Stuart Hayward,

Bitcoin is a profound lesson in money. It has taught me a great deal more than 3 years of economics at university ever did. There is no better example than the recent 50 basis point upping of the repo rate. The South African Reserve Bank (SARB) justified its decision to hike due to a worrying trend of inflation, due to rising oil and food prices, making it appear as if inflation is rampant purely because of external factors which are not of its making. This is absurd considering the SARB has increased SA’s M2 Rand money supply by 20% since April 2020 (see: tradingeconomics.com), this is the chief cause of rocketing prices. Rising international oil prices are not controlled by the SARB and do play an obvious external role in inflation, but don’t be deceived by this excuse. Printing money necessarily devalues the Rand both locally and internationally, there is no cogent external forces explanation. Consider that SA imports the overwhelming bulk of if its crude oil and that its refineries must buy US dollars with Rands to pay for it. All things being equal, had the Covid 19 money printing Rand devaluation not taken place, rising dollar oil prices today would have caused less of a Rand price spike. It doesn’t matter that the Ukraine war increased the dollar price of crude, money printing leaves importers worse off than if our money supply had not been inflated.

Rand debasement is an easy way for our government to rob citizens of wealth and spend money they don’t have, by pilfering stored wealth from savings- an invisible tax. It harms the poor and middle class most as it is they that save in Rands and own few assets. Rubbing salt in the wounds is the SARB’s reaction to the inflation that chiefly it has caused: upping the repo rate. Repo rates determine retail banks’ prime lending interest rates. Credit becomes more expensive when the prime rate climbs, slowing economic growth. This is a double kick in the teeth because it is harder for the poor and middle class to seek refuge from inflation in assets because credit becomes that much more expensive. A slowing economy also reduces employment opportunities, which disproportionately impacts the poor and middle class. Central banks therefore aggravate socio-economic inequality via printing non hard asset backed fiat currency. I find it particularly galling that the SARB has portrayed itself as our saviour from inflation when it is the chief cause of it. It ironically pursues an inflation targeting mandate. It is preposterous that the chief destructor of the value of the Rand has a constitutional mandate to “protect the value of the currency..” Economists don’t question this absurdity due to university conditioning, where they become disciples of Keynesian Economics money printing and central bank necessity, we know no other way.

Enter Bitcoin, a fully decentralised digital currency that is taking the world by storm. Bitcoin adoption as legal tender reduces inequality by doing away with central bank market manipulation. For the first time in history mankind has a global currency that is scarce, stores value and which cannot be manipulated by greedy corrupt rent-seeking politicians. It is not controlled by anyone or anything but unhackable computer codes. There will only be 21 million Bitcoin. Ever. That’s it. There are currently approximately 19 million in circulation. Up until 2140 another 2 million will be mined- that makes for an inflation rate of approximately 1.7% per annum at present- this will drop every year until 2140 by which time there will be no inflation at all. Earn Bitcoin as opposed to Rands and your time/labour is stored, not stolen by a central bank through fiat slavery.

I predict that Bitcoin will be adopted internationally as legal tender within the next 20 years by major G20 economies (not just in tiny dollarised economies as is currently the case- El Salvador adopted Bitcoin as legal tender in September 2021). This will most likely occur without doing away with local fiat currency, but due to Bitcoin’s global ease of use fiat currencies will likely become obsolete (even if central bank cryptocurrencies are in play). Bitcoin is today seen as a risky speculative investment and is volatile in fiat terms, it is also not very user friendly for the tech illiterate- this makes it impractical to fulfil a legal tender function right now. This will change within the next decade as the adoption dominoes fall. There will come a time when people altogether stop thinking in fiat, in terms of a global Bitcoin standard. The naysayers will think me deluded. Governments won’t easily give up fiat hegemony. There will of course be pushback, attempts to ban and seize- but Bitcoin is unstoppable. Citizens vote with their feet and politicians do their bidding. The game theory of global adoption will leave governments with little choice but to embrace it. In the exponential digital age global always beats local.

Does this mean Bitcoin’s Rand value will rocket in the next decade? Very likely considering its scarcity and the current adoption rate trajectory, but that’s not why you should take notice. This isn’t about getting rich. It is about interrogating your fiat conditioning: it’s not okay for your savings to be stolen by money printing. Money printing induced inflation is unacceptable. Inflation is not caused solely by OPEC or by a war far away. It is a curse, largely brought on by governmental fiat currency manipulation. Doing away with central bank inflation necessarily entails getting rid of bloated deficit spending governments, a Bitcoin standard thus enforces fiscal prudence.

The exponential digital age calls for borderless decentralised money. Keeping money local is inefficient and cumbersome. The adoption growth of Bitcoin is the most pivotal cultural revolution in human history; money is going global. The poor and middle class will soon be able to conveniently and securely store their wealth in sound money. This changes everything.

By AAdmin

7 thoughts on “The Bitcoin Tutor: inequality and fiat currency hegemony go hand in hand.”
  1. A most educative, sensible and persuasive comment. Great read.

