1/ Now that the Chad money is coming in, let's look at what moving to a bitcoin-denominated balance sheet might mean.

On inflows, outflows, balance sheets, and how a circular orange future might resolve the points of contention in #Bitcoin

👇
2/ In essence, every economic actor needs to have an economic inflow to survive. This is true for individuals, companies, and even states.

A healthy actor has more inflow than outflow, resulting in a positive balance. Spending is necessary for survival or growth.
3/ Most economic actors sell goods and services to generate inflow. Sooner or later, what they earn is spent again on other goods and services. A payment is simply a moment in time where one is given what is due for goods or services.
4/ Because the future is uncertain, you might want to hold some cash on your balance sheet. A better time to spend the money might arise, or you might need the money more than you need it now. You put something aside for a rainy day. These are your savings.
5/ Saving is simply the act of delaying spending. In the same way that you might want to save your dessert in order to savor it even more at a later point, you might want to save your money so you can put it to better use in the future.
6/ In #Bitcoin, this distinction is especially relevant because there continues to be tension around what Bitcoin is and what it is good for. Due to its resistance to censorship, confiscation, and inflation, bitcoin is useful for both payments and savings.
7/ Those who focus on the payments side of things often speak of "(crypto)currency" and emphasize the "medium of exchange" aspect.

Those who focus on the savings side of things speak of "money" and emphasize the "store of value" aspect.
8/ The MoE crowd is mostly concerned about making exchange and payments easier. Bitcoin is seen as a tool to improve commerce. Focus: inflows and outflows.

The SoV crowd is mostly concerned about security and certainty, e.g. monetary policy and auditability. Focus: balance.
9/ Yes, Bitcoin is a protocol for value transfer. From this point of view, the value of BTC does not matter. Value in -> BTC -> value out.

But Bitcoin is also the soundest money we ever had. The realization and appreciation of this fact will be reflected in its buying power.
10/ Different focal points highlight different concerns. For the first, these concerns are around privacy and scalability. For the second, they are security and valuation (reflected in NgU).
11/ No bitcoin balance? Volatility and price don't matter! Bitcoin is technology that needs to be improved.

Large bitcoin balance? Transaction speeds, UX, and scalability don't matter that much! Bitcoin is sound money and could soon ossify.
12/ Medium of Exchange: remittance payments, dark markets, micropayments, cross-border payments, evading capital controls.

Focus on utility, privacy, throughput, and censorship-resistance.
13/ Store of Value: savings, (personal or company) reserve asset, inflation hedge, long-term investment, hedge.

Focus on scarcity, trustlessness, monetary policy, auditability, verifiability, resistance to inflation & confiscation.
14/ Currently, it seems to me that Bitcoin is a one-way street. Many people had to use bitcoin as a medium of exchange for one reason or another, fell down the rabbit hole, and are now bitcoiners that use it to save for the long term.
15/ A rising number of bitcoiners are all in, forcing them to spend some of their bitcoin. If 100% of your inflow is in bitcoin (or: no inflow, 100% BTC balance), you will have to spend sats on food, shelter, and other necessities. No matter how much you don't want to.
16/ As more and more bitcoiners prefer to receive payments in bitcoin, more and more economic flows will be bitcoin-based. In other words: bitcoiners will be willing to part with their sats to pay other bitcoiners for goods and services. This is already happening (h/t @ctdl21).
17/ While still small, this circular economy is bound to grow. Everyone who ever did cross-border fiat payments knows how much of a hassle it can be. Bitcoin is frictionless, especially when going from bitcoiner to bitcoiner. Discounts of 21% will help too.
18/ Zooming out, the economy is still operating on a fiat standard. However, the number of individuals and companies that move towards a bitcoin standard is growing.

