Store of Value

Time is your most valuable asset

You trade lifetime for money. Work is stored time.

• Money is the container for that time. It should preserve your work until you need it again.
• A good store keeps the value. A bad one slowly eats it away.
• The key question: Does your money keep your time, or lose it?

What if someone can reprint your time?

Imagine an institution could create out of thin air exactly what you worked for: your money.

• Every newly printed unit makes your saved lifetime worth a little less.
• It happens quietly. You don't notice it right away, only over the years.
• This is exactly today's system. And whoever can print, does.

Held the longest

What has held up longest as a store of value through history?

• ~5,000 yrs. Gold. Nothing has lasted longer.
• ~1,200 yrs. Pound Sterling, the oldest currency still in use, circulating since ~775 AD.
• But: As purchasing power, the pound has fallen dramatically. Age alone doesn't protect from debasement.

Why does fiat lose value?SOUND MONEY VS. FIAT

Inflation is not a law of nature. It's a consequence of monetary policy.

• Since 1971 money is no longer tied to any scarce asset. Since the gold peg ended, it can be created practically without limit.
• Austrian School: If the money supply grows faster than the supply of goods, every unit loses value. Rising prices are the effect, not the cause.
• Keynesianism (today's mainstream): treats active monetary and fiscal policy, including an inflation target, as a tool to steer the economy.

It's not the rich who are to blameCANTILLON EFFECT

The reflex is to blame "the rich". The real problem is the mechanism, called the Cantillon effect: new money doesn't reach everyone at the same time.

• Close to money creation (state, banks, owners of assets): get the new money first, still at old prices.
• At the end of the chain (wage earners, savers): already pay the higher prices.
• The result: Asset prices rise faster than wages.

It's not malice that widens the gap between rich and poor. It's money printing itself.

The first truly fixed-supply asset

Bitcoin didn't appear out of nowhere in 2009. It stands on roughly four decades of research.

• 1980s digital signatures and the first e-cash
• 1997 Adam Back's Hashcash (Proof of Work)
• 1998 Wei Dai's b-money and Nick Szabo's bit gold
• 2009 Satoshi puts the pieces together: the first asset with absolute, verifiable scarcity, fixed at 21 million.

For the first time, no institution can reprint your saved time.