Intelligent Persons Guide To Bitcoin – Bitcoin Magazine – Bitcoin News, Articles and Expert Insights

the following is a response to professor fabrizio carmignani’s interview, titled “dummies guide to cryptography”, which I discovered was genuinely written by a dumb, for dummies.

It’s always fascinating when old experts comment on the new paradigm making their old paradigm obsolete.

Reading: The intelligent persons guide to bitcoin

the classic meme that comes to mind represents paul krugman, who said that, by 2005, the internet will have no greater impact on the global economy than the fax machine did, and who also told the people that bitcoin was a bubble at $1. , $10, $100 and ever since.

Trying to make sense of the new through the lens of the old is as effective as asking an auto mechanic to perform heart surgery or asking a cardiac surgeon to fix a car. both are operators of some kind, but the domains are different.

so let’s have a bitcoiners view on bitcoin. notice I said “bitcoin”, not crypto. why? because crypto is much more like the legacy financial system, while bitcoin is a whole new beast.

but that’s another conversation, and you can discover it here.

what is bitcoin?

is a superior form of money that does not rely on a central authority for issuance or ledger maintenance. it is money rooted in the second law of thermodynamics, which transforms energy into a fixed and incorruptible unit of account. it is an immutable network enforced by hundreds of thousands of nodes all over the world, simultaneously. it is a set of rules without rules that any human being can voluntarily participate in and enforce on an individual level. it is a substance that embodies each of the attributes of money (divisibility, portability, knowability, fungibility, divisibility, and scarcity), and thus perfectly performs the three functions of money:

  1. It’s the perfect store of value because I know exactly how much I have relative to the whole, and I know it can’t be diluted or altered.
  2. It’s the perfect medium of exchange because I can send what what I want, who I want, when I want and there is no power in the universe that can stop me from doing it.
  3. It is the perfect unit of account because it is infinitely divisible and so I can measure all other goods and services in it . as your purchasing power grows, one can continue to subdivide the units to measure smaller goods and services, forever.

in other words: money is the technology used by an intelligent species to transmit information related to energy, time and matter. bitcoin is a perfect currency and money network.

why are some people attracted to him?

While I agree with Professor Carmignani that cryptocurrencies are all about gambling blind, in the hope of winning more legacy fiat money, those who understand the raison d’être of bitcoin are drawn to it for much more reasons. deep.

Not only is the legacy financial system a mess, but more importantly, the legacy monetary system is completely broken and thermodynamically fraudulent.

Money fundamentally measures three things: time, energy and natural resources. three fixed quantities that we cannot create out of nothing. participants in an economy (a closed system) do work (which is derived from time and energy) and, depending on the subjective value of the product of their labor on the market, exchange it for a thing called money that they can save for future transactions or use today.

As a result, for money to work properly and accurately measure the product of our labor, it must represent time, energy, and natural resources as closely as possible. this mainly means that it must be a fixed amount that cannot be changed or adjusted at the whim of some “rule”. changing the amount moves the goal posts and distorts the game right in the middle of the game.

Furthermore, because the legacy financial system assumes that money equals wealth, they simply keep inflating the total amount of “money” without an equivalent increase in productive output or capital. As a result, we have much more money chasing the same production and capital, thus diluting the purchasing power of everyone’s money.

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His policies are impoverishing anyone prudent enough to work hard and save, and giving anyone who owns any kind of fixed assets the illusion that they are getting rich.

Savings being the cornerstone of civilization, when you disincentivize them, you begin to break down the foundation upon which individual humans are built.

This has disastrous consequences and is the real reason why people who understand it deeply are attracted to bitcoin (not cryptocurrencies).

do you invest?

one does not ”invest” in a higher form of money.

in the same way that the person who has the zimbabwean dollar or bolivar does not “invest” in usd, but flees to it as superior money that has a better collateral, people who understand bitcoin are breaking out of traditional government . -coins issued not as an investment but as a migration to higher money.

Traditional fiat currencies are only as good as the promise and military might of those who “back” them. the world is changing. I will put my trust in the immutable laws of mathematics and the universal physical laws long before I place it in the promise of some bureaucrat.


mining is the name given to the validation process nodes in the bitcoin network that are used to validate transactions and, more generally, thermodynamically protect the network.

anyone can do it. you just need access to electricity, internet and a computer. yes, to produce a significant amount of bitcoin, you’ll need a more powerful or specialized computer, but that’s perfectly fine. the network is based on a “proof of work” and the result is proportional to the input.

that’s actually the great equalizer. you can’t fake “work”.

why is bitcoin valuable?

for all the reasons I mentioned above. and this is just the beginning.

thier’s law states that good money drives out bad money. any sane human being saves the good money while he spends the inferior money. as more people understand what money is (this is a huge lack in the world) and then discover that bitcoin is not only the best money mankind has ever had, but the perfect money, they too will want to protect their wealth and measure the product of their labor in bitcoin.

this will continue for decades to come and the purchasing power of bitcoin will continue to increase.

a good way to think about it is as follows:

  • money is the biggest market. it represents everything.
  • Bitcoin is the perfect money. on a long enough time scale, everyone will use it.
  • Bitcoin will represent not only all there is, but all there ever will be.

so, technically speaking, the equation for the value of a single bitcoin is “infinity divided by 21 million”. that’s a lot more than $30,000 today.

should i invest?

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As mentioned above, you have a responsibility to understand money first and bitcoin second.

This is a topic that will take you at least 1,000 hours, and probably the classic 10,000 hours of study in mathematics, physics, economics, human action and praxeology, philosophy, anthropology, and human evolution.

and that doesn’t include the technical aspect.

Once you have a grounding in the philosophy and history of money, and understand the raison d’être of bitcoin, you won’t ask yourself this question. you will have answered it yourself.

the disadvantages

The only real drawback there is is being the one with the equivalent of “seashells” while everyone else uses gold.

From an evolutionary perspective, bitcoin will do to fiat money what gold did to all other money, including shells, rocks, stones, and salt. except it will compress 5,000 years into a few decades.

There’s a lot of talk about “bad power consumption” and while I’d love to debunk it here, I don’t have space. so, I hope the following is enough:

Money is fundamental to the functioning of civilization and the ability of free individuals to perform work and store the product of their labor. As humans, we have built huge buildings to allow money to work, so that society can operate. the latest incarnation is the fiat system that requires the collective use of energy from the military industrial complex, the entire world banking system, payment systems, legal systems, courts, buildings and infrastructure, served by millions of people just to keep.

Bitcoin can do the same job, in a much better way, and with the same rules for everyone, for the same energy use that we as humans collectively use for washers, dryers, and toasters.

I strongly suggest reading this recent article by hass mccook, an engineer at oxford mba, which breaks it down to the real details.

Today there is nothing more important for the environment, equal global economic opportunities, the transformation of the economic system and the cleaning up of the financial system that affects us all, than moving to bitcoin.

human action is the basis of discourse. I’ve said this on many podcasts: “don’t tell me what you believe, show me your bank account and I’ll tell you what you believe”. In a world where money is controlled, there is no freedom of expression, no freedom of individual action. that’s not a world we want to leave to our relatives.

so yes, you will get rich by being in bitcoin early on, in the same way that anyone who found gold early on and held on to it saw their purchasing power increase. but more importantly, you will be doing a historical good and a moral duty by moving to a better, fairer, and stronger currency.

this is a guest post by aleks svetski, founder and CEO at and on twitter @ghostofsvetski. The opinions expressed are entirely my own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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