Abigail Disney

Abigail Disney (Disney Heiress worth $120 million) thinks that governments should tax the rich more. I guess the assumption is that then the government would do “good” with that money? But would they? Data says that giving money to people directly often is much better than having “someone else” decide what is best for them. 

There are multiple examples of this

The Finnish Experiment 

California Program Giving $500 No-Strings-Attached Stipends Pays Off, Study Finds

So, instead of deciding what is good for others, why doesn’t she embark on a personal redistribution? I proposed a similar, self funded, basic income idea to Mark Zuckerburg in 2017. He never took me up on that. 
Here is the basic setup.

$30k/year*500 people =$15 million *5 years = Cost of program $75 million over 5 years.

Since Abigail is worth $120 million and has rising stock, she will likely come out with over $75 million at the end of the project!

I am sure someone in Stockton who did this project would be happy to take some money to fund a larger project. 

Or I am sure Andrew Yang would be happy to help facilitate such a project. 
We are waiting for a large donor to step up and fund such a large scale, long term project. 

Be a leader Abigail. 

EV News – 2022 Reveiw and 2023 Coming Soon!

I had a short conversation with someone about EV’s (electric vehicles) who admitted that they didn’t know much about the current adoption/industry. I took it upon myself to gather a few highlights from 2022 as well as some info about exciting near term developments for 2023. Below are those articles!

A short deviation from all the EV stuff that will follow.

Porsche begins production of ‘e-fuel’ that could provide gas alternative amid EV push. Porsche said Tuesday that a pilot plant in Chile started production of the alternative fuel, as it aims to produce millions of gallons by mid-decade.

https://www.cnbc.com/2022/12/20/porsche-starts-production-of-e-fuel-that-could-provide-gas-alternative.html

 A big deal for 2023 is that most EV’s are again open to the $7,500 tax credit, depending on where the batteries are made and some other rules.

Previously after any specific manufacturer had sold 200k EV’s that company’s cars would lose a tax credit.

So GM and Tesla EV’s were not getting a $7,500 tax credit at the end of 2022 while Ford’s were.

https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after

Tesla Cybertruck – Many Tesla fans are closely watching as tooling rolls into the Texas production plant, getting ready for Cybertruck production later in 2023!

Tesla takes delivery of army of robots to build Cybertruck

Tesla Cybertruck Coming, Giga Press Shipments Arrive At Giga Texas

https://insideevs.com/news/630127/tesla-cybertruck-coming-giga-press-shipments-arrive/

TeslaSsemi – Initially 36 delivered to Pepsi. More being delivered in 2023

500 mile range on the Tesla Semi, pulling a load.

Tesla expanding Texas plant – $700 million capital expenditure https://electrek.co/2023/01/10/tesla-applies-massive-million-expansion-gigafactory-texas/

Vinfast – Vietnamese car company. Up and coming! Sounds like a bit of a rough start though.

Part of a huge company – Vingroup that seems to own everything in Vietnam.

https://jalopnik.com/vinfast-vf8-electric-car-first-drive-not-ready-for-u-s-1849892217

 Vingroup Joint Stock Company is the largest conglomerate of Vietnam,focusing on technology, industry, real estate development, retail, and services ranging from healthcare to hospitality. The company was founded by property developer and entrepreneur Phạm Nhật Vượng.

https://en.wikipedia.org/wiki/Vingroup

It’s hard to tell how many cars Vinfast has sold in 2022. It sounds like only a few thousand. But hopefully they will start producing more in 2023! More EV companies the better.

https://www.marklines.com/en/news/274025

 Ford

The company said it sold 15,617 F150 Lightning EV pickups in 2022. Plans to sell many more in 2023. 

 Rivian

On a full-year 2022 basis, Rivian produced 24,337 electric vehicles and delivered 20,332 to customers. Rivian is a new EV only car (currently only making Trucks and SUV’s) company.

https://insideevs.com/news/629288/rivian-ev-production-deliveries-2022q4

VW bus -ID.Buzz –

saw the start of production of the ID.Buzz electric van after it was officially unveiled last March.

