The Bitcoin Standard - Saifedean Ammous

 

Chapter 1 - Money

• Being a medium of exchange is the quintessential function that defines money.
• The price for the convenience of holding money comes in the form of the forgone consumption that could have been had with it, and in the form of the forgone returns that could have been made from investing it.
• Carl Menger, the father of the Austrian school of economics and founder of marginal analysis in economics, came up with an understanding of the key property that leads to a good being adopted freely as money on the market, and that is salability, the ease with which a good can be hold on the market whenever its holder desires, with the least lost in price.
• A good's salability across time refers to its ability to hold value into the future, allowing the holder to store wealth in it, which is the second function of money: store of value.
• The relative difficulty of producing new monetary units determines the hardness of money: money whose supply is hard to increase is known as hard money, while easy money whose supply is amenable to large increases.
• Those who are able to save their wealth in a good store of value are likely to plan for the future more than those who have bad stores of value.
• Wide acceptance of a medium of exchange allows all prices to be expressed in its terms, which allows it to play the third function of money: unit of account.

Chapter 2 - Primitive Moneys

• The word pecuniary is derived from pecus, the Latin word for cattle, while the word salary is derived from sal, the Latin word for salt.

Chapter 3 - Monetary Metals

• The gold standard allowed for unprecedented global accumulation and trade by uniting the majority of the planet's economy on one sound market-based choice of money. Its tragic flaw, however, was that by centralizing the gold in the vault of banks, and later central banks, it made it possible for banks and governments to increase the supply of money beyond the quantity of gold they held, devaluing the money and transferring part of its value from the money's legitimate holders to the governments and banks.
• Investors in the bubble are fleeted (tondu) while producers of the asset benefit.
• For anything to function as a good store of value, it has to beat this trap: it has to appreciate when people demand it as a store of value, but its producers have to be constrained from inflating the supply significantly enough to bring the price down.
• The impossibility of synthesizing gold from other chemicals means that the only way to increase the supply of gold is by mining gold from the earth, an expensive, toxic, and uncertain process in which humans have been engaged for thousands of years with ever-diminishing returns.
• The Roman habit of "coin clipping" (coupure, rognure) wherein the Emperor would collect the coins of the population and mint them into newer coins with less gold or silver content.
• As taxes increased and inflation made price controls unworkable, the urbanites of the cities started fleeing to empty plots of land where they could at least have a chance of living in self-sufficiency, where their lack of income spared them to pay taxes.
• Taxation and inflation had destroyed the wealth and savings of the people of Europe.
• It all began in Florence in 1252, when the city minted the florin, the first major European sound coinage since Julius Caesar's aureus.
• Whether in Rome, Constantinople, Florence or Venice, history shows that a sound monetary standard is a necessary prerequisite for human flourishing, without which society stands on the precipice of barbarism and destruction.
• History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours.
• Economists like Menger focused their understanding of money's soundness on its salability as a market good, whereas twentieth-century sound money economists like Mises, Hayek, Rothbard, and Salerno, focused their analysis of money's soundness on its resistance to control by a sovereign.
• The British pound was defined as 7.3 grams of gold, while the French franc was 0.29 grams of gold and the Deutschmark 036 grams, meaning the exchange rate between them was necessarily fixed at 25.2 French francs and 20.4 Deutschmark per pound.

