After unbraiding this article’s title in your head as to what I might have said more simply (albeit then with a slightly different meaning), please take a good hard look at the image above. I mean really take it in. Grok it. Grok it in your bones.
I was deep in Bitcoin, obsessively studying every day for 7 years, before I first came across this image in 2021 and it immediately grabbed me. I recognized it as a clear explanation of what’s happening, not just to these US Benjamins, mind you, but to literally every country’s fiat currency.
It has become apparent that Bitcoin is a sinkhole, or a black hole of sorts, or perhaps we might even say, an economic singularity, if you will. It doesn’t matter what we call it; the point is, to put it frankly, money—or currency, rather (they’re different)—that flows into Bitcoin will not be coming back out.
Nobody still tries to seriously say, “Bitcoin is going to zero.” And if it’s not going to $0.00, it’s going the other way, forever. Yes Laura, forever. One major tenet of Jeff Booth‘s recommended book, The Price of Tomorrow, is that technology is deflationary. And almost everything might be considered technology – the discovery of fire was technology, the invention of the wheel, of course. And deflation (in an idealistically competitive, true and fair capitalist economy) encourages prices to fall to the marginal cost of production. It’s why you don’t pay $35 for a physical calculator anymore, but now have that and 1,000 other free, more interesting apps in your pocket. Thus, as more efficient technology spreads globally and improves lives, life in general ought to be getting cheaper for everyone, everywhere.
Even economist John Maynard Keynes, himself the Bitcoin boogeyman of econ bros and Ludwig von Mises maxis, predicted (in 1930!) that his grandkids would work just 15 hours a week. And while many goods have gotten cheaper (actual tech in particular, think TVs and smartphones), the perhaps most critical purchases of life today—housing, healthcare, education—have not gotten more affordable; no, in fact, they’ve only risen exponentially. Also, people are clearly not often working just 15 hours, let alone fewer hours.
So What Happened?
Well, perhaps here is where we might first acknowledge that we instead actually live amid crony capitalism–and not the idealistically competitive, true and fair capitalist economy parenthetically noted two paragraphs up. Essentially, society’s productivity gains have been siphoned off the top via the Cantillon Effect, where those closest to the ‘money printer’ (institutions and the wealthiest individuals) benefit disproportionally from the lowest interest rates in their access to money before it circulates or trickles throughout the economy. This disadvantages those who receive it later when prices have already increased, leaving everyone towards the bottom of our economic ladder with less purchasing power, as wage increases significantly lag cost of living increases (and real wages have been stagnant since Reagan’s ’80s).
And because Central Banks print fiat currency from nothing2, with no respect to the time nor energy required to serve as sound money, the US dollar can thusly not serve as a ‘store of value’. Everyone now finds themselves forced to seek shelter (metaphorically speaking) in assets like stocks and real estate, turning literal shelter into a speculation, thus disadvantaging every successive generation with home prices that grow increasingly out of reach. Sound familiar? (To top it off, let’s burden everyone with the second (or third) job of learning how to become an investor and stock picker, as opposed to just focusing on their craft… how efficient!)
And that, my Left-leaning friends, is where wealth inequality comes from.
So here’s the kicker, look at this image again. A DEFLATIONARY3 and globally decentralized hard money with an immutably fixed supply introduced onto a planet that knows only INFLATIONARY, geopolitical fiat currencies printed endlessly out of thin air becomes the drain at the bottom of our collective sink, perpetually swallowing up the exorbitant premium imposed on all physical real-world resources previously perceived as a ‘store of value’ beyond their actual utility (i.e.; home prices first).
That’s what this picture represents.
(Of course, it starts only with the exorbitant premium above and beyond utility value… but it’s becoming more clear that it would be reasonable to expect that eventually all prices will converge to a Bitcoin Standard as more people realize that storing wealth in a better money that can’t be debased—stealing from you the time you spent working to earn it—is a sound decision. Many may start at a 1%, 3%, or 5% allocation, but it’s not uncommon today to hear of more and more Bitcoiners with 35%, 75%, or 90+% of our net worth in Bitcoin – and sleeping better than babies do. It happens fast. Bitcoin is a positive flywheel, a one-way ratchet.)
