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by Saifedean Ammous

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Book Details
 285 p
 File Size 
 2,153 KB
 File Type
 PDF format
 9781119473862 (Hardcover) 
 9781119473893 (ePDF)
 9781119473916 (ePub)
 2018 by Saifedean Ammous 

About the Author
Saifedean Ammous is a Professor of Economics at the Lebanese American
University and member of the Center on Capitalism and Society at Columbia
University. He holds a PhD in Sustainable Development from Columbia University.

by Nassim Nicholas Taleb
Let us follow the logic of things from the beginning. Or, rather, from the end:
modern times. We are, as I am writing these lines, witnessing a complete riot
against some class of experts, in domains that are too difficult for us to
understand, such as macroeconomic reality, and in which not only is the expert
not an expert, but he doesn't know it. That previous Federal Reserve bosses
Greenspan and Bernanke, had little grasp of empirical reality is something we
only discovered too late: one can macroBS longer than microBS, which is why
we need to be careful of whom to endow with centralized macro decisions.
What makes it worse is that all central banks operated under the same model,
making it a perfect monoculture.

In complex domains, expertise doesn't concentrate: under organic reality, things
work in a distributed way, as F. A. Hayek has convincingly demonstrated. But
Hayek used the notion of distributed knowledge. Well, it looks like we do not
even need the “knowledge” part for things to work well. Nor do we need
individual rationality. All we need is structure.

It doesn't mean all participants have a democratic share in decisions. One
motivated participant can disproportionately move the needle (what I have
studied as the asymmetry of the minority rule). But every participant has the
option to be that player.

Somehow, under scale transformation, a miraculous effect emerges: rational
markets do not require any individual trader to be rational. In fact they work well
under zero intelligence—a zero-intelligence crowd, under the right design,
works better than a Soviet-style management composed of maximally intelligent humans.

Which is why Bitcoin is an excellent idea. It fulfills the needs of the complex
system, not because it is a cryptocurrency, but precisely because it has no owner,
no authority that can decide on its fate. It is owned by the crowd, its users. And it
now has a track record of several years, enough for it to be an animal in its own right.

For other cryptocurrencies to compete, they need to have such a Hayekian property.

Bitcoin is a currency without a government. But, one may ask, didn't we have
gold, silver, and other metals, another class of currencies without a government?
Not quite. When you trade gold, you trade “loco” Hong Kong and end up
receiving a claim on a stock there, which you might need to move to New
Jersey. Banks control the custodian game and governments control banks (or,
rather, bankers and government officials are, to be polite, tight together). So
Bitcoin has a huge advantage over gold in transactions: clearance does not
require a specific custodian. No government can control what code you have in your head.

Finally, Bitcoin will go through hiccups. It may fail; but then it will be easily
reinvented as we now know how it works. In its present state, it may not be
convenient for transactions, not good enough to buy your decaffeinated espresso
macchiato at your local virtue-signaling coffee chain. It may be too volatile to be
a currency for now. But it is the first organic currency.
But its mere existence is an insurance policy that will remind governments that
the last object the establishment could control, namely, the currency, is no longer
their monopoly. This gives us, the crowd, an insurance policy against an
Orwellian future.
Nassim Nicholas Taleb
January 22, 2018

Table of Contents
Title Page
About the Author
Chapter 1: Money
Chapter 2: Primitive Moneys
Chapter 3: Monetary Metals
Why Gold?
Roman Golden Age and Decline
Byzantium and the Bezant
The Renaissance
La Belle Époque
Chapter 4: Government Money
Monetary Nationalism and the End of the Free World
The Interwar Era
World War II and Bretton Woods
Government Money's Track Record
Chapter 5: Money and Time Preference
Monetary Inflation
Saving and Capital Accumulation
Innovations: “Zero to One” versus “One to Many”
Artistic Flourishing
Chapter 6: Capitalism's Information System
Capital Market Socialism
Business Cycles and Financial Crises
Sound Basis for Trade
Chapter 7: Sound Money and Individual Freedom
Should Government Manage the Money Supply?
Unsound Money and Perpetual War
Limited versus Omnipotent Government
The Bezzle
Chapter 8: Digital Money
Bitcoin as Digital Cash
Supply, Value, and Transactions
Appendix to Chapter 8
Chapter 9: What Is Bitcoin Good For?
Store of Value
Individual Sovereignty
International and Online Settlement
Global Unit of Account
Chapter 10: Bitcoin Questions
Is Bitcoin Mining a Waste?
Out of Control: Why Nobody Can Change Bitcoin
Can Bitcoin Scale?
Is Bitcoin for Criminals?
How to Kill Bitcoin: A Beginners' Guide
Blockchain Technology
Online Resources
List of Figures
List of Tables
End User License Agreement

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Cover Design: Wiley
Cover Images: REI stone © Danita Delimont/Getty Images; gold bars © Grassetto/Getty 
Images; QRcode/Courtesy of Saifedean Ammous
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