Chapter 4 - Government money

• The common name for government money is fiat money, from the Latin word for decree, order, or authorization.
• The first major treaty of the century of monetary nationalism was the 1922 Treaty of Genoa. Under the terms of this treaty, the U.S. dollar and the British pound were to be considered reserve currencies similar to gold in their position in other countries' reserves.
• There would have probably been a recessionary crash, after which the economy would have recovered on a sound monetary basis.
• President Roosevelt issued an executive order banning the private ownership of gold, forcing Americans to sell their gold to the U.S. Treasury at a rate of $20.67 per ounce.
• As governments controlled money, they controlled most economic, political, cultural, and educational activity.
• Savings reduces spending and because spending is all that matters, government must do all it can to deter its citizens from saving.
• The conclusion obvious to anyone with a basic understanding of money and economics is that the cause of the Great Crash of 1929 was the diversion away from the gold standard in the post-WW1 years, and that the deepening of the Depression was caused by government control and socialization of the economy in the Hoover and FDR years.
• Currency manipulation emerged as a tool of trade policy, with countries seeking to devalue their currencies in order to give their exporters an advantage.
• Whereas the American people were still prohibited from owning gold, the U.S. government promised to redeem dollars in gold to other countries's central bank at a fixed rate, opening to what was known as the gold exchange window.
• In essence, Bretton Wood attempted to achieve through central planning what the international gold standard of the nineteenth century had achieved spontaneously.
• An important, but often overlooked, aspect of the Bretton Woods system was that most of the member countries had moved large amounts of their gold reserves to the United States and receive dollars in exchange, at a rate of $35 per ounce.
• French economist Jacques Reuff coined the phrase "deficit without tears" to describe the new economic reality that the United States inhabited, where it could purchase whatever it wanted from the world and finance it through debt monetized by inflating the currency that the entire world used.
• The second problem was that she countries started trying to repatriate their gold reserves from the United States as they started to recognize the diminishing purchasing power of their paper money. French President Charles de Gaulle even sent a French military carrier to New York to get his nation's gold back, but when the Germans attempted to repatriate their gold, the United States had decided it had had enough. Gold reserves were running low, and on August 15, 1971, President Richard Nixon announced the end of dollar convertibility to gold, thus letting the gold price float in the market freely. In effect, the United States had defaulted on its commitment to redeem its dollars in gold.
• The total U.S. M2 measure of the money supply in 1971 was around $600 billion, while today it is in excess of $12 trillion, growing at an average annual rate of 6,7%. Correspondingly, in 1971, 1 ounce of gold was worth $35, and today it is worth more than $1,200.
• Because banks create money when they issue loans, the repayment of loans or the bankruptcy of the borrower leads to a reduction in the money supply.
• The constantly increasing supply means a continuous devaluation of the currency, expropriating the wealth of the holders to benefit those who print the currency, and those who receive it earliest.
• Government control of money has turned money from being the reward for producing value to the reward for obedience to government officials.
• The term "sound money" as the money that is chosen by the market freely and the money completely under the control of the person who earned it legitimately on the free market and not any other third party.
• In its infancy, bitcoin already appears to satisfy all the requirements of Menger, Mises, and Hayek: it is a high scalable free-market option that is resistant to government meddling.

Chapter 5 - Money and Time Preference

• This is the essence of investment: as humans delay immediate gratification, they invest their time and resources in the production of capital goods which will make production more sophisticated or technologically advanced and extend it over a longer time-horizon.
• The sobering (sombre) reality to keep in mind is that a man's lot in life will be largely determined by these trades between him and his future self. As much as he'd like to blame the others for his failures, or credit others with his success, the infinite trades he took with himself are likely to be more significant than any outside circumstances or conditions.
• The more that a monetary medium restrains this drive for its creation, the better it is as a medium of exchange and stable store of value.
• Any quantity of economic transactions could be supported by a money supply as long as the units are divisible enough.
• People begin to reduce their time preference and can focus on improving non-material aspects of their life, including spiritual, social, and cultural endeavors.
• Humans have for centuries failed to produce a form of money more sound than gold, and that is why it has been the prime monetary instrument used by most human civilizations throughout history.
• An investment would be expected to have significant appreciation potential, but also carry a significant risk of loss of depreciation. Investment is a reward for taking risk, but sound money, having the least risk, offers no reward.

The price of a barrel of oil has been relatively constant in terms of gold since 1971, while increasing by several orders of magnitude in terms of government money

• Whereas 100 years ago most people would pay for their house, education, or marriage from their own labor or accumulated savings, such a notion seems ridiculous today.
• When money was nationalized, it was placed under the command of politicians who operate over short time-horizons of a few years, trying their best to get reelected. It was only natural that such a process would lead to short-term decision making where politicians abuse the currency to fund their reelection campaigns at the expense of future generations.
• It is no coincidence that Florentine and Venetian artists were the leaders of the Renaissance, as these were the two cities which led Europe in the adoption of sound money.

