Bitcoin and Time: The Economics of Absolute Scarcity

Published on
August 26th, 2020
Duration
27 minutes

Risk-On or Risk-Off: Preparing For the Next Market Crash


Bitcoin and Time: The Economics of Absolute Scarcity

The Expert View ·
Featuring Robert Breedlove

Published on: August 26th, 2020 • Duration: 27 minutes

Robert Breedlove, CEO and CIO of Parallax Digital, argues that only two things in the universe are absolutely scarce – time and bitcoin. Until the invention of bitcoin, Breedlove says that gold had been the best monetary technology to transfer the value of time, but it is imperfect because it isn't absolutely scarce. Bitcoin's absolute scarcity, on the other hand, makes it the perfect monetary technology. He breaks down why the last two centuries of success for paper money is less clear cut than many people understand. Breedlove also discusses the economic theory of the value of time, the relationship between bitcoin and gold, and how bitcoin's securability could impact monetary policy. Filmed on August 17, 2020.

Comments

Transcript

  • JS
    Jon S.
    2 September 2020 @ 18:23
    Spendid one ☝️
  • SD
    Sebastien D.
    29 August 2020 @ 08:12
    Having a hedge fund and no money to buy a quality headset? The audio makes it quite hard to follow.
    • FC
      Frank C.
      1 September 2020 @ 18:19
      He used it to buy more bitcoin ;)
  • DS
    David S.
    26 August 2020 @ 22:37
    My main worry with Bitcoin is that a super computer will break the encryption. People say this is impossible, but the impossible can happen. I sized a position hoping for the best. If Bitcoin is busted, it will not affect my lifestyle. If Bitcoin shoots the moon I will be happy. DLS
    • JS
      Jesse S.
      30 August 2020 @ 16:09
      Bitcoin uses the same encryption tools as what protects national secrets. If an attacker is able to break encryption, that would destroy the world financial system, not just Bitcoin.
  • EH
    Eric H.
    28 August 2020 @ 14:22
    Scrolled through a few comments and I think a lot of people came to the conclusion that while bitcoin is scarce (although debatable due to its infinite divisibility), cryptocurrency is not only not scarce but actually infinite. As you say there are some early adopters, so if there were a more powerful late adopter why would they adopt the early adopted cryptocurrency which would transfer more wealth to the early adopters? What are the chances bitcoin is the last coin standing? Gold will not be replaced by a new faux gold or replacement metal so I still see it as much more scarce than bitcoin, until Elon is hyper-mining asteroids of course. Interesting discussion though does make you think, if bitcoin is the chosen one the upside is huge.
    • JS
      Jesse S.
      30 August 2020 @ 16:03
      Scarcity and Divisibility are not mutually exclusive. If you have a pizza and you cut it up into 100 million slices, that doesn't give you infinite pizzas. It will make a few people very rich that have held on and supported bitcoin for a long time. That is a small price to pay for having sound money. There is nothing scarce about the code for bitcoin, it can easily be copied. What is scarce is the existing network that is supporting a given currency. Bitcoin has the strongest network and the value of it is an emergent effect of the network.
  • MC
    Michael C.
    26 August 2020 @ 10:02
    I get the scarcity element narrative. I think we all get it. But as the French say "Je suis au bout de rouleau" with it (I'm being beaten with a rolling pin). Money supply has to be elastic for an economy to function. It's the flip side of scarcity and its economics 101. BTC doesn't solve for elasticity. Inelastic money supply is by its nature deflationary. We have got to stop conflating the definitions and functions of reserve assets, commodities and currencies. Not saying BTC price doesn't go to the moon because it can still function as a commodity. Its just frustrating listening to mixed messages and conflated ideas and belief systems.
    • DX
      Dominus X.
      26 August 2020 @ 10:33
      I 100% agree with this. Bitcoiners unite under their religion of scarcity without understanding elasticity is a necessary element of money.
    • DP
      Daniel P.
      26 August 2020 @ 11:04
      The real-world debate that matters is whether it's better to have a non-elastic money or a money that can be as elastic as governments want it to be. A theoretical "slightly/occasionally" elastic money supply that snaps back to normal like an elastic band (after helping an economy lift itself out of recession for example) doesn't seem to exist?
    • JE
      J E.
      26 August 2020 @ 11:58
      Divisibility makes bitcoin elastic.. Satoshis can grant access to bitcoin for all and if consensus decides on more decimals, it would be a trivial addition without affecting scarcity...
    • CB
      Clifford B.
