The Bitcoin Standard: The Decentralized Alternative to Central Banking
The book describes a bitcoin standard. The currency has a structure that resembles hard money; bitcoin has a built-in system that can adjust its supply. Because of its internal controls, it can sustain long-term economic growth for individuals and enforce limited government.
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A Theory of the Bitcoin Standard
The basis of Mr Ammous’s approach is that currencies with the element of scarcity become the more robust exchange units over long periods of usage. Scarcity is a product of the difficulty of the production of the currency. Traditional hard currencies had scarce resources as their foundation.
Gold was among the rarest and most challenging things to produce, and it served as a basis for currency form many centuries. A low supply growth rate causes strength in a currency. It does not devalue by rapid growth. Bitcoin has these qualities, and it is like a traditional hard currency.
Bitcoin Does not Respond to Demand
When the demand for Bitcoin rises, it does not incentivize increased production. Bitcoin supply is fixed and has a terminal limit. The internal difficulty adjustment is the key. As demand increases, the supply slows by adding difficulty to the mining process. The complexity slows the system and causes increased costs for production.
Stronger than Fiat Currency
Bitcoin, as a monetary standard, offers a more secure path forward than other forms of money. Mr Ammous argues that Bitcoin is a remedy for inflation that erodes value. Governments can use inflation to finance their operations. Bitcoin is good for a store of value. It is the first truly scarce liquid asset. Bitcoin offers protection against government confiscation of wealth. It is a form of monetary sovereignty.
Advantages of the Alternative Standard
Central banks still operate as if on the traditional gold standard. Bitcoin offers a new monetary standard. The below-listed items describe some of the advantages of a Bitcoin standard.
- A free-market digital alternative for sending value around the world.
- Bitcoin offers individual financial sovereignty
- Off-chain transactions can increase without new technology.
- There will only be 21 Billion of the currency, and there will be no more.
Reading and research are excellent ways to increase knowledge about cryptocurrency, and crypto books can focus attention on cryptocurrency and the global economy. Unique among crypto books, Mr Ammous’s work has added a set of insights into bitcoin and its potential to become an international standard. Koinal offers a seamless purchasing system for entering or expanding your participation in bitcoin and other currencies. Koinal works with bank credit and debit cards for fast and secure transactions.