6,000 Buzz deliveries alone by the end of 2022

 In 2022, 20,511 Volkswagen ID.4 (small electric sedan) were sold in the US, which is 22.5 percent more than in 2021 (16,742) and 6.8 percent of the brand’s total volume. Cumulatively, more than 37,000 ID.4 were delivered to customers

https://insideevs.com/news/629719/us-volkswagen-id4-sales-record-2022q4/

2023 Chevy Bolt EV and EUV get $6,000 price cut, start at $25,600 –. Probably cheapest/best value EV for sale in USA.

Canoo – New EV company. Has multiple sale agreements with Walmart, US military, others.

https://www.press.canoo.com/press-release/walmart-purchases-canoo-electric-delivery-vehicles

United states post office – Personally I think this is a great application for EV’s. standard daily route length. Can recharge at night. Should save USPS a lot of money. 

https://about.usps.com/newsroom/national-releases/2022/1220-usps-intends-to-deploy-over-66000-electric-vehicles-by-2028.htm

 o Postal Service anticipates increasing the quantity of purpose-built Next Generation Delivery Vehicles (NGDV) to a minimum of 60,000 of which at least 45,000 will be battery electric by 2028. NGDV acquisitions delivered in 2026 and thereafter expected to be 100% electric.

o Postal Service expects to purchase an additional 21,000 battery electric delivery vehicles through 2028, representing a mix of commercial-off-the-shelf (COTS) vehicles. Acquisitions delivered in 2026 through 2028 expected to be 100% electric.

 Chinese EV companies – NIO, Xpeng, Li auto – are the 3 new big upcoming Chinese EV companies.

NIO – . NIO delivered 122,486 vehicles in 2022 in total, increasing by 34.0% year-over-year. Cumulative deliveries of NIO vehicles reached 289,556 as of December 31, 2022.

https://www.nio.com/news/nio-inc-provides-december-fourth-quarter-and-full-year-2022-delivery-update

Nio is also working on battery swap stations, not just charging like most other EV companies are doing.

https://insideevs.com/news/622519/nio-1200-battery-swapping-stations-china-2022/

Xpeng – Xpeng ranked third, delivering 11,292 vehicles in December, down from 16,000 last year, for a total of 120,757 in 2022.

Li Auto – They are the 3rd hot Chinese EV car company. Honestly I don’t know much about them but apparently they delivered just slightly more EV’s than Nio or Xpeng in 2022 (Li Auto – 133,000 deliveries in 2022. See above link.

BYD – BYD auto is a legacy car company that has delivered a lot of hybrids in china.They sell more plug in hybrids than pure EV’s. but still a good company/force in EV world.

https://insideevs.com/news/629273/byd-plugin-car-sales-december2022/

In 2022, BYD sold more than 1.85 million plug-in electric cars, more than tripling its 2021 result of 593,745. This makes the company the world’s largest manufacturer of rechargeable cars, although, in the case of all-electric cars, Tesla still has a significant edge (over 1.3 million deliveries).

BYD plug-in sales year-to-date:

BEVs: 911,141 (up 184% year-over-year)

PHEVs: 946,238 (up 247% year-over-year)

Total: 1,857,379 (up 213% year-over-year)

Bitcoin Blocks and Fees

Bitcoin at it’s simplest is a ledger keeping track of transactions. On average every 10 minutes a new “block” of transactions is validated. Using this link you can watch as transactions are added to the next block. I think it’s truly mesmerizing. I think it needs to be made into an easy to watch app or screen saver (hint to someone). It is essentially watching each bitcoin block be organized. Transactions are added to the block and finally confirmed.

There is a lot of interesting data in each bitcoin block. 

Bitcoin miners validate a new block on average ever 10 minutes. Each block confirms the transactions that have happened in that time. Money sent from person X to person Y. 

You can also learn how much is paid in block rewards (currently 6.25 BTC every block) and in block fees. 

It does cost money to send your bitcoin from your wallet to someone else. You might think that’s bad since you can send money via your bank account to people now and “not pay a fee”.

