This insightful book is really two books in one. In the first part of the book, the author explores the history and nature of money, while in the second part he ties those concepts back to Bitcoin.
The first section is an introduction to Austrian monetary theory. The author explores the history and nature of money, and the differences between hard money and easy money. He explores the gold standard and asserts that the most creative and innovative times in human history were times where the money was very hard. He explores the link between easy government money and war, inequality, consumerism, and oppression. For me, the most fascinating part of this section was the discussion on time preference and how that affects, and is affected by, the price and soundness of money. You will finish this section with a deep understanding and appreciation for how easy government money corrupts society at so many different levels.
In the second part of the book, he explores Bitcoin and how the architecture of Bitcoin solves the many problems laid out in the first section. The author’s contention is that Bitcoin’s sweet spot is not going to be buying a cup of coffee or stamps at the post office, but rather as an open, immutable, inviolable ledger of settlements between commercial banks, in the way the gold functioned before Bretton Woods. Payments in this international currency would settle in minutes instead of days and weeks. The banks could issues their own Paypal- or ApplePay-like convenient currencies, backed fully (or fractionally, if you like to live dangerously) by the publicly inspectable backing of the Bitcoin ledger. Because no one can control or inflate the Bitcoin currency, it would serve as a superb store of value and settlement mechanism.
Ironically, I found the most provocative comment in the introduction written by Nassim Nicholas Taleb:
Somehow, under scale transformation, a miraculous effect emerges: rational markets do not require any individual trader to be rational. In fact they work well under zero intelligence – a zero-intelligence crowd, under the right design, works better than a Soviet-style management composed of maximally-intelligent human beings.
I think this book is incredibly valuable just for the explanation of money in the first part of the book, but the author’s ideas on Bitcoin’s sweet spot are very intriguing as well. The book is not perfect, with not every argument being completely convincing, not to mention the author’s multi-page rant against modern art, of all things. But overall this is a very important and well-argued book, and well worth the read.
Divergent Nexus 