The Bitcoin Standard | Saifedean Ammous

our final speaker today is someone whom I'm sure many of you are familiar with dr. sayfudine amis he's the best kind of intellectual and academic which is to say an independent one he has taken some time off from his teaching job teaching duties at the American University of Beirut to work on his book which is now considered the seminal work in the area that Bitcoin standard he also teaches his new online courses at his own website sayfudine comm which are really fascinating really interesting we have a small group of us at the Mises Institute that watches him live on Monday mornings he does he does hold advanced degrees from the London School of Economics and from Columbia University he was however able to overcome those infirmities and still develop a sensible worldview dr. sayfudine amis thank you very much Jeff and to everybody at the Mises Institute it was really down to your work in your beautiful website that I managed to overcome these infirmities and it is thanks to this that I have you know recovered intellectually and I'm able to stand on my intellectual feet in front of you at the Mises Institute so thank you so much it's a true honor to be here today I'm not going to actually present my book I'm going to talk about the topic of Bitcoin and Austrian economics and the relationship between them why is it that bitcoiners are so interested in Austrian economics in general obviously far more than the general population is and why is it that I say and so I'm going trying to explain why in my mind I think Austrian economics helps us understand Bitcoin and how also Bitcoin also can help understand Austrian economics why it leads to many people wanting to study Austrian economics once they learn about vidcon I think it's something that is well worth explaining these are my five general categories of explanations of this phenomenon so let's get into them the first one is that bitcoin is free market and non governmental money and you know the the famous quote by Mises quoted in professor salerno's book is that the sound money principle has two aspects affair in approving the markets choice of a commodity used medium of exchange and negative in obstructing the government's propensity to meddle with the currency system and in this regard I think bitcoin is extremely interesting from an Austrian perspective because it functions as a medium of exchange and it has acquired that role without any government having forced it it nobody has forced its acceptance as money and yet this has acquired that role of a medium of exchange and it has acquired economic value on the market the value of Bitcoin has never been imposed by any authority violently it has been won on the market and it has been trading freely on a market for ten years which i think is amazing and it's amazing because it's not government approved money nobody asked government's opinion for it to function and yet it operates it works so it's a slap in the face of the state theory of money so that should make Austrians happy not that it needs any more slaps because it's had its fair share of them but to also borrow from professor sellers distinction bitcoin is firmly in the tradition of Torgo as money it's not John law money it's not money as an instrument of law as an instrument of government as an instrument of policy it's money as a natural emergent institution market institution that emerges through peaceful cooperation it's a good that emerges on the market that all others now the question of is it money is Bitcoin money I like this definition from man economy and state by Rothbard where he says the concept of a medium of exchange is a precise one but the concept of money is not it's it's less precise the point at which you could call a medium of exchange into the common or general medium of exchange and therefore define it as money is rather subjective and from and down to judgment of the historian so in this regard in the you know bitcoin is not the most used money in the world by far however it is already more it's it's worth more in terms of the value that it holds then many of the national currencies around the world so it's all you know it's it's it's more of a money or it's more it's got more volume as money than most national currencies out there in only 10 years so the other interesting thing about it as a free-market institution is that it is the only working alternative to government central banks and their monopoly over international money transfer I think this is from a just purely functional perspective it's truly amazing because there's no way that you can send money across international borders up until the year 2009 there was no way you could do this except through going through the central bank's monopoly and in particular through the correspondence banks which are which is a highly lucrative monopoly in every country you know the central bank allocating to a few banks the privilege of being able to send and receive money abroad is highly lucrative and it's a monopoly that only Bitcoin breaks only Bitcoin has succeeded at breaking so this is quite amazing because now finally we have a free market way of having money across the world and it's you know the interesting thing then once you see that this thing is possible that it's possible to send money from the u.s. to China without having to resort to any of the political and legal institutions that exist in the US or China then it becomes possible for people to really see that 3 market money as possible and that's when the march down the Bitcoin rabbit down the Austrian economics rabbit hole starts to happen because the next question is well how is free market money different from government money and you know the only coherent answer to these explanations can come from Austrian business cycle theory which will tell you it's effectively economic crises in inflation and unemployment are not you know just the product of how capital markets function they're the products of the intervention in capital markets through central planning and manipulation by central banks and that if you had a free market monetary system then you wouldn't get these kinds of failures happening so this is the first one the second one is the fact that Bitcoin continues to operate in spite of having the committed the cardinal sin of having a fixed money supply the Bitcoin money supply can't be increased nobody has found a way of making more than 21 million bitcoins and yet it works so really the only version of the universe the in which this works is really Austrian economics because all the other scores of economics have all their various reasons for why the money supply needs to grow at all time so bitcoin refutes that inflation is tenant of modern economics which is almost taken for granted amongst most economists and the interesting thing about it is that you know it's not just a living challenge it's it's mathematical almost we've seen Bitcoin if you look at the growth in bitcoins supply over the last five years it grew the sub number of bitcoins in circulation has grown by about 32% the value of the daily transactions carried out in Bitcoin in those five years is grown by about two thousand five hundred percent in the same term so that you know the the fact that bitcoins growth has not kept up with the value or the real market value or the real size of the Bitcoin economy has been no impediment bitcoin has just appreciated and it has not needed at the supply rate to increase so people who believe in inflation distinct that the money that the supply needs to continue to increase need to really ask why what need to now answer the question of what supply growth is necessary what is insufficient why should you know should it be 2% as some people have suggested but there's very little evidence as to why and how you know what