But that is where you are wrong. Banks have tons of fees, from monthly fees to the “fee” of paying you 0% interest. 

Every time you swipe a credit card you are paying approximately a 3% fee. The price is just baked into the price of whatever you are buying as sellers assume you will be using a credit card at this point. 

Here’s all the data from a specific completed block. 

Block 767418

A total of 12,419.79 BTC ($222,022,574) were sent in the block with the average transaction being 4.4515 BTC ($79,577.28). ViaBTC (the miner who solved the block) earned a total reward of 6.25 BTC $111,728. The reward consisted of a base reward of 6.25 BTC $111,728 with an additional 0.1489 BTC ($2,661.81) reward paid as fees of the 2,790 transactions which were included in the block.

6.3989/12,419.79 = 0.000515 *100 = 0.05% of the value of the money sent was used to pay fees. 

As you can see the total of 12419.79 BTC were sent during that 10 minutes worth $222 million dollars. Users were charged 0.1489 BTC which comes out to a 0.0012%! That is insanely low.

If you were paying that percentage to send $100 it would be $0.001 dollars. 1/10 of 1 penny!

If you compare this to a credit card transaction at 3% that would cost you $3 vs $0.001 for a transaction. Imagine if everything we did got 3% cheaper overnight? Why haven’t more sellers adopted BTC?

1 Million Bitcoin HODLers. That’s all?

I saw this tweet by StrictlyBTC the other day and it’s really bothering me! For those who don’t know, there are only 21 million Bitcoins that can ever be created.

About 19 million have been created (mined) already and that leaves 2 million left to mine.  

About 4 million have been lost. By my  math that leaves (19-4)= 15 million bitcoin up for grabs today. There are an estimated 100 million people who have used Bitcoin thus far.  A recent estimate has shown that about 1 million Bitcoin addresses are  holding 1 BTC.

Now it is very easy for any person to have more than 1 wallet. So the number of people who actually own 1 Bitcoin might be higher or lower. It’s possible there are many people who have 2 wallets and 0.5 BTC in each so they will own 1 BTC. It’s also possible (and likely) that many of the 1 BTC and over wallets are held by the same person. So 2 of the 1 BTC wallets might be owned by 1 person. To keep it simple I am going to continue to estimate that there are 1 million people who hold 1 BTC.

There are 47 million millionaires in the world. There aren’t enough Bitcoins for each US dollar millionaire to own even 1 BTC!

Many of these millionaires are older people, since on average, you accumulate wealth as you age which probably makes it less likely for them to accumulate bitcoin as they don’t understand it or don’t see value in it. 

The current price of bitcoin is $17,000/coin. This is down significantly from its previous peak of $69k. If each millionaire was to purchase 1 bitcoin that would be 1.7% of their wealth, for the people who are “merely” $1 millionaires, and if they were to just hold it, as more people would continue to purchase bitcoin that would drive the price up significantly.
Many people would argue that this is possible with any asset, which is partially true. But the main difference between Bitcoin and any other asset is it’s ability to be purchased by anyone in the world at any time, essentially, it’s liquidity. 

“They aren’t making any more land” is a commonly heard phrase. Which is not exactly true for many reasons. 

The Dutch reclaim land from the ocean regularly.

The United Arab Emirates hired the Dutch to build some new land.

Unproductive land is regularly turned into productive land. 

Land has another issue, you usually only buy land locally.

Most other assets have similar issues, or unique issues to each asset, that make them difficult to buy.
There are only ever 21 million Bitcoin and they are the ultimate liquid asset.

For these reasons it is just blowing my mind that Bitcoin has continued to drop in price.

Historically, Bitcoin has gained interest from people, myself included, as its price runs up. When the price is going down, no one cares. I fell victim to this in 2017 when it ran up to $17k and then lost value from 2018-2020. I didn’t pay attention and missed out buying in the $3,000-$5,000 range. 

I started reading a LOT more the next time it ran up in 2021 to $69k. As it’s continued into the current crypto winter I have tried to avoid the mistake I made in the last “crypto winter”. I have continued to accumulate. I have been “Orange Pilled”. 

