Bitcoin for a more optimistic future – Bitcoin Magazine
This is an opinion editorial by Leon Wankum, one of the first financial economics students to write a thesis on Bitcoin in 2015.
Prologue
This article is the second in a series series where I aim to explain some of the benefits of using bitcoin as a ‘tool’. The possibilities are endless. I picked out three areas where bitcoin has helped me. This article describes how bitcoin has made me more optimistic about the future because it allowed me to effectively manage my money and build up savings. I have developed a lower time preference, which means I value the future more, which makes me act more consciously in the present. All of this has had a positive impact on my mental health.
The horror of inflation
When money loses value, it affects a society negatively. This process can be observed in countries with high inflation. A tragic historical example is the hyperinflation of the Weimar Republic, Germany’s government from 1918 to 1933. Germany lost World War I and was forced to pay massive reparations. Germany then slipped into a financial crisis. To stimulate the economy and pay the reparation debt, the German national bank, the Reichsbank, printed huge amounts of money. Their money was devalued so massively that people lost all their savings and the country entered an economic crisis. In 1922 a loaf of bread cost around 160 marks, at the end of 1923 it cost 200,000,000,000. In November 1923, one US dollar was worth 4,210,500,000,000 German marks.
Source: Planet Wissen
As a result of the inflation, the Germans became desperate. The population was frustrated, and the resulting inequality led to a rise in populism. Adolf Hitler took advantage of this distress and manipulated the masses into believing that he and his Nazi henchmen could restore Germany to its former glory. His reign in Germany was marked by atrocities and ended in one of the most brutal wars of annihilation in human history. This makes it clear that the devaluation of money leads to the devaluation of society and ultimately to the devaluation of everything – including human life as the crimes in Germany, the atrocities of World War II and the Holocaust have shown.
Monetary inflation leads to social decay.
This was the case in the Weimar Republic and is still the case today. Financial uncertainty and money inflation around the world make it increasingly difficult to save, build wealth and plan for the future. An epidemic of despair and fear is sweeping the world. One might think that central banks have learned from the past, but unfortunately that is not the case. A tragic example is Lebanon: Banque du Liban, Lebanon’s central bank, has been circulating a surplus of Lebanese currency in recent years in response to a deepening economic crisis that has plagued the country since 2019, plunging three-quarters of the population into poverty. As expected, excessive money printing has made matters worse. The inflation rate in 2021 was 154%. The inflation forecast for 2022 is 178%. Although people have more money at their disposal, everything becomes more expensive in real terms.
When the state ran out of money and was afraid of a bank run, it limited citizens’ access to the banking system. In response, on September 14, 2022, Sali Hafiz, a young Lebanese activist, robbed a Beirut bank to claim her own savings so she could pay for treatment for her sick sister, which the bank apparently refused to hand over to her. This raises the question: How is it that a young woman in her prime is forced to rob a bank? Fear of the future plagues the mind.
Bitcoin and mental health
The cause of the problem is the state monopoly on money. Historically, when governments or central banks fail with monetary policy, they cling to power by printing money to continue financing their activities. The population then suffers from currency devaluation, price increases and the resulting uncertainty. Bitcoin works differently. Bitcoin is produced at a rate that was defined when the system was created and is known to the public. There will never be more than 21,000,000 bitcoin. This certainty carries over to other aspects of life, for example you can be sure that if you choose to save the fruits of your labor in bitcoin, you will be rewarded in the future because Bitcoin was designed to be disinflationary. With bitcoin you can provide for your future self, your children and your loved ones. When you are old and less productive, you have savings to live on. More importantly, no authority can prevent you from owning, storing or sending bitcoin. The absolute ownership we have in bitcoin is unprecedented and a reason for great hope.
Bitcoin means hope for a better future (source).
Bitcoin is a monetary constant. Like other constants in the universe, it creates a foundation upon which humanity can interpret information to look forward to the future with confidence. Ideally, money should provide a sense of security about the future. Bitcoin does. Yes, the bitcoin price is volatile, but accepting greater uncertainty in the short term is worth gaining greater security in the long run. Bitcoin can make us optimistic about the future.
Dr. Saifedean Ammous has written about the impact of soft and hard money on time preference and how this core instinct can spill over into other behaviors such as choosing what to eat, how to build, and the value of art and culture. A society that uses soft money is unconsciously instilled with the realization that value melts away and must be spent quickly. It will favor immediacy, sacrificing the future in search of gratification now. For example, from its inception the euro’s operating philosophy was to predictably lose 2% of its purchase value annually.