      26 August 2020 @ 13:51
      Correct. Great talk but it is not founded in economic reality. Previous performance does not dictate future performance and to put it bluntly, this is bigger fool theory on roids. So i got in early and did well, wonderful, now let me shill till thy kingdom come to get others onto my bandwagon so the price of my computer code goes up. I could go on and on about the Government/military clamp down issues but to what point? BTC is a trade to be put on, that is all, hodling indefinitely is beyond risky.
    • MV
      Mathieu V.
      26 August 2020 @ 15:04
      I think the problem here is mindset and the way you were raised.... We do not need inflation for an economy to prosper it's a misconception. And an ignorance of history.
    • CH
      Christian H.
      26 August 2020 @ 16:04
      In austrian economics elasticity of money is not required, only soundness is. Most of these talks boil down to austrian economics vs MMT. There are very articulate people defending either side with a lot of conviction. The good thing is, that we might have a chance to see which one actually works during our lifetimes.
    • PD
      Peter D.
      26 August 2020 @ 23:21
      No. The money supply does not have to be "elastic." "Elasticity" is a scam, perpetuated by government bureaucrats to enable them to confiscate wealth without the public knowing. But as Keynes noted: not one man in a million understands how this works.
    • WG
      Wade G.
      30 August 2020 @ 15:44
      The failing fiat regime we have now is the end state of your elastic currency, which is not to imply it can't limp along in an increasingly deformed state for another couple decades. If you've never read an economic text book that make the case for inelastic money, you need to read more. I don't know the future of bitcoin, but my base case is that it endures and flourishes as an important form of money, growing profoundly in value, largely due to absolute scarcity and other understood features consistent w/ money. I do put low, but non-zero probabilities on some of the threats commonly sited, so I'm pretty modest in my allocation.
  • mB
    marc B.
    30 August 2020 @ 03:26
    More crypto
  • SR
    Steve R.
    27 August 2020 @ 20:43
    Such a complete waste: https://www.neowin.net/news/global-power-consumption-by-bitcoin-mining-tops-7-gw-hashrates-at-120-ehs
    • SW
      Stephen W.
      27 August 2020 @ 21:15
      I suppose if Bitcoin leads us to a future where we don't want to get rid of cash for crap at the earliest opportunity then that might reduce waste though
    • SD
      Sebastien D.
      29 August 2020 @ 08:37
      Start thinking about the energy and lives spent in the pursuit of gold! Then wonder about all the human activities and make a list of all that need to be banned in a future dictatorship. Shopping for anything other than necessities and holidays are on top of my list :)
  • VS
    Vikram S.
    29 August 2020 @ 06:43
    Nobody knows more about Bitcoin than Breedlove22. Prepare to have your mind blown...
  • PW
    Peter W.
    26 August 2020 @ 17:07
    He's definitely the best bitcoin philosopher out there!
    • TS
      Thomas S.
      28 August 2020 @ 18:02
      Nah. That's Andreas Antonopolous. I thought this was a great talk, though. Admittedly, he strung some things together which I'm not sure go together: Going off the gold standard = more divorces, obesity, etc. But, overall, I thought he did a relatively good job of presenting the case for Bitcoin. One thing I wish someone would challenge: Is absolute scarcity (meaning a finite limit to Bitcoin) necessarily a good thing? How much Bitcoin already has been lost due to forgotten private keys (e.g.,, owner died without telling anyone the keys; keys lost due to hard drive failure; MtGox; Satoshi's Bitcoin haven't moved; etc.). How long before most Bitcoin is inaccessible for these reasons? 50 years? More? I get that it's completely divisible, and the scarcity proponents will argue that this just makes Bitcoin more valuable to those who retain their private keys. But, if this guy's right that Bitcoin is the "only" asset with a finite supply, why must we assume there are no downsides to this aspect of a novel new asset class? (And, as pointed out, he's wrong: Digital currencies may each be able to build in a finite supply; but, there are many blockchains that include this finite property, including all the Bitcoin forks and many others. Bitcoin may be the first and most valued right now, but it's not the only one. Indeed, if one looked at the asset class "digital currencies," rather than Bitcoin in particular, then it certainly doesn't satisfy this scarcity test. The opposite is true: Copy-Paste doubles supply since open source blockchains are infinitely reproducible.)
  • ar
    andrew r.
    28 August 2020 @ 16:36
    Fantastic presentation. It wasn't just about the superiority of BTC, but about how unsound money has so many far-reaching effects (a good redux of The Bitcoin Standard, which is one of the best 21st-century reads so far).
  • MD
    Matt D.
    26 August 2020 @ 23:42
    Interesting discussion - in my opinion he's pushing the scarcity argument too far. It is a technological, arbitrary limit, which "can" be changed - it is accepted to be the limit. And there can be many "bitcoin" - ie coins. Divisibility is the same for any digital or fiat currency these days - a function of the calculation tools. Just keeping it real - not trying to bring down Bitcoin or detract from it.