Since I’ve read so much I also fell victim to the thinking that everyone else was learning the same stuff I was. Seeing that there are only ~ 1 million people holding 1 BTC I see I am still very early. Bitcoin is early. 

But it is legal tender in El Salvador and CAR. 

It is gaining more users every day. 

Hashing power is rising.

There are more Bitcoin conferences every day.

I am very curious to see how Bitcoin adoption continues over the next years!
If you want to learn more about Bitcoin you can contact me via email or comment below!

Bitcoin For Beginners

I have been looking for a great video/podcast to share with people who are newer to bitcoin. I believe I have found one that, while long, is very good! 

 BTC001: Bitcoin Common Misconceptions w/ Robert Breedlove

I don’t have much to comment about for the start of the video. It is just a very informative video and I recommend you listen.

There are 2 time stamps I wanted to highlight towards the end of the video where Robert Breedlove is discussing challenges, risks or arguments against bitcoin.

The first one starts at ~1:39:01. Here he is discussing a common argument against bitcoin that it has “no intrinsic value”. An article from Bitcoin Magazine – DOES BITCOIN HAVE INTRINSIC VALUE -( discusses the thought of if anything has intrinsic value, it doesn’t. Value is only defined when some outside entity is able to use any resource. For example, an ocean world would not have intrinsic value to humans as we are land dwelling, but it would have more value to fish. 

Robert Breedlove makes a distinction between intrinsic value vs. industrial value. When many people make the argument that Bitcoin has no intrinsic value they are comparing it against gold, which has an industrial value in that it can be used in many production processes or to make many useful things. It also has value as art or jewelry. Gold actually has no intrinsic value since as noted before, nothing has intrinsic value. Approximately half of new yearly gold mined is used for jewelry and industrial use and half is used for store of value or “monetary premium” by individuals or central banks. This is in comparison to bitcoin which as people have noted, has no industrial use, it ONLY has monetary premium. The benefit of bitcoin’s preservation of value vs say US dollars is that bitcoin has a capped supply of 21 million coins. Once you buy some bitcoin, you are sure of how much you own relative to the total pie. With USD or any other fiat currency (government issued currency) you don’t know how much more will be issued and will erode your value via inflation. 

The other good discussion comes at 2:00. The free market of history had chosen Gold as the benchmark for measuring value. This is because it was the “hardest” money. It had the least inflation. Gold’s inflation was relative to how much gold was mined each year, which is ~2%/year relative to the current total world gold supply. When you take the inverse of that and compare  the “stock” total existing gold (in tons) divided by the new production each year (flow) you get a number, for example 100 tons existing/2 tons new production = 50 stock to flow number (S2F). 

The “flow” of new material creation compared to the existing “stock”. Commodities like oil and corn have very high flows relative to the current stock which produces a small stock to flow number. Learn more about Stock to flow here

There is not a lot of existing corn or oil carryover each year, relative to the new production. Because of this these things usually have relatively cheap prices since there is so much new creation. Things that have low flows relative to the existing stock have higher values as it’s harder to get the new stuff. In the past gold and silver have both been used as money. But gold eventually won out as the “harder” money to produce. There is more silver produced relative to the current stock of world wide silver, compared to gold. 

Silver has a stock to flow number of 22.

 Gold and bitcoin both have stock to flow numbers of approximately 50-60. But in 2024 (during the next bitcoin halving) bitcoin’s stock to flow number will increase to 120. This is because the issuance of new bitcoin will decrease in half.
This stock to flow of 120 will be the highest Stock to flow number of any asset ever, and it’s only going higher as the issuance of new bitcoin continues to be cut in half every 4 years, due to the technical nature of bitcoin. To learn more about the halving read here

Coming back to the conversation, in the past the world wide free market had selected gold as the preferred store of value due to its “hard” nature and high stock to flow number. With bitcoin having a higher stock to flow going forward, along with all the other benefits it has over gold doesn’t it make sense for bitcoin to be the preferred store of value?