happens when Bitcoin goes under 2% does that mean the Bitcoin stops working 5% 10% is the size of the growth in the money supply does it have to be proportional to economic activity to the number of people and why can't it be zero these are all very difficult questions for people to answer if they are not armed with Austrian economics and that's why they come to Austrian economics when they find out about Bitcoin basically you know I think it's it's quite amazing that so far we've not seen a single inflation as economists present a coherent theory or a coherent prediction about why the limitation the the limited supply of Bitcoin is a problem with Bitcoin it would really be interesting to see you know somebody present that if the group the growth the supply growth rate of Bitcoin is declining it's around 4% so she's going to drop below 1% and head towards zero so it would really be great if any of those people who tell us that money supply growth is necessary could actually formulate a point at which they'll tell us you know at this point Bitcoin stops working because the supply growth is too slow we've not seen anybody come up with an explanation if you know anyone please let them volunteer it I'd really be interested the third topic I find interesting is time preference Austrian economists seem to be the only ones who focus on the importance of time preference and I think you know the impact of the move towards easy money and how that has affected individual and societal time preference is something that you would only really read about in the work of Austrian economists like Professor Holtzman or professor Hopper and you know the impact of time preference on decision making and the importance of course in Austrian economics of time preferences it is unrivaled and it's not really analyzed and we see this the interesting thing about bitcoiners and over time is because bitcoin has appreciated so much people who have started getting into it have realized have started to really learn what opportunity cost means just somebody just today you know as if to prepare me for this talk somebody tweeted something that I just saw saying a hangover is Satoshi's way of reminding you that you could have been buying Bitcoin instead with the money that you spent on alcohol and it's you know it's something that for people our generation it's something that we've never had like the concept of saving doesn't really exist when you're young it doesn't make sense to save because money loses value over time and you don't know how to invest in the stock market so the culture of saving particularly among young people in our generation isn't very common these days I'm sure them this is not news for anybody here but Bitcoin changes this quite drastically and it leads to a lot of people beginning to think much more about the future and I think honestly the the reason the the the the number of people that mention this that I've mentioned to me personally and then say it online cannot really be a coincidence it's it really forces a shift in the way that you think about things because when you have access to hard money it makes it easier to plan for the future it makes it easier to hold on to value for the future and that makes it more rational to plan for the future more successful more likely to be successful to be planning for the future so people will start thinking more and more of the future if they have more reliable methods for saving to get to it and I think that's effectively what bitcoin is doing and forth you know ending the Fed this I think is another reason that bitcoin is an Austrian economist see eye to eye in many ways bitcoin is essentially actionable practical practical individual and then a political way of ending the Fed one individual at a time and so you know it's no matter how much you think bitcoin is bad it's still non-governmental money and the more you use it and the more or less you use government money the less you're financing government and you're allowing government to finance itself from this so this kind of motivation you find it's quite common amongst people who read Austrian economics you know ending the war defunding the Fed for ending the Fed of course anyone who's familiar with the work of Ron Paul knows how important this was as an issue for him and many other people associated with Austrian economics and it also is quite strong of a motivation among many bitcoiners many people see it as this new motivation of just taking money out of the hands of the government and bitcoin offers is a new technological way of doing it which i think is quite interesting so finally bitcoin has exemplary haters you know if I haven't sold you on Bitcoin yet just just remember all the people who hate them you know the Fiat government's obviously they hate them because it would be a shame if somebody were to take away their printing presses right and fiat economists like Krugman and Roubini obviously they also hate Bitcoin because they are employed by governments that tell them to tell the world about how the importance of government money and the importance of monetary policy and the importance of hiring more and more economists in your central bank and listening to the IMF and listening to all the chief economists from the IMF all that army of economists that they send all over the world to tell you how to centrally plan your economy you know all of that army is financed essentially with government money in credit nobody actually would pay for the services of you know IMF economists like Ruby need to go and destroy their country voluntarily the U they pay for those things because the IMF walks in with a loan of freshly printed fiat money that they get from the credit line from the US Federal Reserve and so it would also be a shame if Bitcoin were to put these people out of a business wouldn't you say and of course you know monopoly banks that have a monopoly over correspondence banking and this is one very important monopoly through and in today's economic activity and it's it's it's something that Bitcoin disrupts it's allowed us to have this instead of having to rely on this old financial political behemoth monopoly you just rely on open source software that nobody can control nobody can manage and it's a truly through the amazing thing and you know a lot of people who can be skeptical about well software you know you can always acts oft where but pretty much most of the critical things that we do in our life from the grid to flying airplanes today they all run on well not all but the majority of them probably run on open source software it's the most reliable thing because it's you know open source software means anyone can check it online and so if anyone finds a mistake in it they can report it and so this means people are constantly verifying it and constantly checking it and constantly revising it and effectively this is what bitcoin is becoming it's just becoming a fixed protocol for exchanging value without politics and that really makes it quite interesting thank you very much for everything one final announcement my website as Professor diced has mentioned sayfudine calm and in the academy section i've already offered two classes and I'm going to begin offering the next class now I'm going to start principles of economics class on based on Murray Rothbard man economy and state and basically the business model of my website is to teach Austrian economics to bid and so there's a lot of them are becoming interested in it because of Bitcoin because of all the reasons that I mentioned and so if you know if you don't believe me well you know I'm I believe myself enough to set up the website at least so check it out and of course let me know what you think of the syllabus obviously if you have any feedback about it I would appreciate it thank you very much [Applause]

