Is Bitcoin just essentially another form of fiat, with no intrinsic value? Does the endless creation of altcoins negate the scarcity proposition of Bitcoin, which is capped at only 21 million coins? Saifedean Ammous, independent educator at Saifedean.com and author of “The Bitcoin Standard” discusses with David Lin, anchor for Kitco News, some of these common
Let's talk about your Bitcoin, your new book. Now, the Fiat standard. Now we're going to tie this into, of course, everything we've discussed, you are trying to apply the same analysis that you've done with a Bitcoin standard to Fiat currency currencies. Very interesting concept. Uh, uh, I have a counter argument that I've heard from many people online.
This is a common counter-argument against the store of value, prospect of Bitcoin, and they pee and skeptics say that. Yes, your rights. I've deemed the number of Bitcoin is caps and you know that the amount of us dollars or bonds, or, you know, whatever other currencies are not kept, but get this, the number of all coins is not kept.
And therefore crypto is a really just like Fiat currency. You can, you can, you can print as many as you like. And of course the, the, the value proposition is actually in the blockchain technology itself. Crypto has no utility. That's the common argument I hear against Bitcoin. Can you, can you comment? Yeah.
First of all, you know, just the blockchain technology value proposition, I think is just, um, is, is a terrible misunderstanding back from 2015. And I think I wasted enough of my life trying to talk about that. Anybody's interested look at the last chapter of my book. It explains why basically, you know, the only thing that works in blockchain technology is Bitcoin on the one hand.
But yeah. And, and the case of altcoins, I think, um, some people say that altcoins devalue or debase Bitcoin, because you can keep making more and more of the altcoins. But I think in fact, outcome outgoing inflation, he says altcoins and in fact exposes Bitcoin's value proposition and that's because altcoins individually are inflation.
But also collectively they're all inflationary because they're all in one category of goods together, which is inflationary, digital currencies that are not decentralized that have a small group of people that control them. And that's a distinct product from Bitcoin, which is the only one that is truly decentralized.
The only one that truly nobody controls. And the only one where you can know with a very high degree of scale. But there's not going to be 20 more than 21 million. You know what the supply is going to be, but with all the other digital currencies, you don't know how much there's going to be because it's a small group of people that can change the rules.
And we've seen, uh, some of the bigger, uh, altcoins and the hard fork very regularly. And so with one of these hard forks, you know, they could 100 X the supply, you know, you could go from a supply of 100 million to a supply. Uh, 10 billion or a hundred billion or a hundred trillion. And then that will massively devalue the existing coins.
I don't think there's a serious case for investors to look into other digital currencies, because I think this is, you know, the, the, um, the traditional markets critique of Bitcoin and digital assets, um, applies to altcoins. It doesn't apply to Bitcoin. You know, when people say, what is just numbers on a computer and it can get hacked.
It's true in the altcoins that are a group of people that you could, um, get into a room and put a gun to their head and they can change them. It's not true in Bitcoin. There are no people that you can put into a room and get them to change the Bitcoin protocol. So that's why Bitcoin is really the only one that has a credible monetary policy.
We know how much Bitcoin is going to be. And you know, for the last 12 years we've had the monetary policy later. And we've seen Bitcoin stick to it in spite of so many people tried to change it for so many reasons, but it continues to sell. So we don't have that with other coins. And that's why, you know, they trade on other value propositions.
They talk about, well, we're going to do, um, smart contracts or whatever buzzwords of the month they're going to do, or, you know, um, all of these new fangled things that they come up with. They can't really compete on the, uh, actual value proposition of Bitcoin. There's no coin that can credibly say that.
Yeah, we have this much supply and we're never going to make a difference. We're never going to make a change in the supply. So that's why I think, you know, the more altcoins. The more, they eat up their own. Uh, they eat into each other because yeah, so you're doing a smart contract platform. Well, you know, a lot of other people can start building smart contract platforms too, and how it's more special and they'll make more tokens and then there'll be more and more and more tokens and you can keep inflating the number of those tokens.
So all of the demand for smart contract will eventually. Over many, many, many, many networks that want those things, but demand for Bitcoin can only be met by basically some of the things people can learn about the, uh, the Fiat currency that you talk about in your book, you book, do you ever compare Bitcoin directly to the concept of Fiat?
If someone were to say to you, Saif Dean, I think Bitcoin is exactly like Fiat. How would you say, what do you talk about that in your book? Yeah, basically the book is a comparison of the technologies. And so, you know, I wrote the Bitcoin standards. All right. I have an engineering background and I have an economics background.