    • MD
      Matt D.
      27 August 2020 @ 00:57
      The 21 million was chosen, it is not a universal constant like Planck's constant for eg.
    • MD
      Matt D.
      27 August 2020 @ 00:59
      Sorry that's a joke. There's only two scarce things in the universe. Time and Bitcoin. The rest of the video not half bad but ...
    • RD
      Randy D.
      27 August 2020 @ 01:00
      While technically speaking, there can be an infinite amount of “Bitcoin” copies, they wouldn’t be anymore important than creating a new separate branch of the internet. Somebody could go out and create the infrastructure for a new separate internet, but it would likely never gain traction. The users would have a hard time finding any content to view, and the developers would have a hard time finding any viewers for their content. Eventually they’d all just go back to the established internet that we already have spent decades building upon. With Bitcoin it’s the same thing. Anybody who created a new and improved bitcoin would maybe have an initial influx of users/miners/etc, but eventually lack of liquidity and market cap would turn economic incentive back into the original bitcoin. As long as the consensus remains in the original blockchain, Bitcoin is and will be an increasingly scarce asset. My biggest fear with bitcoin is having well over 51% of the mining power located in a communist regime (China). At a $200B market cap, bitcoin is currently a drop in the bucket. But when is it not a drop in the bucket? $1T, $5T, $10T? And when it’s not, assuming mining power is still centrally located in China (which it will remain, as long as the economic incentive remains), what’s to stop the CCP from taking control of all the miners and creating a hard fork in the blockchain? Still a ways off I guess, but that’s where my worry in Bitcoin continues to lie
    • CP
      Chamil P.
      27 August 2020 @ 01:31
      Randy D, that is my major concern as well. This is why running a full node is important and hopefully is adopted more widely as the market cap grows.
    • JH
      Jonathan H.
      28 August 2020 @ 12:57
      Proof of Work makes Bitcoin difficult to adopt in the long run as a transact-able global currency. While the scarcity argument is true other crypto currencies have that scarcity written in the code as well. No doubt Bitcoin price increases might push for speculators to enter the market and adopt the technology. But it is not sustainable for global adoption when currently Bitcoin’s POW energy consumption rivals a sovereign country’s.
  • TK
    Travis K.
    28 August 2020 @ 02:35
    I liked the philosophical take, but agree with others below: the absolute scarcity of bitcoin is ensured for now, but not sure it can be guaranteed way into the future
  • MC
    Michael C.
    27 August 2020 @ 09:20
    How much do you bench Robert?
    • EN
      Elizabeth N.
      27 August 2020 @ 21:48
      Thickest neck in finance.
  • NA
    Naiem A.
    26 August 2020 @ 21:58
    if Bitcoin is infinitely divisible then it is not finite
    • DS
      David S.
      26 August 2020 @ 22:18
      Cute, but no dice. It may be infinitely divisible, but runs into practical problems. The finite is true under the original set up conditions. DLS
    • LF
      Liam F.
      27 August 2020 @ 01:33
      Zeno's paradox 2.0?
    • NA
      Naiem A.
      27 August 2020 @ 20:23
      Imagine for a moment we talking instead about a block of Gold? At which point would people realize that their slither of infinity was worthless? When it was the equivalent of a Single Atom or maybe a Quark?
  • BK
    Brian K.
    26 August 2020 @ 23:07
    I really think Fiat Currency is a deeply rooted almost moral, spiritual cancer on the world. More Obesity, Addiction, Suicide, and divorce since fiat got off the gold standard. WTF? Maybe we are a little bit all over the map?
    • AB
      Alastair B.
      27 August 2020 @ 11:09
      Yes, but less war, and a huge spread in democracy worldwide. Correlation does not equal causation.
  • NR
    Nathan R.
    26 August 2020 @ 11:53
    On this topic, RV is becoming a bit tiresome of late. FEDUPBIZOWNER on Twitter says it best: ‘better get out before the government show drops. And save me your game theory. My partner has nukes authority and taxing power. Ride that horse as far as you can but u better know when to get off. Very simple.’ ‘When the music stops and the governments roll out their own crypto. Ur dead.’ ‘These people (cryptophiles) live in delusion world. I mean I get it. They hate the system and wanna f*&$ it over. So do I. But it ain’t gonna be as easy as “own bitcoin” pretty sure the powers that be already have a plan to eliminate it.’ Strong statements I grant you. My simile would be that crypto, to governments, is like all those 20th century left-wing rabble rousers the Soviets used to “encourage” to begin insurgencies. They were useful idiots. Once the Soviets had control all those revolutionary elements were liquidated. Crypto seems much the same. Governments are watching and taking copious notes but cryptophiles would do well to remember that when it come to seigniorage, government is especially ruthless.
