Bitcoin Ark Fiat Flood System
In the story of Noah’s Ark in the Book of Genesis, God made a decision. Man had strayed from God’s instructions, and annihilation was the chosen solution to redress our capricious species. Noah was known to be a righteous man, so he and his family were chosen by God to repopulate the Earth in the days following the Great Flood.
God informed Noah of his plan for the Flood and asked him to build an ark for himself, his family, and at least two of each animal species (one male, one female, and seven pairs of animals and birds ” pure ”). After 40 days and 40 nights of rain, and many days of subsequent flooding, God sent a wind to the Earth and the waters receded; The Earth could be repopulated.
The Genesis Flood story is among the most popular stories in the Hebrew Bible and the Christian Old Testament. I have heard references to this story several times, but only recently have I thought about it a lot outside of the context of the story itself. The task in front of Noah was immense. He would have to drop everything and start building this monstrous ship, or face certain ruin. However, he does not languish. He began to build.
Whether you interpret this Old Testament account literally or figuratively, there is a lesson here that can be applied to many aspects of our life: “When the flood comes, make sure your ark is built. . Expecting a gain in the future without work, preparation and forethought is simply foolish.
If fiat is the great modern day flood, then bitcoin is its modern day ark.
A modern day flood
“[. . .] on that day all the fountains of the great deep gushed out, and the windows of heaven were opened. And the rain fell on the earth forty days and forty nights.
– Genesis 7:11
The Flood and the ark analogy can be used in reference to many situations throughout history, but there is a current example right before our eyes. The tide has been rising for years and years, yet the Cantillons continue to act in the interest of preserving power, in direct conflict with the good of the voters they have sworn to protect.
Dictionary.com defines fiat as “an arbitrary decree or statement, especially by a person or group of people with absolute power to enforce it”. This accurately describes the currencies of today’s world. Governments have absolute authority over our money. Their monopoly on our money, a reflection of our times, endangers our freedom. Growing up, feeling like money never meant anything to me. The idea that you can just snap your fingers and create a whole bunch of money just seemed wrong. Today it still doesn’t make much sense to me, but I understand the order of subsequent effects more acutely than when I was a child.
Most people don’t realize why Bitcoiners have such a contempt for fiat currencies. This is because most people do not realize the liberticidal effects of these government notes. These include, but are not limited to:
- The Cantillon effect
- Inflation (and sometimes hyperinflation)
- Counterparty risk
- Financial irresponsibility
The Cantillon effect
The Cantillon effect is the phenomenon where those closest to the money printer (politicians, banks, large companies) benefit greatly from an increase in the money supply, and those who are most distant see it as a great detriment. Such an effect breeds corruption and greed. It further concentrates wealth in the hands of political and financial elites to the detriment of the poor and the middle class.
The increase in the money supply decreases the value of the supply currently held. Every time the Fed prints another trillion dollars, know that your purchasing power decreases as a result. Even if the Fed were able to maintain its 2% annual inflation target over the next 20 years (many of us seriously doubt that), that would be a drop of over 40% in your purchasing power. . Reckless monetary policy is a disregard for your hard work, your time, and your freedom.
Government-controlled money is meant to be censored and seized by corrupt officials. For the more than 4 billion people living under authoritarianism, money is frequently embezzled, bank accounts closed, liberty advocates jailed – all to keep the public in check. Censorship may be more pronounced in authoritarian states, but it is not uncommon for democracies to take similar action against their citizens. One of the most prominent examples came in 1933, when Franklin Delano Roosevelt implemented Executive Order 6102, banning the ownership of gold in the United States. A more recent example would be a proposal from the Biden administration requiring banks to report the annual inflows and outflows of all bank accounts of $ 600 or more to the Internal Revenue Service. This is just one more step in the direction of a state of over-surveillance, ripe for financial censorship.
Counterparty risk is a major concern with fiat currencies, both for governments and individuals. Governments assume considerable counterparty risk when they increase their deficits. Constant borrowing requires dependence on other countries, as well as national and global institutions, to finance their spending. Some economists have worried about the high level of US foreign debt held by China – over $ 1 trillion, which is over 15% of foreign debt and 5% of total debt.