I'm going to look at this and try and explain it from first principles. You know, how does it function? What does it do? And once you understand the function, you can understand the implications, like, you know, an engineer writing a description of a product that they, uh, come across or they built. So this is how I looked at Bitcoin for the Bitcoin standard.
And I think that approach seems. Quite popular. A lot of people tell me that it was a great intro to understanding Bitcoin and getting to really know the why of Bitcoin. And that's that that's I think the essence of it. So thinking about it, functionally was a very powerful tool. And then it occurred to me.
Maybe I should do the same thing with the Fiat money system and the difference here, of course, nobody designed Fiat, um, in the same way that Bitcoin was designed. But, um, we can look at it. With analogy to Bitcoin, we can look at the characteristics of Bitcoin, then compare them to Fiat and then look at analyze how fiasco works.
Right. And be able to make conclusions about, um, what are the properties of it. And I think drawing the analogy with Bitcoin, because Bitcoin is a system that works, you know, it's just code it's 100%, uh, facts and numbers and math and 0% emotion and propaganda. Um, you're able to see the basis. Building blocks of what makes a money and a monetary system work.
And then you can, uh, apply that framework to Fiat and see the, uh, analog analogies between them. And then you can understand how fiance works in a much better way because getting rid of all of the romance and propaganda that's around. And so this actually, I found it to be a very fruitful exercise for writing the book.
I think the most, perhaps the most powerful insight that I come up with is when you try to think about how a fiance works, how PF money works, how money works, how he had money, create that, you know, in Bitcoin, we have miners who produce new Bitcoins by doing this proof of work and go. We have people we'll go dig holes in the ground and take gold out and refine it when it feels the way that new Fiat money is made is through lending banks, make new money when they issue new loans.
So when you analyze, when you, when you make an analogy of that, when you make an analogy between mining and lending, then you start understanding why debt is such a prevalent part of the Fiat monetary system. Why everybody's in debt, you know, individuals aren't in debt, uh, governments aren't. Everybody, um, corporations are in debt.
Everybody gets into debt because debt is the only, um, rational course of action in a world in which getting into debt allows the bank that is giving you the loan to print new money. So if you wanted to buy your house in cash, you're just buying your house in cash. But if you buy your house from the bank, the bank is going to get you a better deal, basically because they are printing.
From making your loan, they're able to make new money. So of course, they're going to cut you in on some of that money, so you can take the loan from them. And that's why everybody's always in debt. So then we think about the economic implications of a society that is constantly in debt that cannot save.
And that is forced to live paycheck to paycheck because if you miss a couple of places, You're out on the streets and, um, you know, as opposed to a world in which people are used to accumulate savings, which is how it works on the gold standard. Now, I think it would work under a Bitcoin standard. So this is one very important, uh, difference.
And then of course, the flip side of it is that all of that money that is being sucked out of people's savings, um, with inflation is going to finance government, which allows the government and an enormous amount of, uh, power economic power over the economy, because it essentially can print it off. All right.
Excellent. When is your book coming out? Well, the book is now available for pre-order and it'll be out by then end of the year by December. It should be out so you can get it in time, in time for Christmas. Well, so you can order it right now. You can pre-order it though, the Kickstarter and you can get the first draft right now.
And then do you get the book? Um, either digital or, uh, audio or physical copy by the end of the year. So you can go to safe and dean.com/kickstart. And, uh, you'll, you'll see the link over there and you can also pay in Bitcoin if you want. Can we pay in doge coin? No. And a seventeen.com workout. What can people expect to learn from, uh, from your work on safety.com?
So I have, uh, courses in Australia, economics and courses in the economics of Bitcoin. I've got four courses so far, and I'm working on making them. And, uh, you can sign up and you'll get weekly chapters from my books. So now the Fiat standards, but also principles of economics and economics textbook that I'm writing.
So you sign up and you'll be getting a new chapter every week and there'll be more courses being offered. And then you can also join us in the live sessions. Uh, to discuss these courses, uh, and to discuss all kinds, it's a different material that then get published on my podcast, check it out the Bitcoin standard podcast, where we get a lot of interesting discussion and a lot of interesting guests in ours.
Okay. Excellent. Excellent. And, uh, well maybe one day you'll also accept those corners payment. If you consider it a store of value, but, uh, until that day we'll pay you a Bitcoin. Thank you very much. Thank you for coming on the show. Have a good day. Take care too. And thank you for watching Kitco news. I'm David Lynn. .