Chapter 6 - The Capitalism Information System

• "The cause of waves of unemployment is not "capitalism" but governments denying enterprise the right to produce good money" - Friedrich Hayek
• "The use of knowledge in Society" - Friedrich Hayek.
• Economic knowledge of the conditions of production, the relative abundance of the factors of production, and the preference of individuals, is not objective knowledge that can be fully known to a single entity. Rather, the knowledge of economic conditions is by its very nature distributed and situated with the people concerned by their individual decisions.
• Prices are not simply a tool to allow capitalists to profit; they are the information system of economic production, communicating knowledge across the world and coordinating the complex processes of production.
• "Those who confuse entrepreneurship and management close their eyes to the economic problem...The capitalist system is not a managerial system; it's an entrepreneurial system" Ludwig von Mises.
• A fundamental fact to understand about the modern financial system is that banks create money whenever they engage in lending.
• Scarcity is the fundamental starting point of all economics, and its mots important implication is the notion that everything has an opportunity cost. In the capital market, the opportunity cost of capital is forgone (se priver) consumption, and the opportunity cots of consumption is forgone capital investment.
• Central banks are generally trying to spur (inciter) economic growth and investment and to increase consumption, so they tend to increase the money supply and lower the interest rate, resulting in a large quantity of loanable funds than savings.
• Creating new pieces of paper and digital entries to paper over the deficiency in savings does not magically increase society's physical capital stock; it only devalues the existing money supply and distorts prices.
• The business cycle is the natural result of the manipulation of the interest rate distorting the market for capital by making investors imagine they can attain more capital than is available with the unsound money they have been given by the banks.
• A capitalist system cannot function without a free market in capital, where the price of capital emerges through the interaction of supply and demand and the decisions of capitalists are driven by accurate price signals.
• The money supply expanded by 68,1% over the period of 1921-29 while the gold stock only expanded by 15%. It is this increase of the dollar stock, beyond the stock of gold, which is the root cause of the Great Depression.
• As Hayek put it: "The cause of waves of unemployment is not "capitalism" but governments denying enterprise the right to produce good money".
• The abandonment of the gold standard in 1914 through the suspension and limitation of exchanging paper money for gold by most governments began the period Hayek named monetary nationalism.
• More and more people work in speculating on the actions of central banks, national governments, and currency movement.
• The combination of floating exchange rates and Keynesian ideology has given our world the entirely modern phenomenon of currency wars: because Keynesian analysis says that the increasing exports leads to an increase in GDP, and GDP is the holy grail of economic well-being, it thus follows, in the mind of Keyneysians, that anything that boosts exports is good. Because a devaluated currency makes exports cheaper, any country facing an economic slowdown can boost its GDP and employment by devaluating its currency and increasing its exports.
• It is counterproductive for the countries importing from them to think they can boost their exports by simply devaluating the currency.
• Hard money, by taking the question of supply out of the hands of governments and their economic-propagandists, would force everyone to be productive to society instead of seeking to get rich through the fool's errand of monetary manipulation.

Chapter 7 - Sound Money and Individual Freedom

• For those of us alive today, raised on the propaganda of the omnipotent governments of the twentieth century, it is often hard to imagine a world in which individual freedom and responsibility superset government authority.
• There are today two main government-approved mainstream schools of economic thought: Keynesians and Monetarists.
• They both agree on two unquestionable truths: first, the government has to expand the money supply.
• "We're all Keynesians now"
• When the alternative to spending money is witnessing your savings lose value over time, you might as as well enjoy spending it before it loses its value.
• The Austrian theory of money posits that money emerges in a market as the most marketable commodity and most salable asset, the one asset whose holders can sell with the most ease, in favorable conditions. An asset that holds its value is preferable to an asset that loses value, and savers who want to choose a medium of exchange will gravitate toward assets that hold value over time as monetary assets.
• For Mises, the absence of control by government is a necessary condition for the soundness of money, seeing as government will have the temptation to debase its money whenever it begins to accrue wealth as avers invest in it.
• The services which money renders can be neither improved nor impaired by changing the supply of money.
• When the value of money appreciates, people are likely to be far more discerning with their consumption and to save far more of their income for their future.
• It was no coincidence that the era of central bank-controlled money was inaugurated with the First World War in human history.
• When communities use different kinds of unsound money, trade becomes more complicated, as prices vary along with the variation in the value of the currencies, making the terms of trade unpredictable, and making it often counterproductive to plan economic activity across borders.
• Governments had to keep a balanced budget by always keeping consumption within the limits of earnings from taxation.
• Commodity acquiring a monetary role would incentivize people to produce more of that commodity.
• For John Maynard Keynes and Milton Friedman, one of the main attractions of moving away from the gold standard was the reduction in the costs of gold mining that would ensue from switching to government-issued paper money, whose cost of production is far more lower than that of gold.
• There can be no profit in a free market without the risk of loss, and everyone is forced to have skin in the game: failure is always a real possibility, and can be costly.
• As fiat money has slowly eroded society's ability to save, capital investments no longer come from savers' savings, but from government-created debt, which devalues existing money holdings.
• Maturity mismatching, or fractional reserve banking as a special case of it, is always liable to a liquidity crisis if lenders and depositors were to demand their deposits at the same time.
• Banking as evolved into a business that generates returns without risks to bankers and simultaneously creates risks without returns for everyone else.
• No other ostensibly private industry enjoys such an exorbitant privilege, combining the highest rates of profitability in the private sector with the protection of the public sector.
• If the stress of your job centers purely on pleasing your boss rather than producing something of value, and are not happy with this reality, you may be relieved of frightened to realize the world doesn't have to be this way, and your job may not survive forever, as your government's printing press might not continue working forever. Read on, because the virtues of sound money may inspire a new world of opportunity for you.