I leave you with a final very short 2 minute video related to discussing what is money and value? Money is best thought of as a tool to compare the value of different things or services. You can measure the value of a house, and apple and a massage in the same currency and compare their value. If the money is inflating then the price becomes confusing for measuring things. It’d be like if a ruler was changing as you were trying to measure a table. Inflation is not good or needed for an economy to work. 

If you want to talk about bitcoin you know where to find me!

Bitcoin Intrinsic Value

One of the main arguments I hear against bitcoin is that “it has no intrinsic value. The thing about money is that it doesn’t need to have intrinsic value. Money has to have a few things to make it “good money”.

It should be scarce. 

It should be divisible.

It should be transmissible.

It should be immutable. 

It should be difficult to counterfeit.

It should be assayable (easy to verify it is what it says it is).

Gold is good at some of these things, for example being scarce and immutable. But it is bad at others, it is not very divisible and it is not very transmissible. It’s very hard to purchase something with $1 worth of gold. It’d be a very tiny spec of gold that you’d have a hard time telling that it was really gold or just a dust flake. 

Fiat money (US dollars or other country dollars) are easier to transmit around the world (although they take a few days to settle international transactions or across borders). They are hard to counterfeit but they are easy for the US government to print more anytime they want.

I’ve collected a few articles and quotes about Bitcoin, money and intrinsic value. 

DOES BITCOIN HAVE INTRINSIC VALUE? – Bob Simon

There is no such thing as “intrinsic value” in the sense of an object having objective value in and of itself. As a thought experiment, think of assets typically assumed to hold intrinsic value such as gold, farmland, stocks and real estate. Now imagine a world where no humans exist. Do these assets still have value? The answer has to be no, because value only makes sense in the context of human existence.

Because of the luxury enjoyed by Americans and citizens of many developed countries, the benefits brought about by Bitcoin may not be as obvious as they are for many people in developing nations. Inflation in the United States has been persistent, but not devastating over the past two generations, and most people haven’t had issues with their banking services being shut down.

Bitcoin Has No Intrinsic Value — and That’s Great. – Conner Brown

The Rai stones used by the Yap people are another example of a store of value without commodity use.

Bitcoin is Not Backed by Nothing -Parker Lewis

“What backs the dollar (or euro or yen, etc.) in the first place? When attempting to answer this question, the retort is most often that the dollar is backed by the government, the military (guys with guns), or taxes. However, the dollar is backed by none of these. Not the government, not the military and not taxes. Governments tax what is valuable; a good is not valuable because it is taxed. Similarly, militaries secure what is valuable, not the other way around. And a government cannot dictate the value of its currency; it can only dictate the supply of its currency.

Venezuela, Argentina, and Turkey all have governments, militaries and the authority to tax, yet the currencies of each have deteriorated significantly over the past five years. While it’s not sufficient to prove the counterfactual, each is an example that contradicts the idea that a currency derives its value as a function of government.”

Bitcoin For Everybody – Saylor Academy

I stumbled upon the Saylor Academy Professional Development course, “PRDV151: Bitcoin for Everybody”. Saylor Academy is associated with Michael Saylor, CEO of Microstrategy, which was the first public company to put Bitcoin on its balance sheet. “Saylor Academy is a nonprofit initiative working since 2008 to offer free and open online courses to all who want to learn. We offer nearly 100 full-length courses at the college and professional levels, each of which is available right now — at your pace, on your schedule, and free of cost.” Saylor Academy has free courses on a lot of things, English as a 2nd Language, Math, Politics, etc. 

While there is some overlap between Michael Saylor and his non-profit and bitcoin, in general it is just a learning website which also happens to have a Bitcoin course. Despite having read many articles about bitcoin for the past 4 years, I decided to take this course. WOW! I learned a lot. The course is free and signing up for Saylor academy is free. I am going to link a few of the articles that I found most interesting from the  courses below as well as some of the most impactful quotes that I got from each article for people who don’t want to read all the articles. Many of the articles are also available from their original sources in spoken format so that would make them easier to listen to while driving instead of taking an hour to read them.
A lot of the information is more about the history of money, how US dollars came to be the World Reserve Currency and other interesting history. Later information gets into the history of bitcoin as well as why it makes good money. I highly recommend taking this course for anyone who is skeptical about Bitcoin. 

