It’s Time For Bitcoin
On April 20, 2024, an event more significant than any monetary policy decision in the history of central banking has occured.
For the first time ever, the world has a monetary base with an annual issuance rate of less than 1%.
This may seem like an unremarkable technical detail, but it represents a profound paradigm shift in human civilization’s relationship to money and the future.
The hardness of money, the constraint on its supply, is a fundamental determinant of society’s time preference.
Time preference refers to the degree to which we prioritize present satisfaction over future rewards.
Throughout history, as humanity has progressed from barter to sophisticated monetary goods.
Each transition marked a reduction in time preference as money became harder and more reliably saleable in the future.
From barter items like cattle and grains to more durable commodities like salt, seashells, and metals, the extent to which societies could save and invest in the longer-term future increased with the hardness of money.
The discovery of precious metals like gold and silver catalyzed an exponential leap in this process.
Providing money that was universally saleable, had low carrying costs, and extremely durable as a store of value across time and space.
It was only with the development of gold and silver coinages that complex economic planning and sophisticated financial markets could take root.
The Century of Civilizational Decline
By the late 19th century, the global monetary system had converged on gold.
Annual supply growth of around 2% for the first time enabled a consistent, global standard of economic calculation across borders.
It was during this era of the classical gold standard that many of the bedrock industries and innovations of the modern world were established.
Nations that adhered most strictly to the gold standard made immense economic strides compared to those with unsound paper money systems.
Great Britain became the world’s industrial and financial capital while America rapidly overtook European powers during its decades on a disciplined gold standard.
However, the 20th century saw a catastrophic detour as governments succumbed to the temptation of money printer and abandoned gold in favor of fiat currencies.
With elastic, undisciplined supplies that could be inflated at will.
Removed from the constraint of money’s hardness, the time preference of both households and states increased dramatically.
With fiat money supply increasing over 10% annually on average, the incentive to save and invest for the future rapidly diminished in favor of more present-oriented consumption patterns.
Each year, dramatic amounts of value were drained from the money supply as the purchasing power of each unit eroded.
Why sacrifice immediate spending when your savings are constantly losing value?
Unmoored from hard monetary restraints, governments were able to fund perpetual wars, empires, and unsustainable welfare states by debasing their currencies.
By a form of taxation by inflation on their citizens’ wealth.
With each decade after departing the gold standard, politicians realized they could infinitely inflate away the consequences of reckless spending and shirking difficult economic tradeoffs.
Bitcoin’s Disinflationary Endgame
Bitcoin represents a return to the era of hard, commodity money after a century of monetary instability and profligacy.
With a strictly capped supply of 21 million BTC and emission schedule that halves every four years, Bitcoin is ultimately harder and more disinflationary than even gold.
The 2024 halving will be the most significant one yet, reducing Bitcoin’s annual issuance to just 0.84%.
No monetary commodity in all of human history has exhibited such hardness or restraint on new supply at global scale.
At this level, Bitcoin’s stock-to-flow ratio, the quantity of above-ground supply relative to annual issuance, will surpass that of gold itself.
Bitcoin fully inherits money’s quality of reliably transferring value across time and space.
The societal impact of such absolute scarcity and hardness in money cannot be overstated.
Just as the world’s convergence on gold as a monetary standard catalyzed the Industrialization and centuries of technological progress, widespread adoption of Bitcoin as the global reserve asset will unleash a new era of future orientation and economic coordination.
For the first time ever, the human family will have a monetary standard that does not erode or drain our collective resources towards the present and excessive consumption.
Instead of melting away through constant devaluation like fiat currencies, Bitcoin provides the soundest foundation for entrepreneurship, capital formation, and long-term value creation the world has ever seen.
With Bitcoin’s absolute scarcity and resistance to inflation, the incentives and rewards for saving, investing, and building pan out further into the future than ever before.
Economic decision-making untethered from the distortions of currency debasement can focus on maximizing output, efficiency, and innovation across decades and centuries rather than quarters.
Businesses and individuals can at last vest their economic efforts in multi-generational time horizons.
The 2024 halving establishes Bitcoin as the hardest money in human history.
More than a technical adjustment, this milestone event may spark the start of a new renaissance of human flourishing and prosperity across centuries to come as humanity’s economic energies are reoriented to the long-term future.
For the first time, we have money appropriate for building civilizations across epochal timescales.
