Money, Trust and Bitcoin – A Revolution in Monetary Energy

Energy is the purest form of matter or “stuff” in the universe. It is unsurprising that the early universe was essentially a hot gas of energy. It is the building block of our reality.

Every commodity, product, service or “thing” ever created by any species on our planet is a derivative of energy in one form or another. We are made from energy, we use thermal energy to smelt gold, plants use sunlight energy to produce their food, and we use liquid energy to drive our cars.

Money is just another derivative of energy. People use their physical or mental energy to work and in turn they obtain money in the form of fiat currency so they can obtain the things they need or desire. More importantly, it gives them the option to consume stuff in the future; Therefore, money is a call option on future consumption.

The First Law of Thermodynamics states that energy cannot be created or destroyed; it can only be converted from one form to another. Since money is a true derivative of energy why do we allow governments to create more of it based on politics? Why do we allow the state to dilute our monetary energy over time? The greenback or US Dollar is the global reserve currency but that hasn’t stopped it loosing over 96% of its value since it was created. $1 in the year 1800 would be worth $22.13 today!

In the not-so-distant past, religion was included in the political machinations of governments and principalities, something we would find incomprehensible today. I believe that in 100 years our ancestors will feel the same way about state controlled monetary energy.

The current monetary system requires trust. We must trust the state to safeguard the value of our fiat currencies. We have to trust that government will live within their means and not print excessive amounts of currency to pay for policies. We have centuries of empirical evidence to the contrary; more recently, as a result of the covid pandemic, 80% of all US dollars in existence were printed since January 2020! The purchasing power or monetary energy of many currencies over the ages have gone to zero over time. A recent example would be the Zimbabwe dollar or the Venezuela bolivar.

Bitcoin is the most pristine representation of monetary energy ever created in human history. Like energy, it has a fixed supply, no one can change it. It maintains purchasing power over time; any fixed supply asset will appreciate in value as we print more fiat currencies. For example, as we print more USD you would expect the value of land, another fixed supply asset, to appreciate in value. Unlike land and gold, bitcoin cannot be confiscated by state actors because it’s digital, portable and fully decentralized making it the most secure monetary network in the world. Bitcoin is censorship resistant; no one controls the network. It has all the desirable features of money including divisibility and fungibility.

Which currency or asset enables you to travel anywhere in the world with a billion dollars’ worth of money at a moment’s notice with no restrictions? I am not a bitcoin maximalist, I do like some cryptos – but if you want to preserve your precious monetary energy, then you need bitcoin. The hardest, most pristine, anti-fragile property on earth.