Chapter 8 - Digital Money

• The monetary properties of bitcoin as well as the economic performance of the network since its inception.
• Bitcoin was the first engineering solution that allowed for digital payments without to rely on a trusted third-party intermediary.
• Bitcoin is the first example of digital cash.
• Of the most persistent characteristics of money historically are fungibility (any unit money is equivalent to any other unit), and liquidity (ability of the owner to sell quickly at market price).
• It became increasingly impractical to accumulate capital and wealth without the permission of the government issuing that money.
• Satoshi Nakamoto's motivation for bitcoin was to create a "purely peer-to-peer form of electronic cash"
• A distributed peer-to-peer network with no single point of failure, hashing, digital signatures, and proof-of-work.
• Every transaction has to be recorded by every member of the network so that they all share one common ledger of balances and transactions.
• Whereas in a modern central bank the new money created goes to finance lending and government spending, in bitcoin the new money goes only to those who spend resources on updating the ledger.
• Difficulty adjustment is the most reliable technology for making hard money and preventing the stock-to-flow ratio from declining, and it makes bitcoin fundamentally different from every other money.
• Bitcoin is the hardest money ever invented: growth in its value cannot possibly increase its supply; it can only make the network more secure and immune to attack.
• Gold became the prime money of every civilized society precisely because it was the hardest to produce, but bitcoin's difficulty adjustment makes it even harder to produce.
• The security of the bitcoin lies in the asymmetry between the cost of solving the proof-of-work necessary to commit a transaction to the ledger and the cost of verifying its validity.
• Bitcoin members of the network would broadcast their transaction to all network members, who would verify that the sender has the balance necessary for the transaction, and credit to the recipient.
• Bitcoin's supply is made up of a maximum of 21,000,000 coins, each of which divisible into 100,000,000 satoshis, making it highly salable across scales.
• Bitcoin relies on economic incentives making fraud far costlier than its rewards.
• No single entity is relied upon for maintaining the ledger and no single individual can alter the record on it without the consent of a majority of network members. What determines the validity of the transaction is not the word of a single authority, but the software running the individual nodes on the network.
• Immutable nature of the bitcoin.
• The value proposition is that the money supply is completely inelastic in response to increase demand and price; instead, increased demand just lead to a safer network due to the mining difficulty adjustment. Miners invest electricity and processing power in the mining infrastructure that protects the network because they are rewarded for it. Bitcoin users pay transaction fees and buy the coins from the miners because they want to utilize digital cash and benefit from the appreciation over time, and in the process they finance the miners' investment in operating the network. The investment in PoW mining hardware makes the network more secure.
• It is an economic arrangement that has been productive and lucrative to everyone involved, which in turn leads to the network continuing to grow at an astonishing pace.
• With this technological design, Nakamoto was able to invent digital scarcity.
• Bitcoin blocks are added to the shared ledger roughly every ten minutes.
• With its supply growth rate dropping below that of gold by the year 2025, bitcoin has the supply restrictions that could make it have considerable demand as a store of value.
• For the bitcoin price to rise, people must hold it as a store of value, and not just spend it.
• With the current size of bitcoin blocks being limited to 1 Megabyte, 500,000 transactions per day is close to the upper limit that can be carried out by the bitcoin network and recorded by all peers on the network.
• Bitcoin adopters value it more as a store of value than a medium of exchange.
• As demand for bitcoin transactions grew, miners could afford to be more selective and prioritize transactions with higher fees.
• Bitcoin returns had a standard deviation more than seven times larger than that of national currencies.

Chapter 9 - What Is Bitcoin Good For?

Store of Value

• What constitutes the practical and realistic limit to the quantity of any resource is always the amount of human time that is directed toward producing it, as that is the only real scarce resource (until the creation of bitcoin)
• Each human has a limited time on earth, and that is the only scarcity we deal as individuals.
• The fundamental driver of human progress is not raw materials, but technological solutions to problems.
• As the block subsidy declines, the resources dedicated to mining bitcoins will be mainly rewarded for processing the transactions and thus securing the network, rather than for the creation of new coins.

