Quick Bitcoin thread.
No, I’m not going to convince you to go buy a speculative asset.
I am going to explain why a lot of really smart people are doing it though, and it’s a little more complicated than most think.
<thread> 🧵👇
#bitcoin
No, I’m not going to convince you to go buy a speculative asset.
I am going to explain why a lot of really smart people are doing it though, and it’s a little more complicated than most think.
<thread> 🧵👇
#bitcoin
2/ The easiest way to understand what Bitcoin is, is to understand what it’s not - the current monetary system.
In most countries, money is rarely made by government. Instead, it’s largely made by banks lending money.
When banks issue a loan, poof! Money is created.
In most countries, money is rarely made by government. Instead, it’s largely made by banks lending money.
When banks issue a loan, poof! Money is created.
3/ When banks create loans, they create both assets and liabilities. Money is created, backed by a bank’s confidence in a borrower.
Surprised? A recent poll of British law makers found 84% had no idea commercial banks made most of the money in supply.
So, you’re not alone.
Surprised? A recent poll of British law makers found 84% had no idea commercial banks made most of the money in supply.
So, you’re not alone.
4/ You can see why governments shit bricks when banks are in trouble now, right? So when a financial crisis happens, what does government do?
Scrambles to help create more loans.
They lower interest rates, and create bigger loan programs.
Scrambles to help create more loans.
They lower interest rates, and create bigger loan programs.
5/ It doesn’t matter if it’s best for mom and pop go take out more debt. Go do it.
It doesn’t matter if public companies aren’t making more money. They need you to borrow to pay more for stocks.
This increased spending “ideally” drives higher prices and inflation.
It doesn’t matter if public companies aren’t making more money. They need you to borrow to pay more for stocks.
This increased spending “ideally” drives higher prices and inflation.
6/ Which is great, because we need to deflate the real value of household debt. After all, if we inflate away the value of the debt by inflation, it’s real burden is lowered. Sweet!
Sounds like an insane system? Well, that’s because it is.
Now back to Bitcoin.
Sounds like an insane system? Well, that’s because it is.
Now back to Bitcoin.
7/ During the Great Recession, the creator of Bitcoin basically said fuck this bailout system.
I’m creating a stateless currency, that isn’t driven by credit growth, or inflation. You put your money in, and trade the currency for market value.
I’m creating a stateless currency, that isn’t driven by credit growth, or inflation. You put your money in, and trade the currency for market value.
8/ There’s no inflation. Assets are backed solely by trust in a trustless system.
You can’t fraudulently create Bitcoin.
The Central Bank of Bitcoin can’t just make more of it.
Fast forward to the next recession, and what’s happening? A fuck ton of credit is being made.
You can’t fraudulently create Bitcoin.
The Central Bank of Bitcoin can’t just make more of it.
Fast forward to the next recession, and what’s happening? A fuck ton of credit is being made.
9/ As wealth accumulates for rich people so quickly, they have three choices:
- buy inflated stocks
- buy more real estate to keep empty
- buy bonds with negative returns after inflation
- exit the monetary system
A lot of people are opting for the last option.
- buy inflated stocks
- buy more real estate to keep empty
- buy bonds with negative returns after inflation
- exit the monetary system
A lot of people are opting for the last option.
10/ As wealth gets produced faster than the economy can create productivity, more and more rich people have been piling into Bitcoin.
That’s pretty much the multi billion dollar bet.
That’s pretty much the multi billion dollar bet.
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