hindered by the volatility associated with speculators and the temptation to diversify into other cryptocurrencies. Bitcoin's ability to settle transactions at the speed of telecommunications and its scarcity make it a credible solution to address the gap between transaction and settlement speeds in the monetary system.
The Brokenness of Fiat Currencies
The podcast episode delves into the broken nature of fiat currencies and the impact on economies, particularly in developing countries like Egypt. Inflation leads to a devaluation of savings, while the unit of account for ongoing wages also gets devalued, placing the burden on wage earners to try to negotiate for raises. IMF policies often exacerbate the vulnerabilities of developing nations, requiring them to make concessions that benefit the central banking system rather than the local economy. The centralized nature of the current monetary system perpetuates the chaos and volatility, leaving nations with limited leverage to absorb the impact.
Bitcoin's Potential to Solve Money's Challenges
Bitcoin's growth and progress in the past 14 years have been significant, with its market capitalization reaching a trillion dollars at a remarkable pace. However, the volatility associated with Bitcoin's monetization process and the presence of speculators pose challenges. The gradual adoption and widespread use of Bitcoin can gradually reduce its volatility, making it a more stable and widely accepted form of money. Bitcoin's ability to combine the speed of transaction with the hardness of gold has the potential to solve the 150-year gap between transaction and settlement speeds, offering a promising alternative in the digital age.
The Negative Consequences of Centralization and the Potential Solution Offered by Bitcoin
The podcast discusses the negative consequences of relying on a centralized banking system, such as the loss of privacy and increased risk of inflation. It explores how Bitcoin can help address these issues by providing a decentralized alternative that offers greater privacy and protection against inflation. The podcast highlights the historical progression of centralization in money systems and the resulting problems that have emerged, including the manipulation of reserves and the concentration of wealth. Bitcoin's non-inflationary nature and its potential to offer a more equitable and efficient monetary system are emphasized.
The Benefits of a Deflationary Environment and the Role of Bitcoin in Facilitating Efficient Economic Transactions
The podcast delves into the advantages of a deflationary environment, challenging the prevalent belief that deflation is inherently bad for economic growth. It argues that deflation can be favorable as it aligns with the natural progression of human progress and productivity. The podcast also explores the role of Bitcoin in relation to AI and its potential as the ideal money for AI agents. It highlights how Bitcoin's programmability, programmability, and ability to facilitate microtransactions make it suitable for AI-driven transactions and economic decision-making. The podcast concludes by discussing the importance of price stability and its relationship with the adoption and liquidity of Bitcoin, as well as the potential applications of Bitcoin in various industries, particularly in terms of microtransactions and global accessibility.
On this episode of Swan Signal, Sam welcomed back Lyn Alden to discuss the release of her new book "Broken Money." We explored how technological breakthroughs led to the fall of gold and rise of fiat, why Bitcoin has the ability to bring back sound money principles to the digital era, and why Bitcoin and AI may be a match made in heaven.
Timestamps: 00:00:00 “Swan Signal” Intro 00:00:53 Introducing Lyn Alden 00:01:32 Understanding Other Economies; Lyn Visiting Egypt 00:09:08 Hypocritical Nature of the IMF 00:15:25 Transaction Speeds vs. Settlement Speeds: Why the Money is Broken Today 00:22:49 Bitcoin vs. Traditional Banking 00:28:24 Deflationary Economy 00:34:07 Is Price Stability a Good Thing? 00:38:11 How Do You Feel About Bitcoin’s Progress? 00:43:57 Bitcoin’s Liquidity Profile 00:52:26 Bitcoin and A.I. 00:56:14 “Broken Money” by Lyn Alden 00:57:42 “Swan Signal” Outro
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