Individuals also assume a significant counterparty risk with fiat currencies: risk of censorship and seizure, risk of almost certain depreciation, risk of fraud, risk of State default, or even risk of decoupling of the current currency. Alex Gladstein offers examples of the overnight debasement of the CFA franc in “Tackling Monetary Colonialism with Open Source Code” and the replacement of the colón’s currency in El Salvador in “The Village and the Strong Man: l ‘improbable story of Bitcoin and El Salvador’.
When the government controls the money, it can force you to spend it (and spend it however it wants). A very recent example of this was seen when US politicians urged the COVID-19 stimulus checks to be spent rather than saved. Many may have planned to spend that money anyway to pay rent or put food on the table, but many have chosen to buy a new television or a new pair of shoes that they did not have. not needed because they were influenced by their government. Coercion will be an even bigger problem for future fiat currencies which will take the form of CBDCs (Central Bank Digital Currencies). With CBDCs, money can be pre-programmed with an expiration date, a spend where or spend if criteria. In the not-so-distant dystopian future, CBDCs could allow near total control of domestic trade.
And with coercion and inducement to spend comes financial irresponsibility. It may be the last in the order of effects, but it is certainly not the least. In “The Bitcoin Standard,” Saifedean Ammous brilliantly details how fiat currencies force society to opt for high time preference. In societies with a high time preference, spending is preferred over saving. The future is leveraged in favor of short-term gains. In societies with low time preference, energy is devoted to building a better world. A world where our children will thrive in a way we didn’t have, in a way that we have made possible through our investments today. When we fix the money, financial sovereignty will reign supreme and financial irresponsibility will fade in the dark.
“I conclude that an increase in real money in a state always causes increased consumption and a greater spending routine.” – Robert Cantillon
There is a saying in the Bitcoin community: “Bitcoin solves this. While Bitcoin won’t magically solve every problem in the world, it has been carefully designed to solve the ones mentioned above; those caused by the flood which is flat. The Great Flood is a great analogy for the order of effects set in motion as a result of government controlled money. Isolating one of these negative consequences is bad enough, but they are getting worse. They swallow up everything in their path, drowning freedom along the way. Fortunately, Noah taught us a great lesson: when the flood comes, all aboard the ark.
A modern day arch
Noah’s ark was built around 25 centuries ago. It was made of cypress wood and would be almost as tall as the Titanic.
Bitcoin as a modern arch was built in 2008. It has a block size of 1MB and the architect remains unknown.
“Now the sources of the deep and the windows of heaven were closed, and the rain had ceased to fall from heaven. “
– Genesis 8: 2
The engineering of Bitcoin directly addresses the drawbacks of fiat: it resists censorship and coercion, it minimizes counterparty risk, it has a fixed offer that is enforced by consensus rules, not by rules, and it will end up being the best tool for financial freedom and financial responsibility that mankind has ever known.
People often ask why bitcoin is a better currency than dollar, euro, or gold. It is not just for the reasons listed above. It is not just because it has superior monetary properties. Bitcoin is better money because it was designed to be so.
Bitcoin is the very first currency invented by man. With bitcoin, we have the opportunity to solve the pitfalls of old forms of currency. With Bitcoin, we have a choice. A choice to opt for an open monetary network in favor of a closed network. A choice to opt for a currency that knows no borders. A choice to opt for money that we do not need the authorization of the leaders to use.
For those who do not yet believe in bitcoin, the argument that I have found the most effective is to focus on the anti-fiat angle, before even switching to bitcoin. It is much easier to look back to the inevitable than it is to it, and how many people can dispute the inevitability of decree failure?
To that end, the pro-bitcoin argument has almost nothing to do with understanding bitcoin (at least initially). Just as Noah wouldn’t have needed the ark if it wasn’t raining, we wouldn’t need bitcoin if our monetary policy hadn’t been so short-sighted, our politicians so devoid of virtue, our consumption so reckless.
Once you see this picture clearly, Bitcoin no longer looks like a gunshot, but rather a systematic and carefully crafted response to currency embezzlement. Once you understand that fiat is the flood then you can much more easily see that bitcoin is the ark.
This is a guest article by Nick Fonesca. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.