The Bitcoin Standard – SLO/ENG

When a pseudonymous programmer presented “a new electronic cash system that operates entirely in a peer-to-peer network and eliminates the need for a trusted third party” to a small group of email recipients in 2008, few paid attention. But things have changed. This fledgling autonomous decentralised network now offers, against all odds, sound money and an irresistible and globally accessible alternative to modern central banks. The Bitcoin Standard analyses the historical context of Bitcoin’s rise, the economic characteristics that have enabled its rapid growth, and its likely economic, political and social consequences.

Economic theory

While bitcoin is a new invention of the digital age, it solves a problem as old as human society: the transmission of value across space and time. In The Bitcoin Standard, Ammous takes the reader on a fascinating journey through the history of the technologies that have served the function of money: from primitive trading systems with stones and shells to metals, coins, the gold standard and modern sovereign debt. Exploring the reasons that have enabled these technologies to take on a monetary role gives the reader a good idea of the properties of sound money and lays the foundations for an economic debate on its effects on individual and societal future orientation, capital accumulation, trade, peace, culture and the arts. Ammous shows how it is no coincidence that the greatest achievements of mankind are the product of societies that have sought the benefits of reliable monetary arrangements, and how it is no coincidence that monetary collapse has usually been accompanied by the collapse of civilisation.

Bitcoin

Having established this background, The Bitcoin Standard goes on to explain how bitcoin works in a functional and intuitive way. It is a decentralised and distributed piece of software that converts electricity and computing power into indisputably accurate records, allowing its users to use the internet to perform traditional money functions without having to trust or rely on any authority or infrastructure in the physical world. Bitcoin can best be described as the first successfully implemented form of digital cash and hard money. Relying on an automated and fully predictable monetary policy and offering the ability to make large-value final settlements worldwide in minutes, its competitive advantage may lie precisely in its roles as a store of value and a network for the final settlement of large payments – as a digital form of gold with an embedded settlement infrastructure.

Ammous’s unquestionable understanding of the technological possibilities and historical realities of monetary development make the exploration of the effects of the use of voluntary free-market money irresistibly compelling. Bitcoin challenges the most sacrosanct monopoly of state power, giving individuals back their independence and offering the tantalising prospect of a world in which money is completely removed from politics and its flow is unhindered by national borders.

The final chapter of the book explores some of the most common questions about bitcoin: Is mining bitcoins a waste of energy? Is bitcoin for criminals? Who controls bitcoin and can they change it arbitrarily? How can bitcoin be killed? And how do we explain the thousands of bitcoin copycats and the many alleged uses of bitcoin’s “blockchain technology”? The Bitcoin standard is a key resource for a clear understanding of the rise of an internet-based decentralised, apolitical and free-market alternative to national central banks.