    • MV
      Mathieu V.
      26 August 2020 @ 14:54
      If one gov't ban Bitcoin another would jump right in and open it's arm to it. China already tried and they failed... The US tried to confiscated Gold in the 30' and failed as well. Banning something you don't want is the best thing to do to make things even worse for you... You better embrace it and try to be the leader in that space to be able to take advantage of it.
    • GH
      Garrett H.
      26 August 2020 @ 14:59
      Bitcoin is just a more scarce, portable, and unconfiscatable version of gold--a place for capital to hide and move across borders as numerous fiat currencies inflate or property is confiscated as occurs near the end of the debt cycle. Moreover it can serve as a neutral settlement asset like gold between countries that choose to adopt it, particularly those that need a hedge against recycling surpluses into USTs (e.g. Russia, Iran, etc). Governments will vary in anatognism to it, depending on how they are constrained by law, popular opinion, and the need for financial repression. Right now, most governments don't care about a $200B asset, it is a rounding error in terms of capital flight. The best surface of attack for governments wanting to impose financial repression will initially be large managed funds, property, and retirement accounts which are easily regulated, taxed, and stuffed full of negative real-yielding sovereign bonds. Yes, the Bitcoiners who are outright anarcho-capitalists are idealizing a world that will not occur, and if it did would be extremely unpleasant. But there are many paths through which Bitcoin appreciates if you consider economic history and geopolitics. It's up to each investor to assign probabilities to those outcomes and allocate accordingly.
    • NR
      Nathan R.
      26 August 2020 @ 14:59
      It won’t be a ban most likely. Full embrace by the IRS and Treasury will make it “part of the system” with a Euro-style grace period to transfer bitcoins to new sovereign standard at a fixed exchange rate...or else.
    • KV
      Keld V.
      26 August 2020 @ 15:33
      Switzerland, Singapore, Germany, Malta, Cayman, Japan, etc. are all countries who are embracing Bitcoin. The US can shut it down, but that just means they will loose out on all the fintech inovation happening.
    • XM
      Xiaoyu M.
      26 August 2020 @ 15:47
      US government can't even ban alcohol, lol. Sir, you give too much credit to our government.
    • LB
      Lorenzo B.
      26 August 2020 @ 19:53
      You can't have the whole population, not even a very minor percentage of it, moving to Switzerland, Japan and definitely Malta or the Cayman. A State exercises its power in ways that are extremely more perversive than just controlling the legal tender. And yet I doubt they will ever give up such power. So technology is probably here to stay, and probably Bitcoin is bound to make akilling during a potential (and I presume lasting) Fiat surging debasement cycle. I wouldn't expect the paradigm to change too much, just like it hasn't changed too much after Gutenberg, Marconi, the Television and the Internet.
    • SL
      Sean L.
      26 August 2020 @ 20:47
      What's tiring is the "pretty sure the powers that be already have a plan to eliminate it" nonsense. What are the plans? Be specific? How would you go about it? We have actual points... you think we're being dense when the entirety of your argument is hypothetical conjecture. Also "save me your game theory"? ...why? Because you don't have a good argument against it? Nobody is ever able to explain how nukes, 'authority' and taxation can stop bitcoin. EXPLAIN. The gist of that conversation is as follows: In a debt based fiat system, the money creation process is such that the money is backed by collateral in the form of assets or contractual claims on reasonably expected future earnings (monetized government debt or new loans created by commercial banks). In such a system, a military is very important because it can protect the real assets (gold, real estate, infrstructure) and income streams (tax base, businesses, jobs) that ensure the money remains valuable. This argument about bitcoin and the military is a directional misunderstanding regarding the application of force. Militaries are good a protecting real assets that back money. They are not good at (offensively) forcing the use of money globally - especially in a rule-of-law free market system where there are no rules against barter, foreign currency use, etc... (just a tax headache) as is the case in all of the Western world. In order to ban bitcoin, all countries would have to agree to enforce the ban unanimously *and* have the technical capacity to enforce such a ban. I'm not big on the word impossible but I won't shy away from using it here.
    • JM
      John M.
      27 August 2020 @ 07:39
      My strategy is to maintain a small allocation to bitcoin. I believe it is possible that this thing could rise 50x or 100x in a 1-2 year time frame. I own more gold and far more gold miners - less upside but safer bet. Oddly, gold has outperformed bitcoin in the past 12 months! I think debating Bitcoin's long term relevance is not productive. I have no idea.
  • LF
    Liam F.
