Topic: Economic foundation of Bitcoin from the perspective of Denationalization of Mone (Read 334 times)

That is literally the only reason why he is not coming out as well, or maybe he can't anymore because he might be dead but that's not the point. Dude knew that if he came out then there would be a huge problem, wherever he is from, wherever he is living, wherever he wants to go to all of that would be in search for him and putting him in jail and trying to make a point with it as well, they would throw the whole book at him just to make a statement.

In short, if we are talking about something that is giving people freedom over their governments, even if it is not illegal then governments will try to do their best to stop it and move with their own path, anything that changes the path of the government will be seen as bad. Look at what's going on all around the world, when people start to give power and money to whole groups to give them more freedom, those creators will always be seen as bad by many people.

I think people should never underestimate the power of governments and why Fiat currencies are so important to them. Satoshi Nakamoto (Bitcoin) only succeeded with the Denationalization of Money, because Satoshi Nakamoto stayed anonymous and the technology was decentralized.

If the government knew who Satoshi Nakamoto was... they would have prosecuted Satoshi with the full force of the law and they would have had some way to make an example of people that wants to create their own "Private" currencies. ( Example : Bernard von NotHaus   and the Liberty Dollar ==> https://www.nytimes.com/2012/10/25/us/liberty-dollar-creator-awaits-his-fate-behind-bars.html )

https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency) - They (government) labelled Bernard von NotHaus as a Economic Terrorist and the Justice Department press release was quoted as saying: "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country."  

We can say that Bitcoin is the direction of the evolution of the human currency system. More and more groups will begin to accept Bitcoin's consensus. Nowadays, there are many old people, it is difficult to accept the concept of Bitcoin, but now more and more young people are quickly embracing Bitcoin. They do not have too much cognitive burden on the existing system. Young people can accept new things very well and quickly, and hope to change their destiny through new things.

The goal of currency denationalization is to free the economy from government control. Many governments, however, now restrict the usage or possession of Bitcoin due to their inability to manage it. Bitcoin will never be able to replace fiat currency, regardless of its volatility or decentralization. The government is unable to accept coins that are not under its control as legal currency.

Bitcoin is decentralized and in addition to financial management countries around the world are managing bitcoin to protect the interests of their companies its advantage is more to be decentralized it has no government or institution. The world's largest population is circulating these currencies through a kind of highly secure network no one is a policy maker everyone is equal just a node in the network this coin will go from buyer to seller directly without any intermediary in a safe and secure way. There is no central form of this monetary system there has been complete decentralization.

yes i appreciate your article BTC was born to give all of us financial freedom that is not controlled by any third party , but this is just talking to some tech savvy people as we are exposed to modern technology and use BTC , but some old people as well as children and some underdeveloped countries can't access the technology, they still use fiat money and CBDC.

Hi, d5000, you explained deflation with a very professional knowledge of economics. Now I will make further additions to your point of view. In fact, the solution you mentioned in the article is a stable currency based on Bitcoin. In my opinion, in the future Bitcoin will become the world's currency. It does not mean that Bitcoin must appear in the field of payment. Bitcoin's role is more a store of value and a role of digital gold. Humans store their wealth in the form of Bitcoin. Value is gathered in the Bitcoin network. In daily payments, different countries or economies issue stablecoins, but Bitcoin must be anchored. Use the value of Bitcoin to support the value of these stablecoins. In this way, it is possible to build a reasonable new world currency system.

Great piece.

The denationalisation of currency is really inevitable if you think about it, as we become more globalised.

Central banks are already trying to push this agenda with CBDCs that would allow their currencies to spread across the globe more efficiently - China is certainly at the forefront of this revolution and they are certainly trying to secure a large market share of the globalised currency system. But people need to keep in mind that cryptos, if not decentralised, are still fiats. Decentralised crypto adoption is what we need, not more fiat adoption.

The issue with this point of view I have is that I think it's an oversimplification. Bitcoin is an awesome invention (maybe the greatest one of the young century until now) but it doesn't solve all problems of the world's economy, instead it could create new ones.

Bitcoin, while it was created "out of thin air" at first, is essentially a deflationary currency, so it contradicts Hayek here a bit (if I understand that sentence correctly). The BTC money supply grows, but this growth becomes slower with every halving, and ends at 21 million.

