Why Bitcoin Now: Saifedean Ammous on Why Bitcoin is the Most Advanced Form of Money - Ep.187

Aug 25, 2020

Saifedean Ammous, an economist and author of "The Bitcoin Standard," shares his keen insights into Bitcoin and Austrian economics. He explains how Bitcoin aligns with the principles of sound money and its historical value compared to inflationary currencies. Ammous delves into the intriguing stock-to-flow model and highlights Bitcoin's unique difficulty adjustment as a vital feature. He also discusses time preference, the evolution of money, and raises interesting predictions about Bitcoin's future, making a case for why it’s the best store of value humanity has ever invented.

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INSIGHT

Austrian School & Bitcoin

The Austrian School of Economics uniquely recognizes money as a market-driven phenomenon, not solely a state creation.
This perspective allows for the possibility of Bitcoin, a decentralized currency, to function effectively.

INSIGHT

Fixed Supply and Purchasing Power

Unlike other schools of economic thought, the Austrian school recognizes that a fixed money supply can work.
They argue that purchasing power, not quantity, matters, making a fixed supply potentially advantageous.

ANECDOTE

Yap Island Limestone Money

On Yap Island, large limestones served as money due to their scarcity.
When an American sailor introduced easier-to-obtain limestones, the island's economy collapsed, highlighting money's need for difficulty.

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Saifedean Ammous is an economist and the author of The Bitcoin Standard: The Decentralized Alternative to Central Banking, which has been translated into 20 languages. In this episode, he discusses:

the basic tenets of Austrian economics and why it is the only school where Bitcoin is possible
historical examples of currencies and how they lost their monetary value
the stock-to-flow model and how Bitcoin fits into that model
the three functions, or descriptive properties, of money and why Bitcoin fulfills these functions
the concept of sound money
the idea of time preference in economics and why he believes it is so important
the distinction between debt and money, and why they are not the same
the significance of difficulty adjustment and why he believes it is the crowning achievement of Bitcoin
why he views Bitcoin as the best store of value humanity has ever invented
the metrics he watches when assessing Bitcoin
what he thinks is in store for Bitcoin in the future, and whether he still thinks central banks will buy Bitcoin as a reserve currency
his thoughts on Ethereum and other digital currencies
and his predictions for Bitcoin in the next year

Thank you to our sponsor!

Crypto.com: https://crypto.com/

Episode links:

Saifedean Ammous: https://twitter.com/saifedean

Saifedean’s website: https://saifedean.com

The Bitcoin Standard: https://saifedean.com/book/

Invest Like the Best episode with Saifedean: http://investorfieldguide.com/ammous/

What Bitcoin Did episode with Saifedean: https://www.whatbitcoindid.com/podcast/saifedean-ammous-on-understanding-bitcoin-economics

Plan B’s stock-to-flow model applied to Bitcoin: https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25

https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cross-asset-model-50d260feed12

Essay on why the stock-to-flow model is wrong: https://www.coindesk.com/why-the-stock-to-flow-bitcoin-valuation-model-is-wrong

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