    27 August 2020 @ 02:55
    And this: https://www.forbes.com/sites/michaeldelcastillo/2020/08/26/fidelity-president-files-for-new-bitcoin-fund/
  • RD
    Rick D.
    26 August 2020 @ 15:05
    How is bitcoin an absolute scarce asset when other currency blockchains can be invented to replace bitcoin. Can someone explain what happens to the price of bitcoin when every country (China, etc...) or Company (Facebook) invents their own currency blockchain. I don't understand why no one talks more about this risk???
    • KV
      Keld V.
      26 August 2020 @ 15:28
      State issued digital currencies won't have what makes Bitcoin valuable: Decentralization and scarcity. They will be centrally controlled and the supply will not be scarce at all, it'll basically be what we already have. Plus Bitcoin has the first-mover and all the network effects thats comes with that.
    • AT
      Adam T.
      26 August 2020 @ 15:31
      You'll find your answer here: https://unchained-capital.com/blog/bitcoin-cant-be-copied/
    • CH
      Crag H.
      26 August 2020 @ 20:05
      @Rick: This is actually one of the oldest and most discussed criticisms of Bitcoin. Tons of material out there on the subject. Food for thought: What's stopping people from inventing a better operating system than Windows? What's stopping people from inventing a better network protocol than TCP/IP? Or a better web protocol than HTTP?
    • RK
      Ron K.
      27 August 2020 @ 01:13
      Rick, I struggled with this question too and it took me a long time of reading in it to get to being a Bitcoin Maximalist...but once you are there..it is hard to go back.
  • MD
    Matt D.
    27 August 2020 @ 00:54
    At the 10min to go mark - No Way - the digital age is not going to bring money back to its roots. You think fiat is a cancer. We will have hyper-monetisation in the future (tokens). Well that's my view.
  • LS
    Lewis S.
    26 August 2020 @ 22:31
    Socialism is when the resources of a nation are owned by its people. Autocratic central management of an economy is called State Capitalism, which is what they had in the USSR, what they have in China, and what you have now in the USA. Or you could keep holding cold war propaganda as truth.
    • BK
      Brian K.
      26 August 2020 @ 22:59
      the central bank is accountable to its shareholders, not its customers. Really?
  • TW
    Tim W.
    26 August 2020 @ 11:52
    Another great crypto related video! I'm a firm believer in the future role of Bitcoin that Robert presents. It would be great to see a debate between experts that have opposite views on Bitcoin's potential and its use case.
    • SW
      Stephen W.
      26 August 2020 @ 22:35
      I'd love someone to put up a good debate against Bitcoin just to check my thinking. Ray Dalio 'they'll just make another one' or Jim Rogers 'look I've got a gold coin in my pocket and the government have more guns'. There seems to be a lack of nuance from them that is true of many ardent Bitcoiners too btw.
  • FH
    Frederik H.
    26 August 2020 @ 12:47
    would bitcoin still exist if the price of energy was 0?
    • TM
      The-First-James M.
      26 August 2020 @ 17:27
      Why would the price of energy ever be zero?
    • Jv
      Jasper v.
      26 August 2020 @ 17:34
      yes
    • KN
      Kevin N.
      26 August 2020 @ 17:36
      Of course it would. Free energy would allow for infinite miners running to secure the network all while securing the mining reward in new bitcoin. Free energy is what ALL miners want!
    • SC
      Shaun C.
      26 August 2020 @ 20:47
      Yes - the same way transportation would cost money even if gasoline was free. You still have to purchase the car and pay to maintain the vehicles. Second - there is also costs with moving the energy from the source to the sink (transmission and distribution).
    • SW
      Stephen W.
      26 August 2020 @ 22:30
      I would guess the difficulty algorithm would go through the roof as it would be cheaper to mine and then it would be a question of access to mining resources (computing power) and time
  • AL
    Antoine L.
    26 August 2020 @ 15:48
    I'm curious of Robert thoughts about the inelasticity of Bitcoin
    • KN
      Kevin N.
      26 August 2020 @ 17:34
      Its a feature not a bug. One bitcoin is divisible down to to the 8th decimal place, so each BTC can be split into 100,000,000 units. Each unit of bitcoin, or 0.00000001 bitcoin, is called a satoshi.
    • DL
      Dan L.
      26 August 2020 @ 19:24
      I’d like to second that request. Is elasticity an essential feature of a currency? Why or why not?
    • DL
      Dan L.
      26 August 2020 @ 19:27
      Kevin, I believe Antoine is referring to the elasticity of the money supply, rather than the divisibility of the currency.
    • KN
      Kevin N.
