Economics

Bitcoin

Fix the money, fix the world.

Bitcoin is the first digital asset with genuine, mathematically enforced scarcity. It is sound money for the internet age — the separation of money and state.

The Problem Bitcoin Solves

Gold is excellent money. It is scarce, durable, divisible, portable, fungible. It served humanity well for millennia.

Its one critical weakness: you cannot transmit it digitally. You cannot send gold over the internet. Physical gold moves slowly, is expensive to verify, and can be seized at borders or from vaults.

This weakness allowed governments to replace gold with paper certificates, then quietly sever the link between certificate and gold (Fiat Currency). By the time people noticed, the fraud was complete.

Bitcoin is digital gold — all the monetary properties of gold, plus the portability of information.

The 21 Million Cap

The most important number in monetary history.

There will only ever be 21 million bitcoin. Not because a CEO promised, not because a government decreed, but because the code enforces it — and the code runs on a decentralised network that no single party controls.

This is unprecedented. For the first time in history, a money supply is governed by mathematics rather than by human promises. No central bank. No committee. No emergency authority to “temporarily” expand supply.

Compare to every fiat currency: supply is unlimited, constrained only by the political costs of inflation. Compare to gold: supply grows ~1.5-2% annually as miners add to the stock. Bitcoin: supply growth approaches zero and terminates.

Sound Money Properties

Property	Gold	Bitcoin
Scarce	✅ High stock-to-flow	✅ Fixed cap: 21M
Durable	✅ Doesn’t corrode	✅ Information; cannot decay
Divisible	✅ Melt and divide	✅ 8 decimal places (100M sats per BTC)
Portable	⚠️ Physically heavy	✅ Send anywhere in minutes
Fungible	✅ Pure gold is uniform	✅ Each sat identical
Censorship-resistant	⚠️ Can be seized physically	✅ No one can freeze Bitcoin
Verifiable	⚠️ Requires testing equipment	✅ Cryptographic proof
Self-custody	⚠️ Requires physical security	✅ Twelve words in your head

The Halvings

Every ~4 years, Bitcoin’s block reward — the new bitcoin issued to miners — is cut in half.

2009:  50 BTC per block
2012:  25 BTC per block
2016:  12.5 BTC per block
2020:  6.25 BTC per block
2024:  3.125 BTC per block
...
~2140: 0 BTC per block

This creates a predictable, decelerating issuance schedule. The stock-to-flow ratio increases with each halving. By 2024, Bitcoin’s stock-to-flow exceeds gold’s. By 2028, it exceeds gold’s by a significant margin.

No central bank has ever committed to a policy of reducing the money supply growth rate on a fixed schedule. Bitcoin just does it, automatically, every 210,000 blocks.

Separation of Money and State

This is the deeper significance.

Money has been a government monopoly for centuries — not because the state provides better money, but because controlling money is one of the primary mechanisms of state power:

Print money → fund wars and programs without explicit taxation
Control payment rails → freeze accounts of dissidents
Inflate currency → silently tax savers
Legal tender laws → force acceptance of debased currency

Bitcoin breaks all of these simultaneously. You cannot inflate it. You cannot freeze someone’s Bitcoin without their private keys. There are no payment rails to control. There are no legal tender laws that can make Bitcoin less useful.

This is not a technological curiosity. It is a political event. For the first time since the state monopolised currency, individuals can opt out.

The Austrian Reading

From a praxeological standpoint, Bitcoin is a spontaneous order — no one designed the Bitcoin economy. Satoshi built a protocol; market participants decided it was valuable and acted accordingly.

Mises’ regression theorem holds: money must derive its value from a prior use as a commodity. Bitcoin sceptics cited this as a death blow. In practice, Bitcoin’s earliest users valued it for its properties as a censorship-resistant transfer mechanism — that non-monetary use value bootstrapped its monetary premium. The theorem is satisfied.

Bitcoin’s price is volatile — because it is monetising. An asset transitioning from near-zero monetary premium to global reserve asset will be volatile in the process. This is expected, not a refutation.

The Bottom Line

Every fiat currency ever created has eventually been debased to zero. The average lifespan is measured in decades. Bitcoin has a guaranteed supply cap, a decentralised governance structure no state can compromise, and a growing network effect that increases its utility as each participant joins.

Whether Bitcoin specifically becomes the global monetary standard or merely forces states to compete by constraining their monetary monopoly — either outcome improves the world.

Sound money is a prerequisite for honest economic calculation, protection of savers, and constraint on government power. Bitcoin is the best candidate for sound money the world has ever seen.

November 3, 2024