Let's consider BTC becomes the dominant currency of the world. If the economic growth is stable or rising, the deflationary character means that prices measured in Bitcoin must gradually lower and lower. This deflationary tendency is already strongly visible, as we all know the long term Bitcoin price (e.g. the 1000-day average) has risen and risen, meaning that prices of typical goods and servicies in measured Bitcoin tend to decrease.

Now: is deflation bad? This is open to debate, there are people thinking that a deflationary economy would fit better with a world facing challenges like climate change, where resource usage should be lowered gradually.

But a shift to a deflationary economy would be a big change for the current economic "ruleset". For many publicly traded businesses it could become a disaster, because they benefit enormously from the inflationary paradigm. Fortunately there is at least a business type not affected too much from deflation: cooperatives, which are much more popular than many think, above all in Europe where in some countries they're among the biggest companies (e.g. in Switzerland and Spain). In a deflationary economy they could become a fundamental pillar.

But there is another problem. A deflationary currency could become too attractive, meaning that there would be phases of extreme deflation when too many people buy and hoard (hodl) it. We've already seen that: 15% or even 20% or more of price increase in a single day has occurred several times in the Bitcoin world. In a Bitcoin-dominant world this would mean all prices would be lowered 15-20% in 24 hours, which is an almost safe path into instability. Such an extreme evolution can lead to a "bubblish" sentiment and in consequence to massive profit taking, making the currency "inflationary" again for a while.

This means while we fix one kind of "cyclical depression", we create a risk for another kind of "cycles": the crypto FOMO periods and crypto winters.

Fortunately there is perhaps also a solution for this, although it's a very unorthodox thought: Bitcoin's money supply could be temporarily expanded if demand for it is too high. Obviously not in terms of "new Bitcoin added to the Bitcoin prptocol". But we've already seen such a mechanism: bitcoin-based stablecoins, like BitBTC. These kind of coins could even be implemented perhaps on the Bitcoin blockchain itself, for example with a protocol like Omni or Counterparty.

In conclusion: I agree in general that Bitcoin can bring enormous advantages to humanity (and its economy). But that doesn't mean there are no challenges and problems it can bring, so we have to always think about (and try out) new solutions for these issues.

Anyone can create a currency, but that currency is not going to be an official currency. Only the government can create an official currency that people will make use of. Take for example the United States of America owns the US dollars, it is their official currency and only their government can issue this currency and not just any person.

If you create a US dollar paper money, it’s going to be a counterfeit and no one is going to accept it from you and that’s fact. Now imagine a world without the internet and Satoshi creates Bitcoin as a paper money, do you think it would have been adopted? No it wouldn’t. This was possible because of the internet, but it wasn’t easy move to pull off. And if Satoshi Nakamoto wasn’t good in covering up his identity, I don’t think it would have ended up pretty well for him.

Actually Bitcoin is growing whenever the government is trying to stop the usage, even in the beginning bitcoin wasn't used by many people and they consider it as nothing but when governments stopped the fist gateway for some community driven sites paves the way bitcoin to be used as the donations for it which helped a lot and give recognition as well and the rest is history now.

I prefer the concept of corporations and free markets deploying and managing competing currencies for public consumption. Over the current format of states wielding sole monolithic authority over fiat currency supply.

Politicians and governments can never be held accountable for anything. They suffer no penalty for immoral actions that would guarantee a corporate CEO a place in prison. Thomas Sowell was once quoted for saying: "It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong".

Facebook could be held accountable for making promises about libracoin that didn't pan out. Governments of the world could not. Its a common sense arrangement to place power of currency minting and management into the hands of the private sector who suffers penalties for being wrong.

Yes, your summary is very good. The currency system of a decentralized system should be public. It should not be controlled by a single individual or a group, but should be owned by the entire community. This is the true spirit of decentralization. This kind of thinking is affecting more and more people.

I strongly believe that a currency system in decentralized space should be publicly owned, meaning it shouldn't be owned by a single person or centralized entity, hence shouldn't be privately owned. Private ownership of such delicate/important collective resource is an abomination in the world of decentralization. It's going to lead to abuses that are contrary to the Bitcoin Ideals/principles, unless the principles is coded in the rules and can never be changed without users participation/consensus, and this somewhat makes it publicly owned if your users determine the organization future direction, plus running nodes, helping to secure the network and possibly owning crypto assets in the organization.
Besides, money/currency is too important to be privately owned. That sort of private ownership will attract traditional regulators, if you decide not to attract them, then you need to keep things decentralized, transparent, public, based on the good bockchain principles, based on fair/good rule, consensus-driven, etc.