Unit 1: Bitcoin Economics

The Bullish Case for Bitcoin -Vijay Boyapati

PoW is Efficient – Dan Held

Everything requires energy (first law of thermodynamics). Claiming that one usage of energy is more or less wasteful than another is completely subjective since all users have paid market rate to utilize that electricity.

Unit 2: Bitcoin Investment

Bitcoin is Not Backed by Nothing -Parker Lewis

“What backs the dollar (or euro or yen, etc.) in the first place? When attempting to answer this question, the retort is most often that the dollar is backed by the government, the military (guys with guns), or taxes. However, the dollar is backed by none of these. Not the government, not the military and not taxes. Governments tax what is valuable; a good is not valuable because it is taxed. Similarly, militaries secure what is valuable, not the other way around. And a government cannot dictate the value of its currency; it can only dictate the supply of its currency.

Venezuela, Argentina, and Turkey all have governments, militaries and the authority to tax, yet the currencies of each have deteriorated significantly over the past five years. While it’s not sufficient to prove the counterfactual, each is an example that contradicts the idea that a currency derives its value as a function of government.”

Bitcoin Cannot be Banned – Parker Lewis

In fact, it posits that bitcoin works so well that it will threaten the incumbent government-run monopolies on money in which case governments will regulate it out of existence to eliminate the threat. Think about the claim that governments will ban bitcoin as conditional logic. Is bitcoin functional as money? If not, governments have nothing to ban. If yes, then governments will attempt to ban bitcoin.

Unit 3: Bitcoin History and Philosophy

Honestly, I didn’t find Unit 3 very interesting. It was full of a lot of history and details that are rather dry reading to me at the moment. While it probably provides useful history, it’s just not very exciting and isn’t completely necessary to understand Bitcoin. 

Unit 4: Bitcoin Technology

THE GREAT PLAGUE OF SHITCOINERY – THIBAUD MARÉCHAL

Under the fiat monetary system, the cost of currency issuance is close to zero, which is very profitable for the national issuers, as there is no longer any limit on the quantity of money that can be created, further shrinking the value of the existing currency in circulation, and annihilating the purchasing power of the currency holders — people like you and me.

Unit 5: Bitcoin in Practice

Unit 5 is relatively short compared to the other units. It is a lot more practical. Here is how Saylor Academy describes unit 5. 

“Now that you have some base awareness of Bitcoin, we will cover basic instruction on putting Bitcoin into practice in this unit. This includes acquiring Bitcoin, using a Bitcoin wallet and the Lightning Network, privacy and security practices, and avoiding common pitfalls, scams, and mistakes.”

This is probably a very useful unit for people who don’t have a lot of familiarity with how Bitcoin works. 

Bitcoin Vs. Cryptocurrencies

Bitcoin – Yes as much as you are willing to go to $0. Expect it to fall at least 50%-80% after you buy it. 

All other Cryptocurrencies and NFT’s – Proceed with EXTREME caution (likely scams). Honestly, probably just don’t buy it. 

For an in depth article about Bitcoin vs. All other Crypto I recommend reading the Fidelity Bitcoin First paper. 

Since I’ve started to post about Bitcoin a little, I wanted to make my stance very clear. Bitcoin, while it has potential to cause disruption to payments and fiat currencies, it is still a speculative asset. I personally have a higher than average income and net worth and as such I am willing to risk a small amount of money on speculative assets that I think have a high return potential. Even as such, I am only betting a very small amount of my assets on Bitcoin specifically. For most finances, savings, investing, I still recommend an asset allocation across index funds as advocated by these people.

The Crazy Man in the Pink Wig

JL Collins

Mr. Money Mustache

If you need more recommendations about what books to read about financial independence and investing for low fees please ask. 

