22 Jan Thank God for Bitcoin – My Notes
Thank God for Bitcoin offers a unique contribution to the ongoing development of “cryptocurrency theory.” Written by a (rather large) team of authors, clergy, business people, and general Bitcoin enthusiasts, the book applies a Christian perspective to the topic. The book regularly quotes Bible passages and speaks directly toward the Church and the Christian’s relationship with money, wealth, and the economy at large.
Taking a strong libertarian stance, Thank God for Bitcoin sets out with a “Zero to 60” program, intending to take the reader from economic ignorance to Bitcoin advocate and armchair monetary policy theorist in less than 200 pages. Herein lies my biggest criticism of the book: it’s not long enough to give a comprehensive ‘101 level’ understanding of monetary theory and it’s too short to serve as an economic ‘proof’ for the legitimacy of Bitcoin as a worldwide replacement for fiat currencies. You might say that the book attempts to bite off more than it can chew. That being said, it errs to the side of the ‘new reader’, and in so doing provides the potential for great discussions, questions, and further learning.
I’ve been a proponent of ‘sound money’ monetary policies for more than a decade now, and while I don’t believe the move to sound money is something that can happen overnight, I do believe it is an eventuality. Fiat currency has served its role in the 20th century (despite what many libertarians may think), but the future is inevitably in digital currencies. Cryptocurrencies is an evolutionary next step in money thanks to the ‘democratic participation’ which the internet has afforded. No longer do we rely on nation-states to establish the credibility of a monetary unit–cryptocurrencies network of users can do that for us. The book’s authors have a phrase that really encapsulates this idea which I really like: “Bitcoin is the redemption of money.”
Still, it’s not Bitcoin that will be the redemption of money, it is cryptocurrency as a whole. This is something the authors of the book and I ardently disagree on–they are ‘all-in’ with Bitcoin and believe all other cryptocurrencies are pointless, doomed to fail, and even fraudulent. The fact is, at the time of my writing this, Bitcoin only represents 68% of all cryptocurrencies, and there is still plenty of time for other coins to become established (Bitcoin has only been around for 12 years as it is.) As a testament to their ‘anti-Alt-coin’ stance, Thank God for Bitcoin only dedicates two paragraphs to other cryptocurrencies, a decision I would consider a ‘miss’ at best and even slightly disingenuous.
All said, I’m happy Thank God for Bitcoin exists and I’m thankful to the authors for their efforts on the project. Cryptocurrency and monetary theory as a whole are still widely misunderstood, and until the average person can adequately answer the question, “Where does money come from?“, we will be beholden to the monetary decisions of the economic elite.
Other resources:
- Fiat Currency | The Nature of Money | The Need for Money — These are articles I wrote on monetary theory over a decade ago. They may be somewhat dated but I still stand by them.
- The Ethics of Money Production, Jorg Guido Hulsmann — This is a fantastic ‘201-level’ book on monetary theory from an Austrian School of Economics point of view. Highly recommended
- How an Economy Grows and Why it Crashes, Peter Schiff — If you are somewhat new to economic theory or if you’re looking to get a fresh perspective on your economic education, this is a great, fun little book (it even has illustrations!) The book is FREE for Kindle.
My Underlines from Thank God for Bitcoin
Great wars have been financed with and fought over money.
The type of money that we use has tremendous consequences on those who use it…money is a tool, and tools are designed and made only after a need or objective has already been identified. If a tool is designed badly, or the goals and objectives of a tool are toward immoral ends, then those who use it will be affected.
Sadly, not much is taught in churches about what money is or how money functions.
In other words, work is creative while theft is destructive.
Work adds value; it benefits people, communities, and countries by creating new goods and services that improve people’s lives.
We can think of money as promises or favors that can be traded. The “rich” are those that are owed a lot of favors for their work, and the “poor” as those that are owed few…Those who provide more value at one point in time can be justly rewarded later.
Money is a unique tool: since it is a special good used for trade, the nature of its construction holds a heavy influence on social morality…The truth is, there is moral and immoral money…
Network Effects are the benefits a product or service gains as more people use it.
Largely due to this historical anomaly, much of the gold stayed in the US and every central bank other than the Fed kept dollars instead of gold in their vaults.
In a sense, the US is engaged in the theft of the entire world, or extracting a tribute from every other country like the Assyrian Shalmaneser in 2 Kings.
The Hedonic Quality Adjustment is a method by which the CPI gets adjusted downward.
But when saving is disincentivized, debt and leverage levels rise too far and the economy becomes more fragile.
Because people are disincentivized from holding money, the money that would normally be saved flows into these assets, causing their values to grow at rates faster than the broader economy.
Fiat money eventually collapses in on itself when the monetary base has expanded so much that people using the currency lose faith in its ability to properly store and transfer wealth.
In a sense, hyperinflation is a seizure of private property by the money printer.
Political issues now get evaluated on intentions and not on results.
Consider the prevalence of financial services such as professional investing, tax accounting, and retirement planning. These are all mechanisms that, among other things, attempt to outrun inflation.
Poor people are forced to spend an inordinate amount of time and energy avoiding this cycle of debt or attempting to manage that cycle of debt once they’re in it.
In addition, the moral hazard created by bailouts make such companies bloated as they operate in inefficient ways because they become less price sensitive. This is where we are now.
Whereas work is value-additive, rent-seeking is value-subtractive.
We live in a system that conditions us to feel that as long as the taxes are being paid, the ‘widow and the orphan’ will be taken care of.
Debt also has a negative impact on the condition of our relationships as servicing the debt supersedes our innate human desire to invest into the people that are closest to us, both with our time and resources.
Getting into debt is an existential risk for a church.
If enough tithing congregants leave, churches can get in major financial trouble which can be destructive and dampen their ministry.
In some ways, churches imitate our political system, where politicians focus on getting votes, which also takes a lot of money.
The church must literally, urgently, and tangibly embrace its divinely ordained obligation to call humanity forward, by helping people articulate the problem of our corrupt money with precision and clarity. When we declare with conviction that our current monetary system is corrupt from a position of spiritual and moral authority, we begin to participate in bringing people closer to God.
Bitcoin is the redemption of money.
Bitcoin is non-inflatable money in a world where wealth is continuously stolen by inflation.
Unlike gold, Bitcoin can be adopted gradually. Instead of requiring a political majority, individuals can choose to adopt it without overhauling the existing system.
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