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Sound Money for a Modern World (Tim's Book Club #5)

Understanding Bitcoin in the book "The Bitcoin Standard" by Saifedean Ammous


The Bitcoin Standard

I’m guessing this is probably going to be a controversial post. Bitcoin, and crypto generally, tend to be polarising topics, with many having strong views for and against. Bitcoin is not something that many advisers talk about publicly either, let alone incorporate into portfolios. There’s very good reasons for this and I don’t intend to provide a judgement either way. It’s an interesting area to investigate and one that is becoming more popular and gaining mainstream adoption, through investments like listed ETFs. Bitcoin is highly volatile, only has a relatively short historical track record and is often clouded and lumped together with the myriad of cryptocurrencies in circulation (including dodgy scams and meme coins).


Whatever your views, beliefs, stance is when it comes to Bitcoin, this book is still a must read. If for nothing other than the first two thirds of the book, which details what sound money is and provides historical context for money and its various forms over the decades. Chapters 1-7 should be required reading for everyone. These chapters alone are worth the entry fee, in my opinion.

 

Here's a glimpse:


Money Matters - The concept of money and its role as a medium of exchange, a unit of account, and a store of value. How humans have used money throughout time is based on the fundamentals of what makes something money and how easily it can be replaced when new and better forms of money come along.


Gold - The rise and fall of The Gold Standard and gold’s use in the monetary system. The gold standard was pivotal in our financial history and underpinned many decades of economic stability. Leaving the gold standard has had important consequences for our currency and ability to store value into the future.


Sound Money - It highlights the importance of "sound money" – a form of money that's reliable, predictable, and doesn't lose value easily. Gold and Bitcoin are explored to help understand the importance of sound money in financial markets. The major takeaway for me is how much money is being printed into the system and the devaluing of currency around the world. It explains why things are getting more expensive over time, which is really evident in the world right now.


Alternatives – The book critiques potential alternatives to gold, such as other commodities or complex financial instruments, highlighting their shortcomings as reliable stores of value.


"The Bitcoin Standard" isn't necessarily saying everyone should invest in Bitcoin. But it offers a clear explanation of this new technology and its potential impact on money. It also provides a solid basis for why Bitcoin could be the sound money of the future, especially as fiat currency can be printed at will by central banks.


For me, this is a really fundamental book for understanding Bitcoin and I was definitely challenged by it. I recommend everyone study Bitcoin to properly understand the basis for it, what it is and what its potential could be. Challenging ourselves and our understanding of things is critical in today’s market, especially things that are new and different. We can learn a lot from history and it can help us understand the future we are going into. It’s safe to say at this point, that Bitcoin is not likely to be a passing fade, but will become part of the investment universe for many people (the same can’t necessarily be said of other crypto or digital currencies).


I’d love to know your thoughts on Bitcoin and, if you’ve read this book, what are some of the key insights you had. Did it change your mind and would you consider investing in Bitcoin yourself..?

 

A very important note here: Bitcoin is a volatile and speculative investment. This summary is for informational purposes only and should not be considered financial advice. I'll say it again...this is not financial advice!


If you are interested in getting a copy of the book, click here to purchase on amazon (kindle and hardback).


Here's to our continued education. Keep reading and learning!


Cheers


Tim



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