Back to Bitcoin and Cryptocurrencies.

As I said, bitcoin is quite speculative, but most other cryptocurrencies are even more so. Most crypto currencies are thinly disguised, unregulated securities. In this case a security is something like a stock, where it’s like owning a part of a company. Read more here

Most cryptocurrencies are controlled by a small number of initial developers. Those developers also award themselves some of their cryptocurrency before they allow others to buy them, giving themselves an advantage to “get the crypto while it’s cheap/free”.

Bitcoin is different. Bitcoin is decentralized. No one got a bunch of bitcoin at the start. It is being mined everyday. No one controls Bitcoin. No one person can change Bitcoin. That is what makes Bitcoin very different from 99% of the other cryptocurrencies out there.

Another technology that is getting a lot of press is NFT’s. NFT = Non-Fungible Tokens. 

“NFTs are individual tokens with valuable information stored in them. Because they hold a value primarily set by the market and demand, they can be bought and sold just like other physical types of art. NFTs’ unique data makes it easy to verify and validate their ownership and the transfer of tokens between owners.” – SimpliLearn

Most NFT’s are either a picture of a GIF. Usually you are literally able to take a screenshot to make a copy or just right click to save. While there may be some minor value in these in general I would just advise beginners to stay far far away from NFT’s. 

In conclusion, do a bunch of research yourself before getting into cryptocurrencies.

Only buy as much as you are willing to lose/have to go to $0. 

This is the same advice as any investment.

Check your Financial Privilege

I recently read an interesting book called Check Your Financial Privilege- Alex Gladstein.  This started as a series of posts on Bitcoin Magazine. 

You can read some of the articles below.

Check Your Financial Privilege

 UNCOVERING THE HIDDEN COSTS OF THE PETRODOLLAR

FIGHTING MONETARY COLONIALISM WITH OPEN-SOURCE CODE

CAN BITCOIN BE PALESTINE’S CURRENCY OF FREEDOM?

The reason for the book is because they are very long and in depth articles such that many people may not read them on the internet. But if you want to, they are free there. 

Living in the USA it’s very easy to take a US centric view of the world. That view involves a relatively stable currency, at least for the last 40 years. The last time we really saw high inflation was 1982 when it was 6% and the few years before that. Since then it’s been under 5% and some years as low as 1%. Many other countries have not had this privilege. 

In the USA we also have a pretty robust stock market, averaging 9%/year in gains and usually about 6% over inflation.

Because many people are unable to trust their own currency they try to trust the USD to maintain their local purchasing power. This is not always practical as trying to transact in a foreign currency can cause a lot of confusion. Change may also not be available. 

Two countries that I highlight below have had very high inflation over the last year (and years), relative to the USD. Those countries being Argentina and Haiti. They have lost 25% vs USD  for Argentina Peso and 27% for the Hatian Gourde respectively.

Many people complain about Bitcoin’s volatility. For example, if you had bought BTC in the USA 1 year ago you would be down 20% but since these other countries have such high inflation if people in Argentina and Haiti had held BTC instead of their local currency they would have maintained their purchasing power instead of losing 25%.

Even the Euro, which is a relatively stable currency, has only lost 7% relative to BTC over the last year, whereas the USD has lost 20% over the last year. Bitcoin’s performance over the last year relative the the dollar, the strongest currency, which is not widely available, really only highlights the benefits of the dollar being the world reserve currency. 

Compared to many other assets, bitcoin has performed very well, even when measured against the Euro!

This is what is meant when saying we should “Check our Financial Privilege”. A real fear is that perhaps the USA will fall victim to extreme inflation in the future. 

While stocks have historically been an inflation hedge and will likely continue to be the best hedge, the USD as the world reserve currency may have completed its time. The world reserve currency has changed many times in the past. Before WW2 the British Pound was the world reserve currency. Before that it was the Dutch Guilder, which doesn’t exist anymore.

For a very interesting history on that you can read Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail – Ray Dalio.