      26 August 2020 @ 20:21
      I don't see a good reason for an elastic money supply. Why would anyone want a currency that can be debased at the whims a of a few biased people? I'd rather have a fixed, verifiable supply. Ask the question, how much gold is in existence and is there a ledger somewhere accounting for it all? When anyone "buys" gold how much of the total supply do they have? If they don't actually get a bar of gold but a piece of paper with a "right" to the gold, do they truly own it? Is that same bar of gold re-hypothecated to someone else who thinks "they" own it? What I mean is what happens if everyone with a claim to gold asks for physical delivery? Do you think there is enough? There is no way to know because there isn't a ledger. How much USD is in existence? How much has just been printed in the last 6 months?? Here is the bottom line.......I like Bitcoin because I want my value( hours of my hard work) stored in something that cant be debased and diluted.
    • CH
      Crag H.
      26 August 2020 @ 20:26
      Bitcoiners: "Bitcoin is super scarce and will therefore be a superb form of money!" Economists: "Money supply need to be elastic, therefore Bitcoin will fail." Reality: Bitcoin is the plumbing of the next financial system. Thousands upon thousands of other systems, networks and even currencies will be built on top of BTC. It's a money transfer protocol that will become just as commonly used as HTTP. Most people won't even know they're using BTC when engaging in commerce.
    • JR
      Jason R.
      26 August 2020 @ 22:15
      Kevin is right -- fixed quantity is a feature not a bug. I don't think it is a good question to ask about Bitcoin. The reason is bitcoin is deflationary and fiat is (typically) inflationary. There are some ideas around money that change greatly when the underlying principle of Deflation replaces Inflation. When you build an entire economy on this, the incentives to hold, invest and lend capital work out to be quite WAY different. I am certainly not knowledgeable to explain -- but Jeff Booth has an incredible mind in this space. If you enjoyed Robert's thinking today, i am sure he would be of interest.
    • SW
      Stephen W.
      26 August 2020 @ 22:26
      Banks will rehypothecate it for sure - but good luck trying to bribe and rent-seek your way around Bitcoin as a lender of last resort.
  • DX
    Dominus X.
    26 August 2020 @ 10:43
    Robonomics Web Services (RWS) token has a max supply of 100. Absolute scarcity that! More importantly there needs to be more thought into scarcity as a disadvantage for money. Scarcity for bitcoin is important but overrated for money. Money supply must be able to grow/shrink in relation to the economy it supports.
    • KN
      Kevin N.
      26 August 2020 @ 17:58
      1. Nobody uses RWS as a store of value so the scarcity is irrelevant. 2. Scarcity is overrated for money? So why don't we use pinecones as money? They are everywhere! Scarcity is the ONLY thing that matters! Please read the "Bitcoin Standard" to learn about the history of money. Bitcoin only comes up in the book in the last 20%.
    • SW
      Stephen W.
      26 August 2020 @ 22:08
      "Money supply must be able to grow/shrink in relation to the economy it supports". Why? the growing of money seems to be the main problem in the world?
  • TP
    Tom P.
    26 August 2020 @ 21:04
    Look, it's pretty clear bitcoin is going to be higher than it is today as the dollar (and fiat in general) gets smushed into oblivion to make the debt mountain smaller. However, the aggression with which bitcoin is going to get sold once we've passed the "debt singularity" (for wont of a better expression) will be something to behold. "Hodlers" are going to miss out, because they're going to miss the moment when bitcoin has served its purpose and is no longer valuable. You're never going to pay for your mortgage in bitcoin. But you'll be able to store value for long enough until you can transact back to fiat to pay the bank.
    • SW
      Stephen W.
      26 August 2020 @ 21:57
      I think this will depend on what the 'fiat' is that people will return to. By the time the dollar gets 'smushed into oblivion' and faith in governments being able to manage money without debasing it is gone, is everyone going to go 'Yep, I'll have another go on the Keynesian merry-go-round please, sign me up'. I think they will convert to fiat only when they have to. Take a look at what is being developed, payment rails straight to fiat from Bitcoin.
  • mf
    massimo f.
    26 August 2020 @ 20:26
    But.. isnt everything in absolute scarcity?
    • LF
      Liam F.
      26 August 2020 @ 20:55
      Time to pay attention is in absolute scarcity. As in, I don't have the time to pay attention to all the unfriendly complexity and vagaries of owning BTC. Plus it seems that I also need time to adopt a new religion & dogma. ;-)
  • LB
    Lorenzo B.
