Open Letter to family and friends

 Money is a Touchy Subject

Most people don’t like to talk about it; either because they have little and are ashamed, or because they have lots and are afraid. Even fewer people know anything about the nature of our money, which is quite shocking — after all, money is an essential tool of our civilization. Money can be thought of as evil, but I prefer thinking that the love of money is evil. Money is like multiplying together time and talent.  We, as a society, need Bitcoin more than it needs us. Money is an essential tool for any large-scale co-operation. It is a measuring device, a solution to the problem of barter, a vehicle to store your wealth over space and time, and many other things. In short, money is essential for a complex society to function. However, a series of financial crisis and a recent event like Covid-19 has clearly shown that our money is fundamentally broken.

2009-02-11 - Link Satoshi Nakamoto

"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."

Covid-19 highlighted the ridiculousness of our financial and monetary system. In a matter of days, we went from printing billions to trillions of dollars. The Fed wants inflation at 2% and we just believe that this is a normal idea -- it is not. 25 years ago it cost me $300 dollars a month to leave my Farmer Joe Movie on the Internet -- now it costs me nothing on Youtube, in fact I get paid. The Fed's lingo is fantasy -- the logic of forcing 2% inflation while printing 64.5% more M1 currency in 2020.  That goes for the Modern Money Theory as well (think John Maynard Keynes) Actually Austrian Economics is closer to the truth.

Scarcity has value.

However, as a store of value, Bitcoin is superior to land (and gold, for that matter) in many ways. No other asset can be magically beamed across the internet or other communication channels. Bitcoin has the highest value density of all assets since it is pure information. You could have a billion dollars worth of bitcoin in your head, retaining your wealth, even if stripped naked at a border crossing.

While there are many misconceptions about Bitcoin, the following are probably the most prominent:

Bitcoin is too expensive

Bitcoin is old technology

Bitcoin is too complicated

Bitcoin is risky and speculative

Bitcoin will be replaced by another coin

Let’s briefly go through these one-by-one.

Bitcoin is too expensive: To the contrary! Don’t let the “I need a whole coin” unit bias fool you. Bitcoin is still very cheap. However, if you think that way, you’re in good company. People have been thinking that bitcoin is too expensive since its inception. It will always be too expensive if your perspective is still rooted in fiat money.

Bitcoin is old technology: First of all, Bitcoin is a monetary invention rather than a technological one. It aims to replace the monetary base layer of our society — it isn’t the next viral app for your smartphone. Second of all, Bitcoin is improving and evolving at a rapid pace. It’s virtually impossible to keep up with all developments across the board. I just added a Lightning wallet to my node. Click here to give me some sats.

Bitcoin is too complicated: Granted, Bitcoin isn’t exactly easy to understand. (But neither is the traditional financial system.) Luckily, as with all other complex technologies, usage doesn’t require complete understanding. If it would, you probably couldn’t use your smartphone, use the internet, or drive your car. And in terms of usage, Bitcoin becomes easier every day. Just like using the internet a couple of decades ago wasn’t exactly easy, using Bitcoin today can be challenging at times.

Bitcoin is risky and speculative: Don’t speculate. Stay humble and start stacking sats. If that’s not good enough for you, how about the fact that a portfolio of 5% bitcoin and 95% cash outperformed stocks on risk and returns every year for the past 6 years? Still too risky?

Bitcoin will be replaced by another coin: Bitcoin is the undisputed king and the only serious contender for digital scarcity. It has the best network effects, the highest liquidity, and the highest security by many orders of magnitude. Nothing else comes close, and I don’t want to waste any digital ink naming any other coin. All I will say about Bitcoin’s copy-cats is this: do not touch them. While the Siren’s song of shitcoins is hard to resist, they are called shitcoins for a reason. Bitcoin can’t be copied. It is a path-dependent-invention in a winner-takes-all environment. This is hard to explain without reading "The Bitcoin Standard" by Saifedean Ammous or better yet read a book I helped with, "Thank God for Bitcoin" by Jimmy Song.