What are the consequences of Bitcoin?

The world is at a great crossroads. The economy is accelerating towards a comprehensive collapse due to the current economic crises and geopolitical tensions. After the Great Recession of 2008 and the recent stagnation of economic activity caused by the covid-19 pandemic, the global government has plunged the economy into a period of decline. As narrow-minded state economists and politicians dealt with both crises in the Keynesian style of expanding the money supply, we the people received accelerated price rises and a fall in living standards for the middle and lower classes of the population in return for short-term compensation from the public purse. On the other hand, large companies and corporations, especially in the financial and healthcare sectors, have received huge amounts of capital and low-interest loans at taxpayers’ expense. This has allowed them to expand their business and buy out competitors, as well as strengthen their lobbying position. This has led to increased differences between the classes and, as a result, increased economic inequality. The poor became poorer and the rich became richer. Where will the current economic trajectory take us?

DEMONETISATION OF GOODS

As we have already discussed in this essay, the main problem of modern society is the monopolisation of the money market under state power. It allows the unlimited expansion of money in the economy and the allocation of new units of money to politically connected elites. All that increasing the money supply in society achieves is a redistribution of wealth from savers to borrowers and owners of scarce goods. In a world of unreliable and easy money, those who profit most are those who borrow money to buy scarce commodities such as real estate, company shares, precious metals, property and, most recently, bitcoin.

As the quantity of money increases, the price of scarce goods rises, as their supply is much lower than that of easy money, and the demand for them increases year by year as people start to use them as store of value, thereby gaining a so-called monetary premium. The monetary premium is a term for the added value we attach to a good over and above its industrial value, because in addition to its intended role, the good also partly fulfils the role of money in terms of storing our purchasing power. Real estate has been a fine example of a monetary premium on goods over the years, as people have started to buy it as an investment to improve their wealth and earn a return in the form of rents. The price of real estate is rising rapidly due to the growing investment demand from people who have a surplus of easy money and want to invest it in something that preserves its purchasing power better than a savings account.

The problem with a monetary premium on goods is that it artificially increases their market price and prevents those who need them most from buying them. Individuals who want to buy a property to live in have to pay an extra premium, which often requires taking out loans and paying interest that puts people in debt for life. There is only one solution to this problem: to find a reliable means of money that preserves the purchasing power of savers and destroys the need to monetise commodities. This is where our understanding of bitcoin as the best store of value we humans have ever had comes into play. Bitcoin’s money supply is strictly limited, which means that in the long run it has no inflation and thus does not eat into savers’ purchasing power. In 2024, its annual supply will grow by less than 1%, making it the lowest inflation commodity in the economy and making bitcoin the most reliable store of value.

The first consequence of bitcoin adoption is therefore the erosion of the monetary premium of commodities, as individuals will start to convert their investment assets into bitcoin, whose value will rise faster in the market than that of other commodities. The reason for this lies in bitcoin’s economic characteristics, as it is a commodity with a strictly limited amount of units that can be sent through communication channels, and its marketability is increasing day by day. Buying a property is very risky because it is subject to several external factors such as regulation, a falling property market, very limited divisibility into smaller units, taxation, changes in political regimes and extremely slow sales. If we want to sell a property, we need to find a buyer who is willing to pay a huge amount of money to buy it. But the marketability of bitcoin is much higher, as there are countless individuals on the exchange who are willing to buy a piece of our bitcoin assets within minutes.

Bitcoin thus devalues monetised goods to the point where their market value correctly reflects their actual role. This means that goods will become increasingly cheaper for bitcoin savers, thus reducing economic inequality significantly, along with poverty levels. This will make the world much more like the gold standard era, where the middle class held most of the wealth and differences between people were minimised. Bitcoin can compound this, as its economic properties are several orders of magnitude better than gold.

THE RISE OF FREEMASONRY

Another consequence of the shift to sound money is the guarantee of individual sovereignty and freedom, and a reduction in the scope of government. In today’s world, the majority of the population is dependent on the government to “look after” their well-being through benefits, child allowances, state grants, pensions and countless other taxpayer-funded state expenditures. The problem with this type of economic system is the pervasive dependence on the public purse and the declining capacity to save. As the Treasury fails to finance the purchase of scarce goods, while at the same time pushing up their market prices through inflation and bad investments, people are also increasingly dependent on borrowing. In this way, the authorities, through the political apparatus and the financial system, enslave their populations, who pay ever higher taxes, levies and interest on the loans that the banks make on the cheap, without having to hold sufficient deposit reserves.

The authorities can be imagined as a giant parasite, slowly sucking the blood of its host, in return offering it apparent security and empty promises. All the services provided by the public sector are much more efficiently provided by the free market. Ask yourself when the public sector has ever delivered any service perfectly and efficiently. In exchange for free health, education, administrative and other services, we get long queues, poor quality of service, bored professors who chew over the same textbooks without animating their students with up-to-date information and stimulating them to think with their heads, and civil servants who multiply like bacteria on a toilet bowl, their efficiency comparable to that of a washing machine in removing stubborn stains from the laundry detergent.

WHO IS BITCOIN FOR?

Bitcoin is not for everyone. It is especially not for those who have transferred responsibility for their lives to a large extent to the state apparatus and have become dependent on it, like a son in an Oedipal relationship with his mother and in a combative disposition against his father, who is trying to destroy this complex. These people will fight with all their might against money, which will shift responsibility to the individual and reduce the parasitic scope of power. Quitting this kind of addiction will be similar to quitting addictive substances, but a little easier, as bitcoin is accompanied by a steady increase in purchasing power that encourages addicts to get well and allows them to have a better quality of life.

Bitcoin is primarily for those who are already strictly critical of the authorities and understand the consequences of state interference in the economy. It is also for those who have been declared pariahs by the authorities and have had their access to the financial system restricted. Sooner or later, however, bitcoin will be suitable for all those who want to keep even a fraction of the wealth they produce, as rising inflation and taxation will soon seize most of our possessions, while the accelerating rise in the price of easy money units will make it impossible for individuals to buy the basic necessities of life.

Bitcoin is a luxury good in the current Western world, where we have a number of financial and other instruments that allow us to maintain a part of our purchasing power without our standard of living significantly decreasing day by day. Yet our purchasing power is melting like an ice cube, leaving increasing numbers of people living month to month and paycheck to paycheck without saving enough money for a rainy day. But the situation is very different outside the Western world. Inflation is normal, sometimes even desirable, in third world countries, where regimes often fall into hyperinflationary crises, where state money becomes completely debased and serves only as a poor whoring tool. Everyday shopping in the shops is marked by piles of money carried around in bags, with crowds of people crowding outside the store at all hours of the day, as prices can rise and food stocks can be depleted by the end of the day.

In third world countries, bitcoin is not a luxury good, but an escape route from deadly poverty and hunger. As a result, we have seen the legalisation of bitcoin as an official means of payment in the Republic of El Salvador, which experienced a hyper-inflationary collapse of its currency before dollarisation. Salvadorans have very limited access to the financial system, which means that most economic activity is conducted in cash. Even more depressing is the prevailing global situation where almost 2 billion adults are unbanked, which covers about half of the adult population and does not include minors, whose access to the financial system is even more limited. Bitcoin represents the only glimmer of hope for these people to rise from the poverty line through economic activity. It allows individuals to become their own bank simply by installing an app on their mobile phone. They can then immediately start doing business with the developed world without restrictions, censorship or reliance on financial institutions. Time will tell what the long-term consequences of this revolutionary invention are, but in the present we can witness the tectonic changes that bitcoin, with its relatively low market capitalisation, is causing in society.

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