Afghanistan
Albania
Algeria
Andorra
Anguilla
Antigua & Barbuda
Argentina
Armenia
Aruba
Australia
Austria
Azerbaijan
Bahamas
Bahrain
Bangladesh
Barbados
Belarus
Belgium
Belize
Benin
Bermuda
Bhutan
Bolivia
Bonaire
Bosnia & Herzegovina
Botswana
Brazil
British Indian Ocean Ter
Brunei
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Canary Islands
Cape Verde
Cayman Islands
Central African Republic
Chad
Channel Islands
Chile
China
Christmas Island
Cocos Island
Colombia
Comoros
Congo
Cook Islands
Costa Rica
Cote D Ivoire
Croatia
Cuba
Curacao
Cyprus
Czech Republic
Denmark
Djibouti
Dominica
Dominican Republic
East Timor
Ecuador
Egypt
El Salvador
Equatorial Guinea
Eritrea
Estonia
Ethiopia
Falkland Islands
Faroe Islands
Fiji
Finland
France
French Guiana
French Polynesia
French Southern Ter
Gabon
Gambia
Georgia
Germany
Ghana
Gibraltar
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Guadeloupe
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Haiti
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Netherlands (Holland, Europe)
Nevis
New Caledonia
New Zealand
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Sudan
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Sweden
Switzerland
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Taiwan
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Tuvalu
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Virgin Islands (Brit)
Virgin Islands (USA)
Wake Island
Wallis & Futana Is
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Course Welcome
Anil Patel
Certified BitCoin Professional
What does that mean?
The world's systems are experimental.
How to think about Money
Certified by MIT Fintech Innovation
MBA
Learning Objectives
Of Money
Types
Evaluate
Functions
Understand
History
Differentiate
BitCoin as Money
Why we have money
How money is chosen.
Debunk common money myths
Brief History of Money
Barter Exchange
Primitive Monies
Monetary Metals & Coins
Paper Banknotes
Fiat Money
Digital Fiat Money
Open Crypto.
License and Permission.
You Are Here.
Barter
rice <-> banana
Exponential increase of #pairs with #goods
Price discovery
Each pair has an exchange rate.
Linear increase in #prices with #goods.
"Money" used to price everything
What if banana guy doen't want rice?
Primative Monies
"Soft Money": Easy to make more.
Fungibility: all units are equal.
Shells
Divisible: Can make change.
Furs
"Hard money": difficult to make more.
Salt
Over time
Primative money become softer.
Stuff gets industrially produced.
Purchasing power evaporates
Store of value
Cannot insulate yourself from others holding harder money than you.
Monetary Metals
For people
By governments.
Man-Portable
Over-the-horizon trade
Durable: doesn't decay over time.
Debasement: purity of metal?
Must precisely weigh all transactions.
Gresham's Law: Soft money drives out hard money.
Paper Banknotes
Take gold on deposit.
Earn interest on deposit via loans.
Easy to make change.
Fold-able, Discrete.
Issue Recipts
Bank Runs
Fractional Reserve Banking
Fiat Money
It's money. Shaddup.
Printed for nothing.
Backed by taxing ability.
Backed by guns.
Because the government sez so.
Backed by agressive foreign policy.
Big, fat fractions
Digital Fiat money
Numbers in a database.
Automated printing.
The database is the safe.
Within the banking cartel.
Shared database
Credit Card System.
KYC Gateways.
A Brief History of Salt
Money vs. Currency
What is Money?
Unit of Account
Sound Money
Time Preference
Store of Value
Language
Medium of Exchange
Language
Converge on a few.
Expect Convergance on a currency.
More adoption: more value.
Needs
Communicate
Wants
Power law distribution
Bridge language.
Lingua Franca
BitCoin is neutral.
Store of Value
Must be
Value Dense
Durable
In constant demand
Easily sold as needed.
Liquid
Maintains Purchasing Power
Value to your grandkids.
Isn't cumbersome.
Doesn't degrade short term.
Medium of Exchange
Intermediary good
Nothing is perfect.
Changes over time w/ society.
Within a given community.
Universally Accepted
Facilitates transactions.
vs. need for coincidence of wants.
Not Mediums of Exchange
casino chip
Apple stock
coffee
Unit of Account
Ruler of Value
That's what government does.
Somebody changes "meter"
Estimates based on meters.
Imagine Buidling a house.
Time Preference
Willingness for delayed gratification
"Low Time Preference"
Makes interest rates valuable.
