Thread by @thibm_

Bitcoin is finally bringing fair, open, and social markets to anyone in the world.

But before that happens, let's dig into the weird history of money! 😎

Check a not-too-long thread below, or the not-that-too-short post right here: thib.ca/on-moneys-weir…

1. Over millennia, humans' social desire led us to help, trust and trade with non-akin individuals to create mutually beneficial value.

2. In the early days of agriculture, debt and credit helped us trade in barter societies.

3. As local exchanges started to intensify, keeping track of debt and ledger history for both individuals and groups became cumbersome.

4. Seeking the best option, humans tried it all: stones, salt, spices, sea shells, glass or gold to use as neutral forms of money.

5. Following multiple trial-and-errors, we came to realize the necessary properties that make money a stable, usable and trustworthy means of storing, sending and measuring the amount of effort put into labor.

6. Money can be interpreted as frozen time, which lets humans store their hardly earned labor for a future date or exchange it freely at any moment against other people’s specialized products and services that they wouldn’t be able to get otherwise.

7. Leveraging money has propelled human societies in subsequent eras of rising prosperity, enhanced by substantial improvements in productivity, doing more with less.

8. From the age of hunter-gatherers, towards agriculture, and the industrial revolutions, we've recently entered the now well-known information age.

9. Critical pieces of human activities are moving to the digital realm, bringing massive efficiencies to distribute information across the world at an almost zero-marginal cost, and that quasi-instantly.

10. Software has been rapidly ‘eating the world’, spreading via the Internet, powering our social and work lives as much as our homes, cars and hospitals.

11. We now exchange trillions of dollars of value on the Internet on a daily basis with billions of other human peers and companies.

12. The value of goods and services we buy and sell today is currently denominated in 180 national currencies by local governments.

13. Fiat money is present in 195 countries that regulate, protect, and control the amount of available monetary units that are available

14. As a coordination mechanism for humans, countries have been sustaining their expansionary desires by controlling their monetary policies to manage the value of their currencies against other foreign currencies.

15. Currencies were backed by gold, as a proof of reliability and truth worthiness for trade settlements with homologue countries.

16. But in 1933 Roosevelt’s US government issued Executive Order 6102, making gold private ownership illegal, including a penalty of 10 years in prison and a $250,000 fine for owning more than $100 worth of gold.

17. Paper money was created in an effort to serve as a way to make gold more usable, portable and divisible for daily commerce.

18. Over time, countries have been steadily debasing the scarce yellow rock collateral and paper money created additional claims on the existing vaulted gold money reserves held by newly trusted institutions, central banks.

19. This nefarious behaviour has undeniably led countries to neglect the natural scarcity of gold, which was the sole property responsible for its collective election as a multi-century global reserve asset.

20. Preventing abuses, in 1944 Bretton Woods was a US-led and globally coordinated effort to prevent unreasonable economic stimulus, which had created massive inflationary recessions in countries such as Germany in the 1920s abusing the printing press.

21. Regardless, the US government stopped the US dollar’s convertibility to gold due to the rising addiction of economies to leverage their national monetary policies in the stimulation of short-term economic growth.

22. Since it’s debasement from gold, the US dollar lost over 90%, while other free-floating fiat currencies followed similar downward paths.

23. As sovereign debt rises to new highs today, the US $22 trillion dollar debt along with a $1 trillion deficit in 2018 appears to be inflating unsustainably.

24. The Federal Reserve may very well further expand their money supply to buy more US Treasury bonds onto their balance sheet.

25. But fiat currencies getting large inflows of new units added to the circulating supply by central banks lead to wealth extraction from currency holders.

26. Money is stable if its new flow of units created is relatively smaller than its current existing stock. The larger the stock-to-flow ratio, the more stable the value of the currency is. Hence why gold was the most stable over the last 5,000 years.

27. Gold is naturally scarce because it is mechanically hard to dig it from the ground. It currently takes 71 years of digging non-stop to get the current existing stock of 170,000 tonnes.

28. Fiat currencies have a low stock-to-flow ratio, which diminishes frequently as central banks print more money to control their national monetary policies.

29. Inflation is an upward wealth drought from fiat money holders to yield-generating asset holders.

30. Maduro-led Venezuela has been experiencing an astonishing 80,000% inflation in 2018, which brought the life savings of millions of Venezuelans to be worthless, causing tragic financial damage

31. Across time, the realization that government currencies do not work is evident. As more countries see higher rates of national inflation, leading to an undeniable loss of citizens’ purchasing power, people will start looking once again at other forms of money.

32. Utilizing a more stable money for savings or to send payments abroad to families and friend should be done without anyone’s permission. Heard of #Bitcoin? 😄

33/33. Mega thanks to people who've helped out breaking the logic, and disambiguate this special thing we call money. Plus other folks who don't know it, and yet inspire me to learn more every day. 🤓

@anbuteau
@ZanePocock
@sunknudsen
@stephanlivera
@nic__carter
@NickSzabo4

@anbuteau @ZanePocock @sunknudsen @stephanlivera @nic__carter @NickSzabo4 Especially, thanks to the #Bitcoin Reading Group started by @_JustinMoon_ from whom I'm learning a lot with awesome chats along with @mrcoolbp and @HillebrandMax.