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Issue #489: Bitcoin and base money

Issue #489: Bitcoin and base money

May 22, 2019
Marty's Ƀent

Issue #489: Bitcoin and base money

Here's an incredible thread from our friends Matthew Mezinskis and Fernando Ulrich from the Crypto Voices podcast. In it, they walk us through their calculations of the monetary base of the world and illustrate where Bitcoin finds itself within the pack of base monies.

As they point out at the beginning of their thread, it is important to delineate between M0 and M1/M2/M3 money supplies because M1/M2/M3 include claims on base money, which distorts the end calculation. When we talk about M0 base money, we are referring to physically hard money like gold and silver as well as bank reserves (digital USD, JPY, CHN, etc.) controlled by Central Banks and accessible to the banking system via the central banks' windows. This is the type of money that Bitcoin is competing with.

If we are to benchmark Bitcoin's relative success against other currencies, it is imperative that we choose the correct barometer. Luckily for us, the boys from Crypto Voices have taken a deep dive and done all of the grunt work and laid all of this information out beautifully in the linked thread. As it stands today, Bitcoin is ranked 12th in the world in terms of supply denominated in USD. If we exclude gold and silver from these calculations, Bitcoin moves up to #10. Extremely promising for a 10-year old alien technology if you ask Uncle Marty.

This thread is a 50-tweet banger filled with dense information about the world's money, how much the supply has grown in modern times, projected growth going forward, and how Bitcoin presents a true scarcity of a monetary good that has never existed before on this planet. If you have time to crawl through it this morning or afternoon, I highly recommend you do so. And peep the Crypto Voices podcast if you want to up your Macroeconomics game while learning more about Bitcoin. Matthew and Fernando do incredible work.

I disagree

"When individuals can conduct their own monetary policies over the [Web] it will matter less or not at all that the state continues to control the industrial-era printing presses. Their importance for controlling the world's wealth will be transcended by mathematical algorithms." - The Sovereign Individual

Bitcoin is an inherently anti-state, anti-central banking, and anti-authority tool that enables people to transact when states, central banks or other types of authority figures don't want them to transact. These principles are embedded in Bitcoin's DNA. No one needs to ask permission to join and no one person or entity dictates how the protocol evolves. Bitcoin represents a reversion to sanity in a world that has been bastardized by Central Bank money printing, the centralization of power by the state, and a move towards collectivism which is tearing at the fabric of society.

These principles are very foundational to Bitcoin. Without them, it would not be worth making it a thing in the first place.

Final thought...

One time, when I was in the 5th grade, I had a teacher named Ms. Falkenstein who loves to water ski. She talked about water skiing way too much.


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