"High Time Preference"
Long-term Thinking.
Present You.
Short-term Thinking
Future You.
The Most Important Aspect of Economics you can Learn
"Sound" Money
Protects purchasing Power
Soft Money
Governments constantly debasing.
Hard Money
Wealth is what you don't spend.
The Gold Standard
"Money is gold, nothing else is."
Neutrality
Gold is the optimum, not ideal choice.
Scarcity
Why Gold?
Salability
Chemically
Gold works best.
Does not tarnish.
Abundant enough.
Not too abundant.
Inert.
Not radioactive.
Neither a gas or liquid at room temperature.
Salability
3 Dimensions of sales
Money is
The most liquid asset in a market.
Can be sold
Fastest
Least loss in price
Scales
Will be a minimum coin weight.
Can create hearchy of coins
Requires specialized equipment
Gold is not the most convienient
Is it divisible
Time
Reliably hold value?
Into the future?
Gold is great at this.
Resistant to
Rot
Corrosion
Counterfitting
Mass production
Cannot be destroyed
Form doesn't change over time.
Space
Transfered across the world?
Incurrs risk
risk = expense.
Has to be transported
Gold is a physical metal.
Scarcity
Measure of rarity
Must be useful. Unique Properties.
Rarity does not imply valuable.
Must be demanded by others.
Who Has it?
Ratio
Gold: 185kT/3kT = 62.
Silver: 22
Inflation Rate
Gold: 1.6%
Silver:4.5%
Paladium: 88%
Platinum:266%
Neutrality
Gold does not care.
About what it's used for.
Used as a doorstop.
Doesn't have an opinion.
Doesn't hold political views.
We impose meaning on it.
Esteem does not affect mining rates.
Who's got how much?
Government Money
Interest Rates
Money Supply
Reserve Currencies
Central Bank
The Fiat Era
Gold-Backed
Podcast
Gold-Backed
Governments can't print gold.
Print more currency.
Gold anchors against
Governments CAN seize gold.
3 ways to fund war:
Gold's fundamental weakness.
Raise Taxes
Sell War Bonds
Have to sell gold to maintain peg.
Breaks fractional reserve.
Devlolution through History
1933
Enforced by Secret Service.
Pre 1933: Gold notes had to be 40% backed.
Swiss held gold standard
Ended in 1914: WW1
1900: 50 gold-backed currencies.
Franc dropped 9%
Lyra dropped 22%
Corona dropped 69%
Bretton Woods
1971
7 Stages of Empire
Rome Vs. USA
Bread and Circuses
Fiat. Shaddup.
Gold is NOT money.
WTF Happened in 1971
Value asymptotically approaches zero.
Supply outpaces supporting economy.
No printing limits
Fed Holds it "as tradition"
Central Banking
Conduct Monetary Policy
S.W.I.F.T
Unelected Officials
Independant Authorities
Separate from Government
Banking History
USA: 1913
China?
Canada
Australia
Europe: 1998
Sweden: 1668
England: 1694
Nationalized in 1946
Japan: 1882
Public Goals
Manageable Inflation
Stable Currency
Low Unemployment
Tools
Monetary Policy
Money Supply
Reserve Requirements
Interest Rates
Responsibilities
Liquidity (LoLR)
Supervise & Regulate Banks
Provide Financial Services
We should be happier
Than to have
Our savings protected.
...to have a job
Yikes.
S.W.I.F.T.
World-Wide
6 Major global banks
Society for
Inter-Bank
Now 11,000 institutions
International transfers.
Launched in 1973
Speed Up
Make more secure
Enforces Sanctions
Financial
Telecommunications
Also processes securities.
U.S. Controlled
EU wants its own.
Reserve Currencies
Global Convergence
What's next?
Lifespan is 100 years
Transitions are rough.
Death of the Dollar Reserve
Money Supply
Taxes.
The Gov
The Fed
Lends to Organizations
Destroys Currency
Prints Currency
Buys Treasury Bonds
Increment some numbers in their account.
Inflating the money supply is one-way.
Inflation impacts savers w/o their consent.
The market is large, abstract, emergent.
Impossible to comprehend or manage.
Biggest Scam Ever
Where Money Comes From
Velocity
Interest Rates
Price lender gets from borrower.
Capitalism's Information System
Requires a free market to function.
If rates are fixed: true risk is unknown.
Governed by market time preference.
Communicates what the market wants more or less of.
