On the Table

Pierre Rochard’s essay on ‘The Bitcoin Central Bank’s Perfect Monetary Policy’ presents an impressively cogent case for the superiority of Bitcoin over not only slimy government fiat scrip (boo hiss), but even over precious metals. One table, in particular, deserves to be committed to heart by anyone making systematic three-way comparisons:

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It’s difficult to run through this and see anything less than a fundamental rupture in social history. When compared to Bitcoin, only proto-money has ever yet existed.

As Rochard concludes:

Fractional reserve banking entails the creation of new money that is fungible with already preexisting money, i.e. it can be used interchangeably within the currency’s payment systems. This is impossible with Bitcoin. The BCB [‘Bitcoin Central Bank’] enforces the strictest deposit regulations in the world by requiring full reserves for all accounts. This is the digital equivalent of the Chicago Plan or the Austrian 100% reserve gold standard. Under this regulatory regime, money is not destroyed when bank debts are repaid, so increased money hoarding does not cause liquidity traps, instead it increases real interest rates and lowers consumer prices. This is a self-stabilizing cycle as higher interest rates incentivize hoarders to invest, while deflation increases consumption due to the wealth-effect on hoarders. The BCB prevents lending out of deposits so that it can properly target money supply and avoid the destabilizing effects of commingling the credit and payment systems.

The positive properties of AMST [‘asymptotic money supply targeting’] and PoWS [‘Proof-of-work seigniorage’] combined make it certain that, absent a technological problem, Bitcoin will be adopted as the global currency. For a deeper understanding of the market process involved in becoming global currency I would recommend reading Konrad Graf’s explanation of hyper-monetization and Peter Šurda’s liquidity analysis of bitcoins. The Bitcoin Central Bank will be the longest lasting institution of its kind thanks to the anti-fragile independent monetary policy it has set in stone.

ADDED: Approaching the same forecast in another direction —

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