“Web3 is trustless trust, because code trumps counterparties”
Strong money is a free market’s choice because its’ future value is trusted. Future value is earned over time via utility, because utility builds trust:
Utility + Value = Trust over time.
Money is trust. Strong money is truth machine money that transcends time, because it has earned trust over time.
Gold has been strong money since the 6th century BC (or earlier) and played a major role in the economic stability of many civilizations; including a democratic west after WWII. Gold’s scarcity naturally fights inflation because money pegged to it is always scarce. Money made out of thin air is irrelevant because the peg it’s anchored to is essentially worthless.
For example – in the game Monopoly you use colored paper money that is used to buy, sale, and settle a debt when you land on someones property. Outside of the game that colored money is worthless. The same with fiat (by decree) money – it is only relevant because the existing financial system game deems it so.
That’s easy to understand, but wars and political promises forced the world to waste a vast amount of resources during the hot and cold wars of the 20th Century that helped accelerate irrational economic policies that still exist today… like this >>
In 2008 Bitcoin was born and with it came new hope for strong money for the west, for the east, for everyone. Why? Because (like gold) Bitcoin is a truth machine too. Sound money Austrian economic principles influenced the Bitcoin protocol – specifically its’ limited supply and its’ trustworthiness via its’ accountability system (aka “blockchain”) which makes an immutable (thereby secure) payment system possible.
Bitcoin is not digital gold but gold’s baby brother because (if in the hands of a competent governance model) it would be both finite and trustworthy as a medium of exchange. Bitcoin was never intended to compete with gold as a peg or speculative asset (see the 2008 Bitcoin white paper). It is an amalgamation of technologies and academic research that existed many years before they were put together by “Satoshi Nakamoto” who wrote it in C++.
Its’ core strength is social consensus and its’ economic strength lays in its’ programmable scarcity and its’ transparency between transaction and settlement not its’ clever ledger. Alone Bitcoin is just magic internet money created out of digital thin air wasting energy in data centers to solve blocks and precious time in HODLand wallets.
Yes, Bitcoin as “digital cash” is possible, but it is an unattainable fantasy without real utility… and a real peg (like gold) based in the real world. Why is simple. Bitcoin is the victim of alchemy – meaning it has been cloned thousands of times and each new clone will ultimately dilute its’ value.