Bitcoin vs Gold (Part 2)
0/The gold standard was abandoned in 1971 & absolute control over the money supply handed to central banks. Yet despite gold’s new ATH and long held popular narratives, it cannot function as an adequate check against fiat. Thread ⤵️
0/The gold standard was abandoned in 1971 & absolute control over the money supply handed to central banks. Yet despite gold’s new ATH and long held popular narratives, it cannot function as an adequate check against fiat. Thread ⤵️
1/Humans organically sought ways to communicate value in local trade circles and settled on a form of money. When trade expanded it met other local forms of money. These were corrupted through counterfeiting (Rai stones, glass beads) or adopted if it was better (gold).
2/Good money breeds trust which can be leveraged for personal and political gain. Rules were established to codify the good money. Yet those rule makers - those in power - clipped coins, debased currencies and/or outright printed money for personal benefit.
3/Over time gold came into contact with every major local currency and became, for the most part, the money of choice. The gold standard powered periods of great innovation, economic growth, and personal prosperity.
4/Yet, despite its success, gold’s flaws were exploited by centralized authorities - governments & central banks. Poor portability, difficult divisibility and the public’s inability to audit supply allowed the state to slowly co-opt gold’s role in the financial system.
5/In time, govts introduced gold backed paper money, opening the door to another cycle of clipping & counterfeiting. Gold’s role was corrupted, the money debased. Although used as final settlement between nations, little gold actually moved, confining exchange to ledger entries.
6/When gold was abandoned it freed nations to print money at will. Gold’s price rose from its pegged value, ostensibly as a hedge against this freewheeling economic system. Indeed, its recent all time high is a vote against the dollar & other fiat currencies.
7/Gold however still retains its inherent weaknesses and over the last 50+ years these have allowed central banks to solidify their control over its market and mute its usefulness as a robust non-sovereign money.
8/Satoshi’s white paper reference to gold is no coincidence. He deliberately designed Bitcoin to overcome physical gold’s limitations. Bitcoin has better distributive properties, portability, divisibility, fungibility and absolute scarcity.
9/Satoshi primed Bitcoin to become not only the hardest, soundest money of all time but one that can finally break fiat’s monopoly and restore economic principles to ones rooted in money instead of debt.
10/A verifiable hard cap supply & inflation schedule are akin to atomic constants, as such rigidly define parameters of any economic construct under a Bitcoin standard. An open source economy allows anyone, anywhere, anytime to verify its soundness & mute the state's power.
11/Moreover, Satoshi’s understanding of the need to digitize & embed money into the very fabric our increasingly digital lives supersedes any probability gold can be reconstructed to work in a future requiring near instantaneous transactions & verifiable global settlement.
12/Bitcoin has better utility than gold. Bitcoin’s adaptivity allows it to meet broad use-cases. It can be a reserve currency or power merchant payment systems. Although a decade on, Bitcoin is still in the nascent “appliance” phase of development:
13/Bitcoin is like early electricity. Raw, dangerous, seems very volatile and hard to use. With time it'll start to feel safer, easier and normal. Like electricity it will inspire and power new unimaginable industries. And one day we’ll wonder how did we live without it?
14/The local trade circle is now global and all other forms of money will collapse against Bitcoin. Whether it be dollars, silver, gold, equities or physical assets, each will have to contend with Bitcoin’s relentless quest to subsume our legacy financial system.
Fin/Gold once sufficed, but no more. We’ve moved on from sticks and shiny stones. Bitcoin complements and completes our modern world. We are in the midst of relentless social, political and technological change. We need a new operating system: #bitcoin.
Bitcoin vs Gold (Part 1)