More HODL = more and larger bitcoin balance sheets.
More AutoDCA = more fiat inflow / less fiat outflow.
19/ Earning and spending bitcoin is a natural thing once you drop fiat and bitcoin becomes the money of your choice. This is where SoV meets MoE and - once the orange circle is big enough - will eventually become UoA.
20/ As more people gravitate towards Bitcoin, more goods and services will gravitate towards a bitcoin economy. The Bitcoin Standard is coming, it just won't happen overnight. It will happen one by one, individual by individual, company by company. Balance sheet by balance sheet.
21/ When all is said and done, bitcoin will be taken for granted just like electricity and the internet is today. What remains in the background is a beautiful orange circle of interlocking incentives. Settling transactions, block by block.
FIN/ Thanks to @michael_saylor for being such a Chad, and thanks to @pierre_rochard for letting me expand on this idea (and making me sell all my chairs). You can find Pierre's presentation on Google Slides.

docs.google.com/presentation/d…
PLUG/ If you enjoy thoughts like this, you might be interested in 21 Ways - the bitcoin book I'm currently writing. It will be freely available (just like 21 Lessons), but if you want to support me, you can!
This will be true for companies as well, by the way. There is no other way if your income stream is denominated in sats. (@SamouraiWallet comes to mind.)

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More from @dergigi

14 Jan
1/ Everyone knows that time is money. In the digital realm, however, money is also intricately related to time. It has to be.

swanbitcoin.com/bitcoin-is-time
2/ Among other things, money solves a coordination problem. Trading a single good against others solves the combinatorial explosion of a barter economy. It is a scalability solution that allows coordination across large groups of people.
3/ The two basic forms of money are ledgers (made of information) and physical tokens (made of atoms). Physical tokens keep track of themselves. Ledgers need someone who is in charge.
Read 13 tweets
13 Dec 20
Dear legislators:
* a wallet is a collection of private keys
* private keys are just information

Do you realize what outlawing information would entail?
Information can be represented in all kinds of ways. Do you want to make QR codes illegal? Flags? Art?
Do you really want to move into the territory of illegal numbers? Do you want to outlaw speech?
Read 5 tweets
14 Oct 20
"Bitcoin is protected by a wall of encrypted energy. The fact that there's a lot of energy involved is a good thing. It creates security to the network." -- @michael_saylor
Source: Swan Signal Live E33 with @michael_saylor and @DiMartinoBooth hosted by @CitizenBitcoin / @SwanBitcoin
If you're interested in exploring this idea, I wrote about it at length in 2018.

dergigi.com/2018/06/10/bit… Image
Read 4 tweets
8 Oct 20
1/ GigaChad, the thread.

Why Michael Saylor is - and probably will remain to be - the #Bitcoin GigaChad for quite a while.

👇 Image
2/ He went from zero to cyber hornets serving the goddess of wisdom faster than anyone else, realizing that there is only one game in town: #bitcoin.

3/ How did he do it? He dove down the rabbit hole, quickly and deeply. Bitcoiners know that all roads lead to Bitcoin maximalism. For some, it's a long and rocky path. For GigaChad it's a 5 minute ride in his rocket car.

Read 16 tweets
21 Sep 20
1/ Bitcoin still feels weird, clunky, and complicated at times. Because it is! But so was any kind of computer network, not too long ago.

Some thoughts on Bitcoin's UX.👇

swanbitcoin.com/on-bitcoins-ux/
2/ We often forget how far we have come, and how difficult the most basic stuff used to be. In Bitcoin, some of the basic stuff is still difficult.

Pete in 1991: "What is an IRQ?"
Peter in 2020: "What is an XPUB?"
3/ But also in Bitcoin we have come far: BIP32, BIP39, BIP44, BIP141 - all of them make Bitcoin easier to use. We take them for granted, but we shouldn't. A lot of thought and hard work went into these improvements, leading to better UX in the end.
Read 12 tweets
2 Jul 20
I recently finished The Price of Tomorrow by @jeffbooth. The book gives a good introduction and overview in regards to the two grand themes that are currently playing out: the rise of AI and the downfall of fiat money.

Quick thread in case you want to dive deeper.

👇
2/ In regards to AI and exponential progress, I highly recommend @waitbutwhy's lengthy two-part blog post from 2015. It does a great job of explaining what's going on and is quite thorough (if you can't be bothered to buy any of the books below).

waitbutwhy.com/2015/01/artifi…
3/ If you want to dig even deeper there is probably no better book than The Singularity Is Near by @raykurzweil - it's a bit dated and can seem outlandish at times, but the general concepts presented in the book are as relevant as ever.
Read 11 tweets

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