I think you can still be a founder of a decentralized public organization and still be as wealthy as "private founders in traditional world. (if you choose to). Things has to be unique in this space

Currency denationalization is to get rid of government control. However, many governments now prohibit the use or holding of Bitcoin because they cannot control Bitcoin.
Regardless of volatility or decentralization, Bitcoin cannot replace fiat currency. The government cannot agree that coins beyond its control are legal tender.
If Bitcoin becomes legal tender, more and more cryptocurrencies will appear in the future. Everyone can issue coins, and no one can stop it.
So will the future economic system be divided into countries?

In other words, Bitcoin has never been to replace legal currency, but slowly build a consensus and become the world's legal currency leader. At present, the characteristics of Bitcoin can solve many problems.
But how can so many countries in the world agree to a consensus?
How to solve the price instability of Bitcoin?
The U.S. dollar is already the entrenched boss, and it is impossible for the United States to accept it like this. It is already obvious from the current attitude of American politicians.

Bitcoin will definitely not replace legal tender at this stage. But in the next few decades, as the purchasing power of fiat currencies is getting lower and lower and inflation is getting worse, the global consensus on Bitcoin will become stronger and stronger. There will be more and more people choosing to abandon legal tender and choose Bitcoin. This is the free choice of the people. Of course, this process must be very long and even requires fierce struggle, but I believe it will come.

I think of it as being related to how to manage the financial system and control the levels of printing more than allowing companies and financial institutions to print more money.
If you notice, you will find that the computational and real value of many alternative currencies is zero, and therefore most of these models are not suitable for comparison, except for Bitcoin, which is considered unique to many factors, the most important of which is the decentralization of decision-making.

Bitcoin won't replace fiat or CBDCs. Never.

It will go to mainstream, more. It will become more popular on Earth each four years because of its cyclical bullish seasons but it is not Fiat-killer or anything similar.

Keep your mind neutrally and look at Fiat currencies and CBDCs. CBDCs would be the future of government-based currencies and the younger population will more likely accept it. However, the elderly would still use fiat currencies in paper, polymer, etc.

In my opinion, some of the logic in the book Denationalization of Money is the theoretical basis for Bitcoin to become currency now and Bitcoin to become world currency in the future. We are now used to currency issued by the government, but to some extent, currency can also be issued by non-governmental organizations. The issuance of Bitcoin does not rely on any centralized organization, it relies entirely on algorithms.

I think that the author's denationalization means that Bitcoin replaces legal currency. The current state is that sovereign countries will not abolish banks. As individuals, Bitcoin is more like an investment behavior. I don’t think currency denationalization will play a key role in the development of Bitcoin. The three main factors that promote the development of Bitcoin are: developers, users, and mining pools. Although developers can determine the technical architecture of the Bitcoin network, it is difficult to influence Bitcoin price trends. The main promoters of the recent hot ICO are some veteran bitcoin users, but the rapid rebound of bitcoin prices shows that the key factor that really drives bitcoin's stock price is the major mining pools of bitcoin. All in all, Bitcoin is completely decentralized, not controlled by the government, let alone regulated by the existing banking system.

Yes, this is our status quo, we are forced to accept it, and we are forced to use it. But when Bitcoin was born, Bitcoin gave us new choices. The government cannot control Bitcoin, nor can it eliminate it. When we choose Bitcoin, we not only get the freedom of wealth, we also get the freedom of thought.

We did not take it for granted - we were forced to accept it, forced to use it. And lack of economic education (there is no economic education in school - guess why. Why we have religion, art in school and not economy? Why no one teach us how interest rates affect loan installment? Because it is easier to manipulate population that dont know how money works)

No one will abolish the central banks. No on will stop governments from issue and control the money of a nation:

Mayer Amschel Rothschild: "Permit me to issue and control the money of a nation, and I care not who makes its laws!"

my view.
companies/communitys come and go/change. make and lose money..
so yea having them loyalty card 'credits' may seem good now. but no guarantee they will be a thing in 2-100 years

governments are (in best case) advocates voted in by the citizens. so they represent the citizens. and a government would always exist longer than any company would

governments should monitor and regulate the general citizen 'money' to ensure there is always something people can use as a general medium of exchange recognised nationally and stable(wishful thinking) but governments should not stop companies/communities from having their own optional extra choices of other currencies
EG whether it be grocery store loyalty token accounts
EG whether it be community tokens
EG whether it be national tokens
EG international medium of exchange to hedge against fiat remittance markets

replacing government regulated currencies. and just have a single crypto that all citizens are pegged to. is not a free option. it becomes the only option. which in of itself would become its own problem

being a second option a free option. solves more problems than it would create being the 'single world currency'

I think in the early days of money, when we used shells, paper money, copper money, there had to be a central mechanism for that. Otherwise the monetary system will not develop.