Individual Sovereignty

• Bitcoin holders  can send large amounts of value across the planet without having to ask for the permission of anyone.
• "Microprocessors will subvert and destroy the nation-state"
• Uber and Airbnb have not asked for government permission to introduce their products successfully and subvert traditional forms of regulation and supervision.
• The "Ethics of Liberty" Murray Rothbard.
• "Only a ruleless, purely libertarian world can fulfill the qualifications of natural rights and natural law, or, more important, can fulfill the conditions of a universal ethic for all mankind." 
• In the foreseeable future, as it is still a very low level of general adoption, bitcoin provides a cost-effective option for people needing to get around government restrictions on the banking sector, as well as to save wealth in a liquid store of value not subject to government inflation.
• Government confiscated gold and issued their own money.
• The ability of any individual to run a bitcoin node and send his own money without permission from anyone, and without to expose his identity, is a noteworthy difference between gold and bitcoin.
• As bitcoin continues to evolve in the direction of having a higher market value with higher transaction fees, it starts to look more and more like a reserve currency than a currency for everyday trading transactions.
• Bitcoin's advantage is that by bringing the finality of cash settlement to the digital world, it has created the fastest method for final settlement of large payments across long distances and national borders.
• The number of unique connections in a network equals n(n - 1)/2, where n is the number of nodes.
• Without a lender of last resort, fractional reserve banking becomes an extremely dangerous arrangement and it would be my expectation the only banks that will survive in the long run would be banks offering financial instruments 100% backed but bitcoin.
• The number of transactions in a bitcoin economy can still be as large as it is today, but the settlement of these transactions will not happen on bitcoins ledger, whose immutability and trustlessness is far too valuable for individual consumer payments.
• Given the supply of bitcoins is strictly limited, it may be wise for a central bank to spend a small amount acquiring a small portion of bitcoin's supply today in case it appreciates significantly in the future.
• Bitcoin is still viewed as a quirky (excentrique) Internet experiment for now, but as it continues to survive and appreciate over time, it will start attracting real attention from high-net-worth individuals, institutional investors and then, possibly, central banks.
• The modern central bank business model is being disrupted.
• The real advantage of bitcoin lies in it being a reliable long-term store of value, and a sovereign form of money that allows individuals to conduct permission less transactions.

Global Unit of Account

• Buying a bitcoin token today can be considered an investment in the fast growth of the network and currency as a store of value, because it is still very small and able to grow multiples of its size and value very quickly.
• On the one hand, bitcoin's strict scarcity makes it a very attractive choice for a store of value, and an ever-growing number of holders could tolerate the volatility for long periods of time as it is heavily skewed (incliné) to the upside, as has been so far. On the other hand, the persistence of volatility in bitcoin's value will prevent it from playing the role of a unit of account, at least until has grown to many multiples of its current value and in the percentage of people worldwide who hold and accept it.

Chapter 10 - Bitcoin Questions

Is Bitcoin Mining a Waste?

• In essence, proof-of-work involves network members competing to solve mathematical problems that are hard to solve but whose solution is easy to verify.
• Once the validity of the transactions and PoW are verified by the majority of the network nodes, a set quantity of bitcoin is issued to reward the node that correctly solved the PoW. This is known as the block subsidy, and the process of generating new coins has been referred to as mining, because it is the only way that the supply of coins is increased, in the same way that mining is the only way to increase the supply of gold. On top of the block subsidy, the node that correctly solved the PoW also gets the transaction fees included by the senders. The sum of the transaction fees and the block subsidy is the block reward.
• PoW is the only method so far discovered for making the production of a digital good reliably expensive, allowing it to be a hard money.
• The question of whether bitcoin wastes electricity is at its heart a misunderstanding of the fundamentally subjective nature of value. Electricity is generated worldwide in large quantities to satisfy the needs of the consumer. The only judgment about wether this electricity has gone to waste or not lies with the consumer who pays for it. People who are willing to pay the cost of operation of the bitcoin network for their transactions are effectively financing this electricity consumption, which means the electricity is being produced to satisfy consumer needs and has not been wasted. Functionally speaking, PoW is the only method humans have invented for creating digital hard money. If people find that worth paying for, the electricity has not been wasted.
• Bitcoin can then be understood as a technology that converts electricity to truthful records through the expenditure of processing.

