Fellow humans,
Quick update before I start writing about today’s topic — I’m updating the title of this newsletter from Greater Than Myself to SALtoshi Whitepaper. If you’re a Bitcoiner, then you already know. If you’re not, pay attention.
The pseudonymous creator of Bitcoin goes by the name of Satoshi Nakamoto. Often I say some bullish things about Bitcoin, and recently one of my coworkers called me Sal-toshi Norgemoto, which is absolutely genius. Satoshi Nakamoto released a nine-page document explaining Bitcoin in 2008, and the known title of this document is the White paper.
Now that you’re caught up, let’s dive in the rabbit hole.
There can only be one global reserve currency (GRC) at any given time. A GRC is basically one currency that much of the world economy agrees to use for a baseline medium of exchange to price goods and services. Right now the GRC is the US dollar. The dollar is the most popular currency on earth. No matter where you go to spend money or conduct business, there’s a medium to high chance you will be able to use the dollar in that location. As a result, when we discuss the value of things, we usually compare it to the dollar as a reference point.
Now that you understand what a GRC is and how it fits into the world economy, let me give you some context for what sparked my interest to write about this topic.
Recently somebody told me there will be multiple “global currencies” while we were discussing “global reserve currencies,” which means that person and I were not on the same page in that conversation.
Of course there can be multiple global currencies, because a global currency is simply a currency that can be used globally. The big difference between a global currency and a GRC is that there can only be one GRC at a time. While often not common, there can be a variety of global currencies existing simultaneously. The key word is reserve. Whichever currency is the GRC is the king currency for that time period.
Fast-forward to the year 2050, and I believe Bitcoin will be the GRC, possibly much sooner. People will no longer price things in dollar terms. We won’t compare goods and services to the dollar when discussing or presenting value.
For example, people won’t say, “I’m selling my house for $250K,” or “I make $75K per year.” Rather, we will price things in Bitcoin. People will say, “I’m selling my house for 0.15 BTC,” or “I make 0.05 BTC per year.”
The entire thought process will change, as if we’re learning a new language. In a sense, we are learning a new language. As we adopt Bitcoin as the new GRC, our language will literally change. We will need to add a new set of words and phrases to our vocabulary. Beyond simply learning new words and phrases, most people will need to first learn the concept of money, and then those fiat maximalists will need to relearn the concept of money.
The best part about all of this is that we will no longer talk about inflation as a huge problem. Poor people will not be so poor, as long as they accumulate and hold Bitcoin a little earlier than the next person. In a sense, it’s a race to buy Bitcoin before the next significant price increase. That way, if you need to utilize some BTC for living expenses, you will be able to use your profits, instead of your initial investment. Safe to say if you can afford to live and eat while having some money left over, you’re not completely poor. This is the goal.
As 2Pac explained so eloquently in this interview, nobody should have tens of millions of dollars while people are starving.
In this new scenario, you won’t hear somebody say, “I can’t believe how expensive the cost of living is becoming.” Instead, most things will become cheaper when compared to Bitcoin. You can actually watch this happen in real time.
Best example I can think of is the comparison between Bitcoin and gold. One year ago, you could have bought about five and a half ounces of gold for the cost of one Bitcoin. Today, you can buy about thirty-two ounces of gold for one Bitcoin. Gold is becoming cheaper when compared to Bitcoin. A lot cheaper. Many goods and services are becoming cheaper when compared to Bitcoin also.
I have no idea when Bitcoin’s volatility will significantly reduce, but I do know Bitcoin’s market will never be completely stable. No money is completely stable, not even the dollar or gold. Bitcoin’s market will not likely be a calm pond in our lifetime. Rather, Bitcoin’s market will be some variation of an ocean, with both mild waves and full-blown storms. Check out CoinMarketCap to watch this happen in real time.
In a free market like Bitcoin, money is always entering and exiting, which does not allow for complete stability. Unlike the stock market which has business hours and is manipulated with circuit breakers and centralized exchanges, Bitcoin has no referees to stop the play when things become chaotic. This is a pro, not a con, unless you accumulate high and spend low. Same concept applies to investing — buy low and sell high.
In theory, the more Bitcoin we accumulate and store now, the more goods and services we will be able to afford in the future. This can help close the wealth gap. The only problem I can see now is that wealthy people and institutions are actually going all in on Bitcoin while the market cap is low (cheap Bitcoin), and poor people are acting like they can’t afford $5 worth of Bitcoin. I’m not making this up. This is actually happening, and this will not help to close the wealth gap.
We don’t want wealthy people buying Bitcoin before poor people. This is how the rich get richer, and the poor get poorer, and wealthy people know this.
Until next time,
Salvatore Norge
Proofreading credit goes to Nick Sibeto