And contrary to some weak criticism, it is in this regard we come to see that Bitcoin’s digital nature is in fact not a bug, but a feature!
What Does This Mean?
Everything is already and will continue to collapse in price measured against Bitcoin. Most obvious of all, real estate. How could we have thought turning shelter into a speculative asset would result in a reasonable home price for the average family? Or for the next generation? Answer: that wasn’t even a question they asked.
Traditional real estate agents and investors (of a certain generation, in particular) are now trying to debate and argue against this until they’re blue in the face. I get it; it hurts one’s ego. But there’s just no stopping this. The world has already moved ahead with a new denominator. ADAPT OR REGRET, folks. Bitcoin is an open protocol; it doesn’t care.
Of course, a CRITICAL caveat to note in this is that everyone who considers their home to be most of their net worth (looking at you, my fellow Americans) MUST recognize this transition is already underway and immediately take steps to offset the corresponding loss in purchasing power lest they fall behind of what they might calculate as their net worth now. Fortunately, even a relatively modest allocation to BTC now will likely protect your current purchasing power.
But a larger allocation, however… and now you see that Bitcoin is—what feels hyperbolic to say, but—your opportunity to enjoy the most massive wealth transfer history has yet seen4.
Bitcoin is indeed a redistribution of wealth.
Our First Zero-Bound
As Jeff Booth has further described it, picture a large table with goods for sale on top. Now pour some oil on this table and lube it up. Imagine a tiny ride-on lawnmower maybe, your car, or a textbook, imagine all the goods of the world… everything’s sliding around, including a measuring tape or ruler by which to measure the length of these goods – or in this mixed metaphor, with which to assign a price to each. The ruler is the currency. Only in the case of the world’s current monetary order, that US dollar ruler is free-floating, now gliding relatively aimlessly along the top of the table too.
Well, certainly it’s not so easy to measure something if your ruler has no fixed, flat edge or you can’t align the 0 of the ruler with the edge of the good. In this case, no prices are fixed to any dependable measure of value. Everything is perception, or what someone is willing to pay for it – an actual Greater Fool Theory (ironic). That’s society today. (And since at least 1971 when Nixon took the US off the Gold Standard.)
Our collective ruler to price anything has no fixed zero-bound.
(I’ve sometimes wondered how homeowners and real estate agents come up with such a perfectly round number with which to price a home for sale. It’s all a massive estimation.)
Then 60 years of computer science R&D and the Internet get to work and BAM! Bitcoin comes along. A weighted ruler just slapped itself down, cleanly right at the straight edge of our global table, offering the only clear, flat end from which to begin accurately measuring… everything. Almost naturally, all goods will now be forced to reprice themselves around the one ruler that is actually stable (the Bitcoin protocol that is, not the [only currently volatile] BTC price) – a measuring tape that refuses to budge on the one thing it’s here to do… measure value.
Bitcoin is the discovery of an economic constant. That’s what Bitcoin is. This is why it’s fair to say, “Bitcoin is repricing the world.” And when it comes to exchanging value, money converges to one.
Bitcoin is Earth’s new denominator.
And just maybe if we can indeed first ‘fix the money,’ only then might we even have the chance to try to actually ‘fix the world.’ (…But that doesn’t quite roll off the tongue, does it?)
So how long will it take most W.E.I.R.D. people to grok this image? My guess? 5 years, by 2030.
Tick tock (next block).
#StudyBitcoin. UPGRADE YOUR DENOMINATOR.
Footnote:
- Technically, Bitcoin is disinflationary until 2140, but compared to fiat currency, Bitcoin will have deflationary effects on the price of everything else in society. ↩︎
More posts by @5atoshiNakamoto
@5atoshiNakamoto is a longtime book editor, new article proofreader here at TPB, and was host of Bantu Bitcoin—a Bitcoin-only education podcast from rural Zambia, in Bemba and English—when he served as a United States Peace Corps Volunteer.
