The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous

January 15, 2021 — January 22, 2021

Los Angeles, CA

A gift from an anonymous friend in crypto

I began reading this book in late 2020 casually after a friend and I had one of our diplomatic and friendly crypto “standoffs.” I took a long break from the book during my ambition to complete my financial initiatives and win agreements in late 2020. I picked up this book again when our travel initiative for Egypt’s main media account got hacked and found out that it is very likely our (dirty) competitor (now an opponent) used Bitcoin to pay for it. Before I say anything about Bitcoin or cryptocurrency, I will talk about the book itself, then I’ll leave my opinion and final verdict in the comments. First, the book is very well written, it’s grammatically unimpeachable and the book’s organization made it interesting and the storyline of events and examples made it enjoyable and engaging. While I’m critical of the book and its arguments, I definitely and highly recommend it. The reason this review is going to be longer than my average review is that cryptocurrency is something that has been brought up to me several times on several occasions, whether it was a discussion/argument or investment request; from now on, I’m sending a link to this review instead of debating or responding.

However, like other well-written publications that are introducing a new concept or arguing for something: the book is cleverly and strategically written. It introduces basic monetary economics and then discussing the history of money and civilizations’ relationship to it, the government’s evolving role in its management, our reactions to money and behavioral economics, the praise for capitalism, discussing sound money and individual freedom (why governments suck), digital money, and finally everything about Bitcoin. Overall, great examples, discussions, and points being made. However, it’s only presenting one perspective and beating up other perspectives. The author is presenting valid arguments but fails to address potential counter-arguments to the points he’s making, instead he resorts to spitting on other forms (mainly traditional) of managing currency and assets, deeming them as inferior. This is a weak point of the book, I continuously wrote down my counter-arguments to see if he’d write something as a response, it didn’t happen, just more bashing. However, he does begin addressing the popular questions and arguments against Bitcoin in the later chapters of the book. The main argument I have is that the problem isn’t with the government, it has to do with GOVERNANCE. Every argument that he made can literally be counter-argued by the reform of governance; and every amazing point he made can be met with reforms. The beauty of governance is that it can always be evolved and that every strong empire has an achille’s heel if it becomes too tyrannical. I’ll touch upon this crucial point further in the comments.

I admit I had to put the book down a few times when I wanted to fact-check some of the stories or events mentioned that raised my brow and I felt like it was bullshit, surprisingly, it wasn’t. I learned something new and my mind was blown, then continued reading. Especially when it came to all the stabs the author took at John Maynard Keynes and Keynesian Economics. This isn’t the only time the author throws shade, he writes out some heavy criticism about many modern human beings, such as artists, government officials, and socialist economists. At times I thought that his language was actually quite arrogant and unnecessarily passive-aggressive. While a lot of the facts written were true, the perspective was often one-sided, which is understandable since the author is trying to make an argument. But, it could get ridiculous at times. I paused reading when he mentions and praises Warren Harden, based on the event of unemployment returning to normal levels after the 1920 Depression because of the absence of government intervention. Keep in mind, Warren Harden has been constantly ranked as one of the U.S.’s worst presidents.

The sound money and individual freedom chapter were particularly interesting when he brought up the Austrian School of Economic Thought vs. Keynesian Economics (I'm not a strong supporter of either). He was blaming governments and banks for the economic downfall and the outbreaks of financial crises, based on them going through the traditional system of Keynesian Economics that most governments follow, stating the reason that governments enjoy it is because they are given the power and aren’t held accountable for the liabilities they can cause; and that the reason most people support these traditional economic theories is that the government owns the textbooks we read and therefore we are raised to support these methods. This started sounding like one of Mohammed Fayed’s conspiracy theories. A really good case that he brings up is regarding the relationship between public opinion and government spending, I’ve seen a similar case being discussed in several Urban Planning publications and books: that it’s not right for governments to not take the consent of their taxpayers to fund projects or finance operations. I partially agree, but again, this is something that can be reformed! Simply make the government reliant and require the approval of civilians to fund a project. as mentioned in the books the Happy City, The Death And Life Of Great American Cities, and touched upon in Smart Cities and Doughnut Economics; if the people are willing to fund the project with their own money and pay for it, then the government proceeds with it. Another good point he brings up revolves around how banks and bankers are screwing over people because they benefit and get paid regardless of what happens to people’s money and that policies have been made to protect them from downfall even if they fail a lot. Again, this can be addressed with reforms! By creating a banking system and culture where the banker’s cut is directly tied to their performance rather than a commission, so if they succeed they profit, and if they fail it will cost them (this is an aggressive suggestion), furthermore, that governments should shut down a bank if there’s the sketchy activity or they’re constantly plummeting tremendously, rather than turning their eyes, forgiving them, or bailing them out.

Decentralization is a very powerful debate, one that I’m strongly opposed to. Since ancient times, we’ve always had some kind of centralized authority to lead civilization. Do I believe the form of our centralization is outdated and in places very corrupt, yes, but that can always be reformed. On the other hand there’s the concept of a free-for-all, no checks and balances, and a vulnerability of becoming an anarchy. There were several red flags in the last chapters when he began discussing Bitcoin more. The concept of transactions that cannot be restricted or confiscated, not even tracked by government authorities is the first one (although Bitcoin carries the record of every transaction as long as Bitcoin is still operational). I appreciate how the author addresses the possibility of crime, however, he states that the Bitcoin brand of anarchism is completely peaceful. Hah. The issue is Bitcoin’s superior antifragility, is that when anarchism and crime occurs, it’s very well shielded and has survived the FBI and the Chinese government. Think of it like this, a young and visionary leader eventually grows up and becomes a great leader or turns into a tyrant. All tyrants have an achilles heel, except Bitcoin doesn’t.

Furthermore, to touch on the concept of scarcity and Malthusian economics: The author doesn’t believe that resources are finite and that population’s rapid growth isn’t a problem, he actually challenges humans to test the limits of scarcity and supports more population growth since he thinks a bigger population will increase the likeliness of more innovation. Horrible. What he doesn’t realize is that as time goes by, the extremity of our challenges and the pace we go at increases. The main increase in population is mainly found in poorer areas, there’s no innovation, just more people suffering and more help needed to support them; one should watch Bill Gates’s presentation about this. Last, but definitely not least, we are facing a global climate challenge, screw the economic ideology of scarcity, we have to think about sustainability if we want to be alive to experience anything ‘of the future.”

To top all this off, the vision for Bitcoin is very idealistic. It would require a significantly larger population to get on the bandwagon. This is going to be extremely hard to do. Even with that, according to the Bitcoin philosophy it would backfire as a disadvantage. The creator of Bitcoin states that Bitcoin will never change or evolve and will remain the same to eternity, well, everything and I mean everything evolves over time. We’re going to be dealing with whole new problems in the future. Also... you know what? I’m done.

So, with all this being said, I stand against cryptocurrency; but this time, more educated about the whole topic. If you got rich from anything to do with crypto, good for you, but I will continue to deny any requests for an investment into a venture that’s based on crypto. Instead, I will continue to brainstorm and discuss reforms and better governance.