Bitcoin offers an alternative as it is inherently disinflationary. Money that cannot be inflated at will rewards good behavior, low time preference, high savings, planning and responsibility. Bitcoin offers a world that promotes savings for your future self and your family; a world that allows you, your family and your community to plan for generations. “Bitcoin promotes human potential through its callous enforcement of consensus-based rules that give us predictability, and by extension, trustworthiness.”
Most importantly, as so eloquently described by John Vallis in a conversation with Peter McCormack on the “What Bitcoin Did” podcast, Bitcoin makes us have a more hopeful vision of the future. Vallis explains how many people are more optimistic with “a greater sense of freedom due to the properties of bitcoin and using it allows people to: 1. take more responsibility and 2. see a different future on the horizon than those they hair. had seen before.”
Later in the episode, Vallis said:
“How much of the anxiety in life comes from a job, a career, money and all that? For most many… When you’re put in a state of relative deprivation, you’re more susceptible to being destroyed because of your needs, because of your wants, because of all those kinds of things. But if you’re in a lesser state of deprivation, and it can be a financial lack, spiritual, psychological, all those kinds of things. If you’re healthy, more generally, I think you’re less at risk. It is less likely to be destroyed.”
Bitcoin allows us to rise to a higher version of ourselves, because we feel a level or security and are less afraid of the future. With a bitcoin standard, these characteristics will change society.
Most bitcoiners I know, myself included, have experienced a transformation since adopting bitcoin. Like most people around me, I used to worry about the future. Today, I feel optimistic about my future self because I know bitcoin will reward me. I can now concentrate on doing what I love, which allows me to bring the greatest value to the outside world. Learning to harness bitcoin’s potential has allowed me to focus on what I believe is truly important. This has brought a new level of consistency to my life that keeps me grounded and energized.
Dr. Ammous explained how Bitcoin has the potential to change people on his podcast “The Bitcoin Standard” in a conversation with Tarek El Diwany and Allen Farrington in a way that resonated with me because it reflects my personal Bitcoin journey:
The value of bitcoin allowed me to value myself more. For years now I haven’t drank or partied and instead put the money in bitcoin. With that refocusing, my time preference has completely changed. Instead of valuing things that provide short-term satisfaction, I value things that will make me happy in the long term. Instead of partying every weekend, I understand the value of using my time during the week. I don’t use the weekend to escape the week, I now use it as an extension to achieve my goals. As Dr. Ammous says in the podcast, Bitcoiners have grand visions of dynasties and building generational wealth.
Many people with a fiat mindset don’t think that far ahead. Interestingly, those with a fiat mind do not understand Bitcoin. They have a very short time preference and only see the daily price fluctuations and not the long-term gains. Fiat people are running on a treadmill that won’t let them see past next weekend because there is no easy way for them to provide for the future. With bitcoin it is. With bitcoin, time preferences are extended and people can value the future, which allows us to value the present. Whether you agree or disagree with this, I have met a few Bitcoiners who have gone through major mental changes after holding bitcoin for at least five years.
Conclusion
Bitcoin can be a tool to find optimism, if we are willing to use it accordingly. This self-responsibility is at the heart of Bitcoin’s philosophy. The first step is to accept that the current economic model we live in is not the best possible one. The next step is to actively use and research bitcoin. This makes you face yourself because you begin to actively engage with the reality you live in and you begin to question your own actions. The beginning of the Bitcoin journey can be difficult due to bitcoin’s volatility, which contrasts with the perceived security of the current system and can be unsettling at first. But as time goes on (and bitcoin increases in price), satisfaction and security set in. This can have a positive impact on mental health as there is less tension and worry, which can lead to a more optimistic view of the future.
With bitcoin, you have to learn to deal with uncertainty. Something that actually belongs to being human, but which is seen as bad by the existing system. We are used to high time preferences. Everything must happen quickly. A system like Bitcoin, which takes time to develop, creates anxiety. However, it is a lesson that teaches you how to be more patient, financially responsible, self-determined and independent – virtues that we do not necessarily learn through our existing financial system.
Currency crises and political unrest will sooner or later force everyone to get involved in bitcoin, because it offers a better alternative. I hope this article will inspire you to get involved with bitcoin before you are forced to.
This is a guest post by Leon Wankum. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