Out of Control: Why Nobody Can Change Bitcoin

• If bitcoin's currency were to be compared to a central bank, it would be the world's most independent central bank.
• The only requirement for a node to be part of the network is that it follows the consensus rules of the other nodes. Nodes which break the consensus rules by altering the structure of the chain, the validity of the transaction, the block reward, or any one of many parameters in the system end up having their transactions rejected by the rest of the nodes.
• To the extent that changes have been made to the software, these changes can be best understood as improvements to the way in which an individual node interacts with the network, but no alterations to the bitcoin network or its consensus rules.
• Nodes are severely restricted in their choice of consensus rules because if they enforced rules inconsistent with the consensus of the network, their transactions would be rejected.
• Gavin Andresen has pushed very aggressively for several attempts to fork bitcoin into having bigger blocks.
• Bitcoin is straightforward to use, but impossible to alter.
• It might even be helpful to think of the parameters of bitcoin as being similar to the rotation of the earth, sun, moon or stars, forces outside of our control which are here to be lived, not altered.

Antifragility

• A global team of volunteer software developers, reviewers, and hackers have taken a professional, financial, and intellectual interest in working on improving or strengthening the bitcoin code and network.
• As a new technology that is not easy to understand, bitcoin was always going to receive inaccurate and downright hostile media coverage, as was the case with many other technologies.
• 99bitcoins.com

Can Bitcoin Scale?

• Bitcoin's 1-megabyte blocks mean that the capacity for transactions as it stands is around fewer than 500,000 transactions per day.
• Visa can process around 3,200 transactions per second, or 100.8 billion transactions per year. Bitcoin's current 1-megabyte blocks are able to process a maximum of four transactions per second, 350,000 transactions per day, or around 120 millions transactions per year.
• The most important use cases of bitcoin, as a store of value and uncensorable payments, are well worth the transaction fees.
• The idea that millions, let alone billions, could use the bitcoin network directly for carrying out their every transaction is unrealistic as it would entail that every network member needs to be recording every other member's transactions.
• More and more transactions are being carried out off-chain, settled on exchanges or websites that handle bitcoin, turning bitcoin into more of a settlement network than a direct payment network.

Is Bitcoin for Criminals?

• Bitcoin allows for the monetizing of the computer security market.

How to Kill Bitcoin: A Beginners' Guide

• At the heart of bitcoin's design there is a fundamental asymmetry between the cost of committing a new block of transactions and the cost of verifying the validity of these transactions.

Hardware Backdoors

• An attack on mining equipment is more likely to succeed given that there are only a few manufacturers of mining equipment, and this constitutes one of bitcoin's most critical point of failure.

Internet and Infrastructure Attacks

• Bitcoin does not need as extensive an infrastructure as the rest of the Internet, because its blockchain is really only about transmitting 1 megabyte of data every ten minutes.

Rise in Cost of Nodes and Drop in Their Numbers

The Breaking of the SH256 Hashing Algorithm

A return to Sound Money

• The demand for bitcoin stems from the need of individuals all over the world to carry out transactions that bypass political controls and to have an inflation-resistant store of value.
• The possibility of a global return to sound money and liberal government is extremely unlikely as these concepts are largely alien to the vast majority of politicians and voters worldwide, who have been reared for generations to understand government control of money and morality as necessary for the functioning of any society.

Altcoins

• Hal Finney passed away in Augusta 2014
• It is the sovereignty of bitcoin code, baked by proof-of-work, which makes it a genuinely effective solution to the double-spending problem, and a successful digital cash.
• The concentration of currency holding, processing power, and programming skills in the hands of one group of people who are effectively partners in a venture defeats the entire purpose of employing a blockchain structure.

Blockchain Technology

• Bitcoin's mechanism for establishing the authenticity and validity of the ledger is extremely complex and complicated, but it serves an explicit purpose: issuing a currency and moving value online without the need for a trusted third party.
• There are many easier and less cumbersome ways of recording transactions, but this is the only method that eliminates the need for trusted third party.
• Bitcoin is a system built entirely on cumbersome and expensive verification so it can eliminate the need for any trust or accountability between all parties: it is a 100% verification and 0% trust.
• The colossal processing power needed to make the bitcoin network operate eliminates the need for a trusted third party to process payments or determine the supply of money.
• Every party in the bitcoin network is only capable of joining the network by agreeing to existing consensus rule.
• The market shows that the redundancies of transaction recording and proof-of-work can only be justified for the purpose of producing electronic cash and a payment network without third-party intermediation.
• Bitcoin's creator was motivated by creating a "peer-to-peer electronic cash", and he built a design for that end.