Channel: misesmedia

Views: 35,697

Keywords: Bitcoin Standard, Bitcoin, crypto, cryptocurrency, Saifedean Ammous, Libertarian, Mises, Money, Rothbard, conference, lecture, scholar, currency, digital, freedom, government, state, anarchy, privacy, liberty, peace, strategy

Id: nkNhSPxFsnY

Length: 16min 5sec (965 seconds)

Published: Tue Oct 01 2019

Reddit Comments

[u/Mengerite]

Thanks for this. I love the M.I. and S.A.

Every time someone sells a dollar for a BTC, they are expressing their Austrian values. Not just in words (they may have never heard of it), but with action.

Exclude short term traders from the above statement of course, but everyday, the Austrians are proven more correct while the Keynesians and MMTers are proven wrong.

When given the freedom to choose, people want hard money. Only force can compel them to accept soft money. What excites me about BTC is we finally have a hard money they can’t shut down (not completely). Menger and his line of thinkers will be proven right. The harder the government tries to crack down, the more Austrians are proven right.

[u/bbqpitfailer]

Interesting stuff. Just bought his book on bitcoin.

[u/chilidawger]

But we love Keynesian economics! Jk. Ron Paul for life

[u/walloon5]

This is so great, good for people to hear more about.

Nice to see the alignment of bitcoiners and Austrian Economics

[u/Tiny_Frog]

Thank you for the heads up. :)

IMHO a very good listen - and I got his book also.

[u/hiroo717]

This is a great thought-provoking talk. Thanks for posting. I am interested as I like Peercoin too because it brought us Proof-of-Stake but it has an inflationary model and this seems to question whether that approach is necessary or even desirable at all.

[u/YamadaDesigns]

What do you think about modern monetary theory?