September 12, 2022

🛫 Finite money, infinite wealth

"Scarcity in money leads to abundance everywhere else"

Joe Lupo
Joe Lupo

Reserve Client Manager

🛫 Finite money, infinite wealth

Table of contents

🛫 Finite money, infinite wealth

Inflation rates, Federal Reserve interest rate hikes, and speeches by Federal Reserve officials dominate economic headlines. Federal Reserve decisions influence global economic conditions. One of the Federal Reserve's most important jobs is controlling the supply of U.S. dollars. Given the economic impact of their role, it is worth asking: What is the optimal supply of money?

Although money functions as a unit of account and store of value, its primary use is as a medium of exchange. Its utility as a unit of account and store of value are secondary functions. Given the role of money, does increasing its supply make it a more useful medium of exchange? For example, if there are 100 units of money in an economy, would increasing the number of units to 200 make it better money?

While some would argue otherwise, the answer is simple. An increase in the quantity of money does not make it more useful. It merely dilutes the value of each unit. When more money enters the economy, the only result is a rise in the price of goods and services. Therefore the "optimal" supply of money cannot be tweaked or influenced by increases in the money supply. It is merely the current amount of money in the system at any given time. Supply increases do not make money better; they only drive up prices.

This is part of what makes bitcoin so unique. In contrast to the ever-increasing supply of dollars, bitcoin shines as an alternative. While the world suffers the effects of inflationary money, bitcoin runs on a fixed supply schedule, with a known final quantity (approximately 21 million). Its fixed supply schedule ensures consumer demand alone determines its value. Consequently, when comparing the supply of bitcoin versus dollars, bitcoin is far more favorable.

News

⏫ Bank of Russia: cross-border crypto payments are inevitable

Citing current geopolitical conditions, the Russian central bank, once opposed to digital assets, now regards them as a necessity. The central bank and finance ministry are reportedly working together on enabling cross-border payments in cryptocurrency. The central bankers should realize it would be best for these payments to occur in the only finite, global, neutral, and incorruptible monetary network.  

🛑 IMF cites benefits of bitcoin and digital assets, then calls for regulation

The International Monetary Fund released a new report on digital assets. Surprisingly, the report mentions cryptocurrencies' positives, detailing use cases such as hedging against weak currencies and potential payment instruments.

As expected, however, the report didn't stop there. IMF officials also called for "a global response" in developing crypto regulations. More centralization and control always appear to be the IMF's goal, but fortunately, bitcoin fixes this.

🚨 Gas flows to Europe halted until sanctions are lifted

Gazprom planned on reopening its pipeline on Saturday. However, the Russian state-owned energy giant decided otherwise, pushing the European energy crisis further to the brink. The news came with an ultimatum to the West: remove your sanctions or no gas.

As a refresher, Russia is currently excluded from the global financial system via sanctions in response to its invasion of Ukraine. Europe has primarily depended on Russian energy as they attempt to wean off fossil fuels. It now faces its worst gas supply crisis ever, with soaring prices expected to only increase as winter approaches.

Bitcoin adoption continues

The Human Rights Foundation launched a fund in 2020 to support bitcoin software developers and announced recent donations of $325,000 to various entities and developers in the bitcoin ecosystem.

Singapore's largest bank, DBS, is expanding its bitcoin and digital asset offering to 300,000 of its wealthiest clients in Asia.

The number of Bitcoin ATMs continues to grow in California, with Los Angeles reportedly reaching 2,000.

Saudi Arabia's central bank has hired a former executive to lead its new bitcoin and digital asset program. The news comes as Saudi citizens have reportedly embraced cryptocurrencies.

Documenting bitcoin on Twitter posted this excellent graphic displaying the global distribution of bitcoin nodes (network validators) worldwide.

One year ago, El Salvador became the first sovereign nation to adopt bitcoin as a legal tender.

Macro and Bitcoin price update

Join the conversation on Twitter Spaces at 8:00 PM EST today.

No registration required but make sure you follow @CoinbitsApp and set reminder to get notified when we're live.

Follow @CoinbitsApp to join

How bitcoin works

Learn one key idea about bitcoin each week. This week: Bitcoin is abundance.

25% of US businesses are considered "zombie" companies. That is, they can not afford to pay the interest payments on their debt.

Put another way, one-quarter of firms must borrow to service their debt payments, or they will go out of business.

These companies don't currently create enough value to justify their existence. Otherwise, they would be profitable or, at the very least, be able to cover their debt obligations.