    1. Hi Gert, thanks for taking the time to read and comment. I really value reader feedback and opinion, nice to debate interesting topics.

      Please check out my recent Youtube interview, where I discuss the poison that is fiat money printing debasement and compare it to Bitcoin’s sound monetary policy: https://www.youtube.com/watch?v=FAeJ6nYdiX0&t=2s

  2. Yes, Bitcoin could indeed do all that and one can check back on RT and Max Kaiser who punts it hugely. However only 21M will be the max until another cyber currency is introduced thus as it were putting more coin into play. The matter of bitcoin not have an army with guns is another.

    1. Hi Dominic, thanks for taking the time to read and comment. I really value reader feedback and opinion, nice to debate interesting topics.

      This is a common fallacy: the notion that another cryptocurrency will replace Bitcoin or that Bitcoin’s scarce value proposition will be diluted by another cryptocurrency. There are tens of thousands of cryptocurencies. All cryptocurrencies other than Bitcoin are centrally controlled and 99% of these non bitcoin coins are scammy rugpulls, get rich quick scams where the founders pump and dump on retail investors. Bitcoin is in comparison fully decentralised, it has no organisation controlling it. It is trustless. Given the sham that is fiat currency hegemony, people or central banks cannot be trusted not to debase currency- the temptation is too high. Bitcoin runs purely off its nodes rewarding Bitcoin miners with fees in exchange for powering the network, there is no call center or CEO, this is why Bitcoin is revolutionary, this is why it has a very good chance of becoming a global reserve currency. It fixes money on a global scale. Bitcoin also has a name, a brand and a level of goodwill that is incomparable to any other cryptocurrency. Bitcoin has never been successfully attacked by hackers and it is now able to scale to compete with Visa/Mastercard as a payments network. the more valuable Bitcoin is in fiat the more secure the network is against attack (this is because more miners mine Bitcoin with higher prces- increasing the network hashrate or mining output- an attacker needs 51% of the hashpower to change the Bitcoin code- or to hardfork it). The whole point of Bitcoin is that does one thing very well, it stores value via digital scarcity- no other cryptocurrency does this nor can it do this as these other currencies are more like the very central banks that Bitcoin monetary policy does away with. In conclusion there is only one cryptocurrency that has the name, security, decentralised trustlessness and reputation to be global money- and that is Bitcoin. Bitcoin is not at present an inflation hedge, because it is still seen as a “risk on” asset by speculators- this will change over the enxt decade as adoption rockets and its market cap grows to where price manipulation is more difficult. Please check out my recent Youtube interview, where I discuss the poison that is fiat money printing debasement and compare it to Bitcoin’s sound monetary policy: https://www.youtube.com/watch?v=FAeJ6nYdiX0&t=2s

  3. Was not gold – is not gold – inflation and government proof too?

    1. Hi Ross, thanks for taking the time to comment and read. The reason I love to write is because it catalyses this sort of interesting debate.

      You are right, Bitcoin is not gold. It is HUGE improvement on gold. Bitcoin is scalable and very cheap to transport. Gold is expensive to move and impractical to use as a currency. With a gold standard you have a massive element of fraud in that central banks lied about how much gold they actually had, causing debasement of the “gold-backed currency”. With a Bitcoin standard there is no need for paper or fiat to be backed by Bitcoin because Bitcoin is a highly divisible currency that is cheaper to move and much more secure than digital fiat currency. Bitcoin is government proof in that governments will try to ban it, but will eventually have no choice but to embrace it- citizens that are fed up with monetary debasement will eventually opt out of garbage fiat and operate in Bitcoin. This is not some fantasy, Bitcoin is a 900 pound gorilla that will devour the bulk of fiat. It will be a slow and brutal battle, but Bitcoin will eventually win, which is why Bitcoin is massively underpriced right now. Gold really does a poor job as money. Bitcoin does a much much better job as money. Fiat is local (and to a certain extent gold is also local because transporting it is so expensive), Bitcoin is global- in the exponential age global always beats global. In addition, there is gold in asteroids, which will be mined in the 21st century by private space mining concerns, and thus gold’s current stock to flow ratio and low inflation rate of supply will be a thing of the past. There will only ever be 21 million Bitcoin. That’s it. The code is unhackable and the software is untamperable (due to hashrate or Bitcoin miners output and the power/money required to attack the network). It is estimated that at least 7 million Bitcoin are lost forever and are not and will never be in circulation, Bitcoin is therefore even more scarce than 21 million coins, the same cannot be said for gold. There is no contest, other than in the case of the internet being down for years due to nuclear war, then gold is money and is better- but even then it is incredibly unlikely that every single Bitcoin mining node woud be struck out by a nuclear holocaust. Bitcoin is a cockroach that will never die. Please check out my recent Youtube interview, where I discuss the poison that is fiat money printing debasement and compare it to Bitcoin’s sound monetary policy: https://www.youtube.com/watch?v=FAeJ6nYdiX0&t=2s

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