    26 August 2020 @ 17:57
    what prevents a group of participants to create a certain number of per se scarce crypto-systems? just like we have Bitcoin, couldn't market participants agree to recongnize value in Bitcoin2, Bitcoin3...BitcoinN? Gold after all has value for all the reasons mentioned, but also because market participants agree on giving gold value. Same is for Bitcoin. If as a collectivity (through governments) we make it extremly difficult to transact in Bitcoin-1 (by regulations) while we make it very simple to transact in Bitcoin-2 (basically because government mandates its taxes to be paid in Bitcoin-2)...what happens then to the value of Bitcoin-1? I agree on the likelihood of a blockchain system to susbstitute gold as the tool for a hard currency ledger, but I also can't be sure that Bitcoin will be that one
    • KN
      Kevin N.
      26 August 2020 @ 18:06
      The answer to your question is that the market decides which Bitcoin wins. Note that other Bitcoin forks have already happened and currently exist already as people tried to "improve" on bitcoin. (BSV, BCH) Most notably "Bitcoin Cash" which thought the market wanted bigger blocks to hold more transactions and they forked off Bitcoin and guess what. The market decided it didn't want that. So the miners and participants continued using the original BTC blockchain. Its reliable (11 years), secure (most Hashing Power), has a history of price growth (+billion %) etc etc. In a free and open market the hardest money wins. Thats Bitcoin.
    • TV
      Tyrell V.
      26 August 2020 @ 18:26
      Google Robert's medium article talking about path dependency. This is the main reason bitcoin 1 will stay market lead... It is a big assumption but is a proven principle in adoption theory. My main concern is that when you get forced onto the Government Digital currency rail (probably at a terrible ratio to current fiat rates - due to cantellon effect) - by definition, digital currencies will be all pervasive and knowing. If a government wants to keep you within the fire walled system it can - I do not know how any non government crypto survives that? It will be at the mercy of the government consent to operate and interact with the new digital currency.
    • LS
      Lemony S.
      26 August 2020 @ 19:08
      Tyrell, you don't think there will be ways to get internet access, open ports, covered tracks? There are satellites everywhere and those need not be US or country X satellites. BTC is already so big it'll be hard to outright ban it, that will be a powerful admission that it's important, which is the paradox. Cryptos will only be remarkably restricted for the consented sheeple or clean system players who are ok with being taxed to death to do the little that they desire to do within the system of the confiscatory tax future that is coming ... until that inevitably breaks as well.
    • DL
      Dan L.
      26 August 2020 @ 19:21
      Sovereign governments are in competition with each other. Therefore, they do not benefit from all accepting the same crypto for taxes (or for settlement in general); i.e. they might as well all back the crypto that already has greatest acceptance (Bitcoin). Also, banning Bitcoin requires banning free speech. This at least makes doing so less popular and the sort of thing totalitarian governments tend to do, like printing lots of fiat.
    • SL
      Sean L.
      26 August 2020 @ 20:53
      In order to have more reliable digital scarcity, you need to be more decentralized than bitcoin. In order to be more decentralized, you need greater network effect. But it's a catch 22 because how do you convince more people to use a less decentralized (and thus less reliably scarce) version of bitcoin? Bitcoin is a one time occurence - you can't recreate its authentically honest and decentralized distribution mechanism over the past decade.
  • Dv
    Daniel v.
    26 August 2020 @ 17:02
    What about art? Last time I checked Rembrandt did not come back. His paintings are therefore an absolute scarcity, like a lot of other stuff. I have a big percentage of my portfolio in BTC but these guys talking about BTC like its some sort of God, it's tiresome.
    • DL
      Dan L.
      26 August 2020 @ 19:13
      Art is not a commodity. An artwork is scarce, but it is non-fungible and lacks a unit of account (or is composed entirely of a single unit). It may also degrade over time, costs a lot to transport and can be counterfeited.
    • SL
      Sean L.
      26 August 2020 @ 20:21
      Scarcity is just one of the key battlegrounds in the competition for monetary goods (the most saleable good which solves the problem of the double coincidence of wants) - scarcity, durability, divisibility, portability, transactability (including verifiability, auditability, etc...).
    • Dv
      Daniel v.
      26 August 2020 @ 20:26
      I was referring to this: "...argues that only two things in the universe are absolutely scarce – time and bitcoin."
  • PT
    Philip T.
    26 August 2020 @ 12:41
    Good pro-Bitcoin discussion. It is not clear why a verifiable gold-backed cryptocurrency doesn't meet his concerns with gold. The two biggest risks to Bitcoin are governments restricting its use and a hacker (or the massive Chinese military group of hackers) breaking into Bitcoin (as has happened before).
    • DP
      Daniel P.
      26 August 2020 @ 13:32
      What do you mean a massive Chinese military group of hackers "broke into" Bitcoin?
    • MV
      Mathieu V.
      26 August 2020 @ 14:55
      The Bitcoin blockchain has actually never been hacked ever. I'm not sure what you're talking about
    • KN
      Kevin N.
