Bitcoin’s Price and Why It Matters | ft. Saifedean Ammous, Economist & Author, The Bitcoin Standard
In the 8th episode of The VALR Podcast, hosted by Farzam Ehsani, Co-Founder and CEO of VALR, Saifedean Ammous, a leading economist and author renowned for his best-selling book The Bitcoin Standard, shares his journey into the world of Bitcoin and his perspectives on its future role in global finance.
Saifedean, an expert in Austrian economics and a prominent voice in the Bitcoin community, has been a key figure in shaping the discourse around decentralised finance. His background as a lecturer and economist, coupled with his deep understanding of monetary theory, provides a unique perspective on the transformative potential of Bitcoin in today’s economic landscape.
A Background in Economics and Monetary Theory
Saifedean's interest in Bitcoin began during his time studying economics at Columbia University, where he became fascinated with monetary economics. The financial crisis of 2008 prompted him to question traditional economic models and explore alternative theories, particularly the Austrian school of economics. This school of thought challenges the mainstream view that the state should control money, arguing instead that money should be a product of the market.
Initial Scepticism and a Change of Perspective
Initially, Saifedean was sceptical of Bitcoin. He dismissed it as a passing trend that governments could easily shut down. However, as Bitcoin's value continued to rise, he realised he needed to understand it better. By 2013, after observing its resilience and growing market value, Saifedean began to seriously study Bitcoin, recognising its potential as a decentralised form of money that operates outside the control of central banks.
Key Insights on Bitcoin's Unique Role
Saifedean emphasises that Bitcoin's fixed supply of 21 million coins is its most crucial feature. Unlike traditional currencies, Bitcoin cannot be inflated or manipulated by any central authority. This makes it a reliable store of value, offering an alternative to the inflationary nature of fiat currencies. He also highlights Bitcoin's potential to serve as a global reserve currency, eventually surpassing the market size of traditional financial assets such as bonds and real estate.
Addressing Common Misconceptions
During the podcast, Saifedean addressed common misconceptions about Bitcoin. He clarified that while Bitcoin is often viewed as a speculative investment, its primary function is as a form of money. He also discussed the limitations of Bitcoin as a payment method, noting that while on-chain transactions may not be practical for everyday use, solutions like the Lightning Network are already improving Bitcoin's scalability and usability for smaller transactions.
Looking Ahead: The Future of Bitcoin and Global Finance
Saifedean is optimistic about Bitcoin's future, predicting that its market value will continue to grow as more people recognise its benefits over traditional fiat currencies. He argues that Bitcoin does not need a collapse of existing financial systems to succeed. Instead, it will gradually gain adoption as a superior alternative to government-issued money.
He also envisions a world where Bitcoin becomes the dominant form of money, with multiple layers of financial services built on top of it, similar to the current banking system but without the ability to create money out of thin air. This, he believes, will lead to a more stable and equitable financial system.
Closing Thoughts
The conversation with Saifedean Ammous, author of The Bitcoin Standard, offers valuable insights into the evolving role of Bitcoin in the global economy. As a fixed-supply digital currency, Bitcoin presents a compelling case for those seeking a stable store of value amidst the uncertainties of traditional financial systems. With ongoing developments in technology and growing interest from various sectors, Bitcoin’s journey is just beginning, and its impact on the future of money could be profound.
For more insights and discussions on emerging trends in the digital currency space, subscribe to The VALR Podcast to keep up with the latest developments.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate.
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