Therefore, a rising interest rate environment, or one where the cost of capital increases, threatens the "zombie" companies' existence.

But the Federal Reserve is dead set on raising interest rates to curb the inflation resulting from their monetary policy.

It's a pretty messy situation that holds the livelihoods of many in the balance.

So how did we get here?

The injection of trillions of cheap credit into the economy in the wake of the pandemic led to massive malinvestment and the funding of unproductive firms at the expense of productive ones.

In other words, easy borrowing led to bad investments.

This system is possible because state-controlled money allows the Fed to create infinite new monetary units, diluting the value of money and lowering the cost of credit for firms.

In contrast, bitcoin is a fixed monetary system not controlled by any single government or entity.

Under a bitcoin regime, profit requires more than simply printing new monetary units.

To obtain bitcoin, one must first provide a valuable good or service that others are willing to exchange. With bitcoin, wealth redirects from those closest to the money printer to those creating value for everyday people.

A bitcoin monetary system unleashes innovation, bringing higher quality goods and services and lower prices. Money flows to superior capital allocators and producers rather than the politically well-connected or already established "zombie" firms.

By fixing the money supply, Bitcoin delivers a world of abundance in everything else.

Are you ready to begin your bitcoin journey?

When it comes to getting started with bitcoin quickly and safely, Coinbits is the best option. It's free to create your Coinbits account. Withdrawing or selling your bitcoin is free of charge, too.

Sign up for Coinbits

Coin check

What is currently the smallest unit of bitcoin?

  1. Millibitcoin (mBTC)
  2. Microbitcoin (µBTC)
  3. Satoshi (sat)
  4. Ether (ETH)

Check your answer at the end of the page.

From the meme pool

Follow us on Twitter for more fresh bitcoin content

🌟 What to do next

➡️ Want bitcoin? Sign up for Coinbits.

➡️  Orange pill the whole family. Get the “Bitcoin for Kiddos” book. 10% off your order with code: Coinbits

➡️ Need coffee? Shop Queen City Coffee Roasters and get 15% OFF your order with promo code BITCOINROUNDUP

➡️ Want to work with us? Explore careers at Coinbits.

Answer: C. Satoshi (sat)

A satoshi is equivalent to 100 millionth of a bitcoin. In other words, there are 100 million satoshis in one bitcoin.

September 8, 2022

🛫 Finite money, infinite wealth

"Scarcity in money leads to abundance everywhere else"

Joe Lupo
Joe Lupo

Investor Relations

🛫 Finite money, infinite wealth

Inflation rates, Federal Reserve interest rate hikes, and speeches by Federal Reserve officials dominate economic headlines. Federal Reserve decisions influence global economic conditions. One of the Federal Reserve's most important jobs is controlling the supply of U.S. dollars. Given the economic impact of their role, it is worth asking: What is the optimal supply of money?

Although money functions as a unit of account and store of value, its primary use is as a medium of exchange. Its utility as a unit of account and store of value are secondary functions. Given the role of money, does increasing its supply make it a more useful medium of exchange? For example, if there are 100 units of money in an economy, would increasing the number of units to 200 make it better money?

While some would argue otherwise, the answer is simple. An increase in the quantity of money does not make it more useful. It merely dilutes the value of each unit. When more money enters the economy, the only result is a rise in the price of goods and services. Therefore the "optimal" supply of money cannot be tweaked or influenced by increases in the money supply. It is merely the current amount of money in the system at any given time. Supply increases do not make money better; they only drive up prices.

This is part of what makes bitcoin so unique. In contrast to the ever-increasing supply of dollars, bitcoin shines as an alternative. While the world suffers the effects of inflationary money, bitcoin runs on a fixed supply schedule, with a known final quantity (approximately 21 million). Its fixed supply schedule ensures consumer demand alone determines its value. Consequently, when comparing the supply of bitcoin versus dollars, bitcoin is far more favorable.

News

⏫ Bank of Russia: cross-border crypto payments are inevitable

Citing current geopolitical conditions, the Russian central bank, once opposed to digital assets, now regards them as a necessity. The central bank and finance ministry are reportedly working together on enabling cross-border payments in cryptocurrency. The central bankers should realize it would be best for these payments to occur in the only finite, global, neutral, and incorruptible monetary network.  

🛑 IMF cites benefits of bitcoin and digital assets, then calls for regulation

The International Monetary Fund released a new report on digital assets. Surprisingly, the report mentions cryptocurrencies' positives, detailing use cases such as hedging against weak currencies and potential payment instruments.

