The Bitcoin Standard: A Summary of Saifedean Ammous's Thought

Since its publication in 2018, the book “ The Bitcoin Standard: the decentralized alternative to central banks » by Saifedean Ammous has generated a lot of buzz in the cryptocurrency world. For many bitcoin maximalists, it became the reference book which explains what Bitcoin is from an economic perspective.

It is also one of the only works that exposes and analyzes Bitcoin with an academic eye, considering it according to different economic theories. The reason is that the author is a trained economist.

This book, translated into several languages, has become an essential reference for bitcoin enthusiasts and investors. In this article, we will explore the ideas presented by Ammous and understand why his book has caught the attention of many bitcoin enthusiasts.

Who is Saifedean Ammous?

Saifedean Ammous is an economist and author of Lebanese origin. He was born on April 22, 1981 in Beirut, Lebanon. He grew up in a family of intellectuals and professionals, which likely influenced his early interest in economic and monetary issues.

Ammous earned a bachelor's degree in economics from the American University of Beirut, where he gained a solid foundation in classical economic theories. He then continued his higher education in the United States, earning a master's degree in economics from Texas A&M University and a doctorate in economics from the University of Columbia.

During his career, Ammous taught economics at various academic institutions, including the Lebanese American University and the University of Texas. He specialized in the study of monetary systems, the Austrian economy and the theory of the business cycle.

In 2018, Ammous published his most famous book, titled “ The Bitcoin Standard: The Decentralized Alternative to Central Banking". In this work, he argues that Bitcoin is a first-class currency (sound money) which could replace fiat currencies issued by central banks. The book has enjoyed worldwide success with more than 36 translations around the world.

Ammous is also a popular speaker and frequently speaks at international conferences and forums on monetary and economic issues. He is often invited to share his views on Bitcoin and cryptocurrencies. Recently, Saifedean Ammous was invited by Nayib Bukele to discuss the implications of bitcoin as legal tender in the country.

It should be noted that Ammous is an enthusiastic supporter of Bitcoin and he regularly expresses criticism of current monetary systems. It promotes the idea of ​​a decentralized currency and argues that Bitcoin can offer benefits such as protection against inflation, security and financial autonomy.

Saifedean Ammous continues to be an influential voice and a leader in the Bitcoin ecosystem and cryptographic in general. He is very active on social networks and continues to publish articles, books on economics and give lectures on his economic ideas.

1/ The Foundations of the Bitcoin Standard

The Austrian School of Economics

Saifedean Ammous is part of the Austrian school of economics, whose thinkers such as Bohm-Bawerk, Mises, Friedrich Hayek and Rothbard profoundly influenced his economic vision.

This school of thought emphasizes the importance of individual freedom, the free market, and non-intervention of the state in the economy. Ammous considers Bitcoin through the prism of the principles of the Austrian school to analyze the nature and potential of bitcoin.

The Role of Bitcoin as a Store of Value

At the heart of Ammous’s analysis is the concept of the stock-to-flow ratio. This concept, originally developed to understand the specificity of gold as a store of value, is applied by Ammous to assess the potential of bitcoin as a “hard currency.” The stock-to-flow ratio measures the amount of stock (the existing supply) relative to the flow (the newly created supply). The higher this ratio, the more scarce and valuable the currency is considered.

Due to the fact that the issuance of Bitcoin is limited to 21 million units describes it as deflationary currency unlike fiat currencies which can be printed unlimitedly, according to the needs of governments.

Using blockchain technology, bitcoin offers transparency, security and immutability that fiat currencies lack. Additionally, its intrinsic scarcity, as measured by the high stock-to-flow ratio, makes it an attractive store of value for investors seeking protection against inflation and devaluation.

He thus compares Bitcoin to gold and recalls in his work that the global economic system was more efficient before the end of Bretton Woods, where gold served as the currency standard. Ammous presents bitcoin as a decentralized alternative to the centralized banking system. According to him, bitcoin has the characteristics necessary to serve as a strong and durable store of value.

