The Bitcoin Standard: The Decentralized Alternative to Central Banking

But in October 2009, an Internet exchange2 sold 5,050 bitcoins for $5.02, at a price of $1 for 1,006 bitcoins, to register the first purchase of a bitcoin with money.3 The price was calculated by measuring the value of the electricity needed to produce a bitcoin. In economic terms, this seminal moment was arguably the most significant in Bitcoin's

Other ancient forms of money include cattle, cherished for their nutritional value, as they were one of the most prized possessions anyone could own and were also salable across space due to their mobility. Cattle continue to play a monetary role today, with many societies using them for payments, especially for dowries. Being bulky and not easily

The security of Bitcoin lies in the asymmetry between the cost of solving the proof‐of‐work necessary to commit a transaction to the ledger and the cost of verifying its validity. It costs ever‐increasing quantities of electricity and processing power to record transactions, but the cost of verifying the validity of the transactions is close to zer

It is likely that Bitcoin's advantage lies not in competing with these payments for small amounts and over short distances; Bitcoin's advantage, rather, is that by bringing the finality of cash settlement to the digital world, it has created the fastest method for final settlement of large payments across long distances and national borders. It is

In a society with sound money, banking is a very important and productive job, where bankers perform two highly pivotal functions for economic prosperity: the safekeeping of assets as deposits, and the matching of maturity and risk tolerance between investors and investment opportunities.

Official central bank reserves are at around 33,000 tons, or a sixth of total above‐ground gold.

Over the past seven decades with relatively reliable statistics, this growth rate has always been around 1.5%, never exceeding 2%.

One of the fundamental laws of economics is the law of diminishing marginal utility, which means that acquiring more of any good reduces the marginal utility of each extra unit. Money, which is held not for its own sake, but for the sake of being exchanged with other goods, will have its utility diminish slower than any other good, because it can a

The constantly increasing supply means a continuous devaluation of the currency, expropriating the wealth of the holders to benefit those who print the currency, and those who receive it earliest.