As expected, however, the report didn't stop there. IMF officials also called for "a global response" in developing crypto regulations. More centralization and control always appear to be the IMF's goal, but fortunately, bitcoin fixes this.

🚨 Gas flows to Europe halted until sanctions are lifted

Gazprom planned on reopening its pipeline on Saturday. However, the Russian state-owned energy giant decided otherwise, pushing the European energy crisis further to the brink. The news came with an ultimatum to the West: remove your sanctions or no gas.

As a refresher, Russia is currently excluded from the global financial system via sanctions in response to its invasion of Ukraine. Europe has primarily depended on Russian energy as they attempt to wean off fossil fuels. It now faces its worst gas supply crisis ever, with soaring prices expected to only increase as winter approaches.

Bitcoin adoption continues

The Human Rights Foundation launched a fund in 2020 to support bitcoin software developers and announced recent donations of $325,000 to various entities and developers in the bitcoin ecosystem.

Singapore's largest bank, DBS, is expanding its bitcoin and digital asset offering to 300,000 of its wealthiest clients in Asia.

The number of Bitcoin ATMs continues to grow in California, with Los Angeles reportedly reaching 2,000.

Saudi Arabia's central bank has hired a former executive to lead its new bitcoin and digital asset program. The news comes as Saudi citizens have reportedly embraced cryptocurrencies.

Documenting bitcoin on Twitter posted this excellent graphic displaying the global distribution of bitcoin nodes (network validators) worldwide.

One year ago, El Salvador became the first sovereign nation to adopt bitcoin as a legal tender.

Macro and Bitcoin price update

Join the conversation on Twitter Spaces at 8:00 PM EST today.

No registration required but make sure you follow @CoinbitsApp and set reminder to get notified when we're live.

Follow @CoinbitsApp to join

How bitcoin works

Learn one key idea about bitcoin each week. This week: Bitcoin is abundance.

25% of US businesses are considered "zombie" companies. That is, they can not afford to pay the interest payments on their debt.

Put another way, one-quarter of firms must borrow to service their debt payments, or they will go out of business.

These companies don't currently create enough value to justify their existence. Otherwise, they would be profitable or, at the very least, be able to cover their debt obligations.

Therefore, a rising interest rate environment, or one where the cost of capital increases, threatens the "zombie" companies' existence.

But the Federal Reserve is dead set on raising interest rates to curb the inflation resulting from their monetary policy.

It's a pretty messy situation that holds the livelihoods of many in the balance.

So how did we get here?

The injection of trillions of cheap credit into the economy in the wake of the pandemic led to massive malinvestment and the funding of unproductive firms at the expense of productive ones.

In other words, easy borrowing led to bad investments.

This system is possible because state-controlled money allows the Fed to create infinite new monetary units, diluting the value of money and lowering the cost of credit for firms.

In contrast, bitcoin is a fixed monetary system not controlled by any single government or entity.

Under a bitcoin regime, profit requires more than simply printing new monetary units.

To obtain bitcoin, one must first provide a valuable good or service that others are willing to exchange. With bitcoin, wealth redirects from those closest to the money printer to those creating value for everyday people.

A bitcoin monetary system unleashes innovation, bringing higher quality goods and services and lower prices. Money flows to superior capital allocators and producers rather than the politically well-connected or already established "zombie" firms.

By fixing the money supply, Bitcoin delivers a world of abundance in everything else.

Are you ready to begin your bitcoin journey?

When it comes to getting started with bitcoin quickly and safely, Coinbits is the best option. It's free to create your Coinbits account. Withdrawing or selling your bitcoin is free of charge, too.

Sign up for Coinbits

Coin check

What is currently the smallest unit of bitcoin?

  1. Millibitcoin (mBTC)
  2. Microbitcoin (µBTC)
  3. Satoshi (sat)
  4. Ether (ETH)

Check your answer at the end of the page.

From the meme pool

Follow us on Twitter for more fresh bitcoin content

🌟 What to do next

➡️ Want bitcoin? Sign up for Coinbits.

➡️  Orange pill the whole family. Get the “Bitcoin for Kiddos” book. 10% off your order with code: Coinbits

➡️ Need coffee? Shop Queen City Coffee Roasters and get 15% OFF your order with promo code BITCOINROUNDUP

➡️ Want to work with us? Explore careers at Coinbits.

Answer: C. Satoshi (sat)

A satoshi is equivalent to 100 millionth of a bitcoin. In other words, there are 100 million satoshis in one bitcoin.