2/ Bitcoin and the Current Monetary System

Ammous devotes a significant part of his book to explaining the harmful consequences of the current monetary system, based on fiat currencies issued by central banks. According to him, these currencies, such as the euro and the dollar, are prone to inflation and devaluation, which harms economic stability and long-term wealth accumulation.

He argues that the fiat system creates overreliance on monetary authorities and exposes individuals to considerable economic risks.

Ammous emphasizes that bitcoin challenges the state monopoly on the creation and management of money. By offering a decentralized and apolitical alternative, bitcoin challenges the control of central banks and governments over monetary policy. According to Ammous, this disruption can lead to greater economic freedom, a reduction in financial crises and protection against uncontrolled inflation.

Social and Economic Implications

Ammous also explores the broader social and economic implications of bitcoin. He argues that widespread adoption of bitcoin could promote peace, international trade and economic growth.

By eliminating financial barriers and enabling fast, inexpensive transactions, bitcoin could spur innovation, investment and job creation. It also highlights the potential of bitcoin to reduce economic inequality and promote financial inclusion in regions where access to traditional banking services is limited.

It is in this sense that the president of El Salvador met with Saifedean Ammous, recently, in order to better think about the repercussions of the legalization of bitcoin in the country.

Criticisms addressed to the thought of Saifedean Ammous

Although it has gained popularity in the cryptocurrency community and attracted the interest of many readers, there are also some criticisms of it. Here are some of the commonly cited criticisms of Saifedean Ammous:

1. Oversimplification : Some critics argue that Ammous oversimplifies the complexity of economics and monetary policy by attributing all problems to the use of fiat currencies and promoting Bitcoin as a universal solution.
2. Lack of nuance: Ammous's critics say he doesn't pay enough attention to nuances and different economic perspectives. His book often presents dogmatic assertions rather than exploring contradictory ideas and theories.
3. Ignorance of the advantages of current monetary systems: Some economists and monetary experts argue that Ammous downplays the benefits of existing monetary systems, such as price stability, adaptive monetary policy, and the ability to respond to economic crises.
4. Ideological and naive vision: Some critics believe that Ammous adopts an ideological view rather than an economic approach based on empirical evidence. They claim he shows bias towards Bitcoin and ignores the cryptocurrency's potential weaknesses. It is particularly on this point that the author Nassim Nicholas Taleb thinks that bitcoin would be incapable of fulfilling the function of money attributed to it.
5. Lack of practical experience : Ammous is an academic and economic theorist, but he does not have extensive practical experience in the field of real monetary systems. Some critics believe this limits its understanding of the complex realities of the global economy and the practical implications of widespread Bitcoin adoption. He is criticized for a naive, even infantile vision of macro and micro-economics.

It is important to note that these criticisms are not shared by everyone and that some people support the ideas and arguments put forward by Saifedean Ammous. As with any influential person, there are supporters and detractors who fuel debates and discussions about their ideas through institutions such as IMF or from crypto-holders.

Conclusion

« The Bitcoin Standard » by Saifedean Ammous is a book that has left its mark on the cryptocurrency industry. By analyzing bitcoin through the prism of the Austrian School of Economics, Ammous presents a serious and compelling view of the value and potential of bitcoin as a solid store of value and a decentralized alternative that should be explored.

His book sparked lively debate and provided insight into the implications of bitcoin on the global economy.

Whether you're a cryptocurrency novice or expert, "The Bitcoin Standard" is essential reading for anyone interested in the future of money and economics.

📚 You can buy the book on the publishing platform dedicated to Bitcoin Konsensus Network or on Amazon.

See also:

• The 10 books to understand Bitcoin and cryptocurrencies
• Why You Should Read Phil Champagne's "The Book of Satoshi"
• WallCrypt launches encyclopedic book and blockchain game