Bitcoin and the Tyranny of Time Scarcity (Part 6)
Economics is the art of cooperation and competition aimed at conquering scarcity.
Hard Money Renaissance
Against this usurpation of our individual sovereignty by government, we find hope in the emergence of a modern innovation called the internet — the universal exchange engine for knowledge. The internet has already democratized and disintermediated many aspects of our lives — from lodging and transportation, to media distribution and commerce. Compositionally, the internet is a set of open-source protocols (known as the internet protocol suite) for permissionlessly moving information worldwide in an instant. Constructed in a free market manner, through years of cooperation and standardization efforts, the internet is the greatest knowledge network in history. Today, we all benefit from this readily-accessible library of human knowledge:
As Milton Friedman so aptly pointed out in 1999, about ten years before the invention of Bitcoin, the one thing the internet lacked was a secure, private “e-cash”:
“The one thing that’s missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B, without A knowing B or B knowing A.”
Friedman’s prescience proved astonishingly accurate. Coming into the 21st century, we had two key inceptors for digital hard money: gold, the ancient and prevailing monetary sovereignty layer (representing an unmanipulable money supply), and the internet, the ultimate engine of exchange (representing global interconnectivity or liquidity). By combining and building upon the economic properties of both, Bitcoin is a momentous monetary innovation that has achieved the divisibility, portability, durability, and recognizability of pure information infused with the absolute scarcity of time. As the internet gives us freedom to express and absorb ideas without obstruction, Bitcoin gives us the freedom to express and receive value in a hard money that cannot be stopped. In this sense, Bitcoin is the latest evolutionary layer of the internet protocol suite; a quantum leap over the monetary “Nash Equilibrium” gold represented.
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Historically, gold has become more difficult to extract with the passage of time due to chemistry, physical rarity, and game theory. Gold is the ancient anchor to the prime economic reality of time scarcity, precisely why it remains the prime money of modernity. Time is the most objective measure for our intersubjective (opinion-based) valuations, as it is the one unarguable aspect of existence. In a society run on hard money, price levels naturally decline over time as our productivity grows in tandem with the division of labor. Put another way, hard money tends to appreciate over time as human knowledge becomes more specialized. In this way, increases in the value of hard money reflect how far humanity has liberated itself from time scarcity.
In Part 7, we will dive into the liquidity characteristics of time and information…
Thank you for reading Bitcoin and the Tyranny of Time Scarcity (Part 6).
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“History is a set of lies agreed upon.”
-Napoleon Bonaparte