Destroys market price discovery
Distorts incentives
Creates illusions of wealth
Creates boom/bust cycles
Taking Negative Interest Rates Public
Rolercoaster Crash
Malinvestment
Investments that would not be made w/o distortion.
Short time horizons
Politicans control money supply
sub-prime mortgages
dot-com bubble
Activity
Research a malinvestment.
A small police force would suffice.
Without government there is no war.
Military Spending.
Argue why.
Indicates nobody in the market wanted it.
Cite: WW1. Bonds sales failed. Had to resort to debasement.
BitCoin as Money
Monetary Properties
Store of Value
Proof of Work.
Neutrality
Monetary Policy
Unit of Account
Medium of Exchange
Store of Value
Don't loose your private keys.
10,000+ copies.
Liquid
Maintains Purchasing Power
Value Dense
Durable
Cannot be destroyed
Decentralized
Can absorb all value "thrown" at it.
Can store large and small values w/ equal ease.
Shallow history.
But blows the doors off everything else.
Mostly.
Liquidity is increasing exponentially.
Medium of Exchange
Divisible
Portable
Widely Accepted
Fungible
Relatively Stable
Common & Accessible
Nope.
Nobody wants to spend.
Supremely.
Mostly.
Need at least a cell phone.
Every BitCoin has a permanent history.
Unit of Account
Uniform Unit of Measurement
Unheardof.
21 million cap.
Usable to measure value.
Divisible to "satoshi", 100 millionth of a BTC.
Pretty good.
Sufficient Granularity
Sylabus
"What is money?"
That is the beginning of the real rabbit hole.
Over time becomes hyper-intuitive.
Start with 'money' you know.
Discover the money you do not know...yet.
Proof of Work
Money has always been backed by work.
Fiat is the historical anomaly
Must do computation to create BitCoin.
Should return to work-backed money.
Components
BitCoin
Dollar
Govenor Board
Node Network
Monetary Policy
Swift
Blockchain
Unit of Account
Settlement Network
Crypto
World Finance
Monetary Policy
Halvening
21 million cap
Mining done by 2140.
Inflation halved every 4 years.
Board of Govenors
Vs.
Code is Law
Etc.
Stock/Flow ratio is 56, 1.8% inflation.
Average 10 minute blocks.
Difficulty adjustment
Fees are free market supply/demand for block space
Comparable to gold
BitCoin's Central Bank
Anti-fractional reserve.
Neutrality
All forms of information were printed.
Has no editor
Has no opinion
Printing press enables duplication.
BitCoin creates uniqueness.
Disrupted church's monopoly on books.
Platypus.
Assignment
BitCoin Memes
Still volatile.
Banks are still scum.
Evolves rapidly
It's about wealth.
It's about freedom.
Used by scammers
For every perception
There is an equal and opposite perception.
18
This calls for wisdom.
and his number is 666.
for it is man's number
Calculate the beast's number
The the one who has insight
16
small and great
free and slave
On their right hand
He also caused everyone
rich and poor
to obtain a mark
or on their forehead.
17
or is number
his name
that is
the mark of the beast
unless he bore
to buy or sell things
Thus no one was allowed
This is fiat.
This is global
This is universal.
The key is iconic.
The key is indelible.
Permissioned.
Membership could be on a permissioned blockchain.
is a license, not currency.
Revelation 13
Name or Record Number.
Democratic.
This role may be a particular person.
Cryptographic key?
Private key of the beast?
Always two there are.
Command economy
Free economy.
Only free economy produces goods and services.
Command economy is humanity's default state.
Recently free dominated...for a short while.
Most of human history command dominated.
One cannot destroy the other.
Currency is work.
Currency is relationship-based.
Cantelon Effect.
The Free Economy will converge on the BitCoin Standard.
BitCoin will endure until Christ returns and beyond.
Powers that Be.
Intermediaries and rulers
BitCoin will be mark agnostic: permissionless currency.
BitCoin is not the Mark.
Will converge on the "Mark of the Beast".
Will remain in power until Christ returns.
Will re-form around license and permission.
Will loose control over money to BitCoin.
Collapses are not economic. They're celestial black swans.
The economy will be running on BitCoin.
This is not an economic measure.
There will be no doubt.
Deep into Armegedon.
This is a draft, not a stimulus.
Rally 'round the family. Pocket full of shells.
Private Goals
Maintain and extend claims on the economy.
Maintain reputation.
Maximize in-flow of value to shareholders