Of course, money becomes a toy made by centralized institutions, and it is also a necessary requirement of state centralization. With the advent of bitcoin, a decentralized peer-to-peer electronic cash system, we can fully envision a decentralized, degovernment monetary system that is more efficient and fairer.

Although I think bitcoin will have a good development in the future, I have not yet thought about the specific development. There may be many difficulties to overcome, but I believe that one day bitcoin will win over fiat currency.

We take it for granted that currency should be issued by the government not by any private institution. But when Bitcoin was created and accepted by more and more people, it occurred to us that it's not an exclusive right for government to launch currency and money can also be electronic and digitized. When increasing number of people began to realize that, our minds got liberated. A well-known Austrian economist Hayek elaborated this economic foundation in Denationalization of Money, published in 1974. I believe many of you here must have read it. He inspires us to understand the role of Bitcoin in the era and the economic foundation for Bitcoin to perform its monetary function.

I strongly recommend this book because it can systematically explain some basic knowledge in economics and give you more confidence and strength. Friedrich August von Hayek, an outstanding British economist and political philosopher born in Austria, the winner of the Nobel Prize in Economics in 1974, is widely regarded as one of the most important members of the Austrian school of economics, one of the most influential economists and social thinkers in the 20th century. He adheres to free marketing and his theory is verified when Bitcoin was created and extensively employed in the payment system of human society.

In 1976, Hayek published his last economics work---Denationalization of Money where he overturned the orthodox concept of currency system: since free competition is the most efficient in the general commodity and service market, why can't it be introduce to currency field? He put forward a revolutionary proposal: abolish the central bank's monopoly on currency creation, private currency and free competition are permitted. In this competition process, the best currency will appear.

Hayek concluded from theory and a detailed investigation and analysis of history that free competition of currency can prevent the recurrence of severe inflation and deflation, which are still plaguing our world today. Free competition of currency can also deal with cyclical depressions and unemployment, deep-rooted diseases in the current world economic system.

In the long run, we always have an illusion that institutions like government, of democracy or monarchy, will act in accordance with the general interests. If that's true, it should be reliable to hand over the currency to the government. But the fact is that the those institutions cannot control inflation, and the fiat we have is rapidly depreciating every year. No country can maintain the purchasing power of its currency at the previous level. Government's owning currency equals to the trend of its devaluation.

Hayek broke the illusion. He believes it impossible for the government to work for the general good. In his view, we should not be too obsessive about the government's credit since the efficiency of competition is much higher than that of government administrative monopoly, competition will select currencies with long-term stable value. Therefore, the superstition of currency’s nationalization strengthened by Keynesianism should be dispelled, private competitive currencies are allowed and the function of the government is to provide a legal and supervision framework for orderly competition of private currencies.

Compared with the Austrian liberal school of economics, the Keynesian school left a whole generation of economists advocating fiscal intervention. The administrative intervention of the major governments has never stopped. Whenever crisis strike, like covid-19, printing machine are starting anew to devalue fiat faster and faster. It seems that the government has solved the temporary economic difficulties, it is actually seeding fatal dangers to the entire economic system. The bull market of Bitcoin in 2021 was carried out on the basis of the government's depreciatory legal tender.

Then we can clearly feel the value of Bitcoin as a free currency. It has established a brand new system controlled by mathematics and algorithm. Fair, open, and transparent to everyone in that no one can interfere, tamper with or control Bitcoin. Bitcoin has built up a free currency system that is equal to all everyone. All governments must operate under the uniform rules of Bitcoin, and no one can cheat. Greater monetary power implies absolute obedience to Bitcoin rules.

That’s the new order Bitcoin brings to humans, which is bound to evolve into a novel human civilization. What’s your point?