      26 August 2020 @ 17:39
      Who controls the gold in this scenario? A "trusted central authority" ???? Yeah not really working right now.
    • DL
      Dan L.
      26 August 2020 @ 19:32
      Because a gold-backed crypto is a digital form of gold-backed paper. Therefore, you inevitably run into the same problems with currency devaluation unless you have some magic way of guaranteeing that the ratio of gold to digital units remains constant.
    • SL
      Sean L.
      26 August 2020 @ 20:25
      A verifiable gold-backed currency is an oxymoron. Who would verify it? Not individuals which means its can't compete with bitcoin on that front. Game theory says gov'ts can't successfully ban it because other competing jurisdictions will gain. Bitcoin has never been hacked before - no idea what you're referring to but that's simply false.
  • RD
    Ryan D.
    26 August 2020 @ 11:46
    2 important things I’m note sure I understand. BTC is inherently deflationary, how is this good with globally growing population? Isn’t the BTC predominantly controlled by some whales? Governments want to have some type of fiat, G7 collectively could sanction IR exclude business that use BTC could they not? Isn’t the US restrictions access to capital markets already with that those who trade with Iran? I love the concept and goals- just not sure how it meshes with the goals of governments who will fight it with any means necessary to maintain their carte Blanche of spending....
    • KN
      Kevin N.
      26 August 2020 @ 17:45
      It DOESN'T mesh with the goals of government and that is precisely why it exists. Governments want to print money endlessly to accomplish their own goals. Inflation steals your wealth at a prescribed clip of 2% per year. Bitcoin cant be stopped by governments. Yes, they can create friction to onboarding and offboarding but it wont stop it. However the train has left the station. Its been around for 11+ years now. See Fidelity digital, see Microstrategy, see the state of Wyoming legalizing everything, see the OCC letter allowing banks to custody Bitcoin. Look, it cant be "banned".
  • SS
    Stephen S.
    26 August 2020 @ 15:40
    I listened to this guys’s “An Open Letter to Ray Dalio”, wasn’t too convinced. Generally positive on Bitcoin, but thought it could be better articulated.
  • RK
    Roger K.
    26 August 2020 @ 08:02
    Scarce...!?? what about the forks?
    • AC
      Alex C.
      26 August 2020 @ 08:46
      or effective fractional reserve expansion through second layer scaling. In reality economies need to balance inflation and deflation, so it's not necessarily a bad thing. However, it's still ultimately based on trust, the trust that it moves beyond speculation and that being a view that continues to be shared by market participants. Gold clearly has a well established track record on that front, bitcoin is still nascent. From a store of value perspective people need to believe that others won't move value to a competing technology.
    • LK
      Lalith K.
      26 August 2020 @ 09:12
      This is true for crypto as an asset class but not bitcoin specifically. The bitcoin network is unaware of forks. This can be trivially demonstrated by typing "bitcoin-cli gettxoutsetinfo" in the terminal of a computer running a full bitcoin node. A metals analogy would be something like the existence of tungsten does not detract from the scarcity of gold.
    • DP
      Daniel P.
      26 August 2020 @ 09:38
      Sorry, but in 2020 this is pretty naive - go make a fork and see what happens (hint: there's lots of high profile examples to draw on)
    • TM
      The-First-James M.
      26 August 2020 @ 15:32
      The majority of people active in the space don't give two f***s about the forks, and ignore them as yet another new s***coin...
  • CG
    Chris G.
    26 August 2020 @ 14:42
    I love this guy.
  • MH
    Michael H.
    26 August 2020 @ 11:42
    Overall a good discussion. He downplays the value of gold as money or a medium of exchange because it underpins all central banks. That is not a fault of gold but a fault of central banks. Wait until central banks control crypto currency and Bitcoin. Also he states that we can't make more time but isn't that what productivity improvements do?
  • VG
    Viktor G.
    26 August 2020 @ 10:59
    Great visualization from Robert. Just checked the Gold/Bitcoin price (XAUBTC). No need to go much deeper into discussion which of the two assets is better, market knows it best.
  • Nv
    Nick v.
    26 August 2020 @ 09:06
    In my opinion it is; Transferring the value of energy instead of value of time.
    • DP
      Daniel P.
      26 August 2020 @ 10:12
      While also true, I suppose the obvious response to this is: how is energy produced? I think his point is that human time underpins everything and so is the more foundational value.
  • RW
    Richard W.
    26 August 2020 @ 08:52
    Excellent perspective - thank you
  • MB
    Michael B.
    26 August 2020 @ 07:49
    Wish I had my time back. There was nothing new in this thesis.