Here is a short (1 hr) Youtube Video summary of the book, by the author, if you don’t want to read the book.  https://www.youtube.com/watch?v=xguam0TKMw8

In conclusion, when considering if “bitcoin is good for me” you should try to expand your scope a little. While you may not realize the problem of inflation, even low inflation, as it’s been ever present, many people around the world have seen the damage inflation has done and see the potential that bitcoin may provide to hedge against inflation.

USD to BTC –
May 22, 2021 – $37,59610
May 22, 2022 – $29,985.50
20.25% decrease

Hatian Gourde to BTC –
May 22, 2021 – 3,318,494.21
May 22, 2022 – 3,361,197.64
1.29% increase

Argentine Peso to BTC –
May 22, 2021 – 3,541,519.54
May 22, 2022 – 3,549,033.05
0.21% increase

Hatian Gourde to USD
May 22, 2021 – 88.27
May 22, 2022 – 112.09
27% increase

Argentine Peso to USD
May 22, 2021 – 94.20
May 22, 2022 – 118.47
25.7% increase

Euro to USD
May 22, 2021 – $1.22
May 22, 2022 – $1.06
13.1% decrease

Euro to BTC
May 22, 2021 – 30,863.91
May 22, 2022 – 28,415.65
7.93% decrease

Bitcoin As Legal Tender Around The World

One interesting thing about bitcoin adoption is places that allow it to be used either as a legal tender (El Salvador) or for payments (many businesses). I think what is most exciting is the game theory that plays out as more and more nations adopt bitcoin as a legal tender. Being a finite resource, only 21 million bitcoins, will ever be created, there is an incentive to adopt early as a reserve asset. “Getting in on the ‘ground’ floor”. 

Of course, some countries have less incentive to do that. For example, the United States enjoys huge benefits of the USD being the world reserve currency. To adopt bitcoin openly would show lowering faith in the USD, so likely, America will be one of the last countries to openly buy bitcoin. 

El Salvador was the first country to adopt bitcoin as legal tender. It has already given up it’s own currency and all transactions in the country were beign done in US dollars. Adopting bitcoin as a secondary payment method/legal tender really isn’t that big of a deal. 

Now there are a few more small autonomous regions that have started to also allow Bitcoin to be used as legal tenders:

 Lugano, Switzerland

Prospera, Roatan Island, Honduras

Madeira, Portugal

Rio De Janerio (for property tax payments)

The best number I could find was El Salvador owns 1800 bitcoins. I believe it is a few more as this was in Jan 2022. When comparing their population (6.5 million) to the world population (7.9 billion) and their bitcoin holdings (1800) to total bitcoin available (21 million) they hold about the right proportion relative to the world. But Since they are accumulating more, while the rest of the world doesn’t, they should pull ahead and have the economic benefits of that as the price rises. 

There are a few other more autonomous areas that have also legalized bitcoin. 

Lugano, Switzerland, has formed a partnership with stablecoin issuer Tether to establish bitcoin, Tether and Lugano’s own LVGA Points token as essentially legal tender in the city.r”

Rio De Janeiro Is Giving People a 10% Discount to Pay Taxes in Bitcoin

Honduras’ Roatán Island, Portugal’s Madeira to ‘Adopt Bitcoin’

https://cryptonews.com/news/honduras-roatan-island-portugals-madeira-to-adopt-bitcoin-mexican-senator-sends-bullish-sign-too.htm

More information about what exactly Madeira is. 

More information about what exactly Prospera (Rotan Island, Honduras) is.

Of course, Bitcoin is still quite risky. Then again, everything is risky.

Stocks are risky as any 1 company could go under. 

Holding cash is risky as it can be inflated away as a country prints more of it. This has happened in many countries in history. Just because it hasn’t happened in the USA yet is not a good reason to think it couldn’t! (I recommend this book , Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail -by Ray Dalio, as a very interesting history primer on money).  

There’s also a 1 hour youtube video summary, by the author, if you don’t want to listen to the whole book. 

As always, this is not investment advice or telling you to buy bitcoin. But I believe it is a very interesting technology and certainly worth learning about!