Bitcoin, Bears, Thermodynamics... Battlestar Galactica

Money is an energy system that eliminates the coincidence of wants, or...

the person who has what I want does not want what I have to sell.

Money as a tool also allows for more specialization within a workforce. If I am confident that Tommy will accept my money for his finely woven shirts, then I don't need to try and make my own poor attempt at a shirt. This helps produce a more productive economy, with higher-quality goods.

Because we are no longer trading actual physical goods between each other, the money that we are now trading between us has no utility value beyond the fact that I am confident I can procure what I need with it, because everyone has agreed to accept it. If money is an energy system, then we would want that system to be free from manipulation and be truthful. I want one dollar to be worth one dollar either today, tomorrow, or far into the future.

Unfortunately, when humans are put in charge of this system, over and over through the annuls of history, people have manipulated money for their own selfish means.

Lucky for us, there is one man whom we could trust to defend our money. Who would recognize the value of truth in money? The arbiter of truth, Dwight Shrute.

Out of Human Control... Except for Dwight

As an energy system, money would and should have to follow natural laws. There is nothing more natural than the law of conservation of energy.

The First Law of Thermodynamics states that energy cannot be created or destroyed, it only may change its form.

More specifically, energy cannot be created from nothing in the natural world, and cannot be destroyed with a net result of zero energy.

Plants take in the radiant heat from the sun and it is transformed into a chemical process to provide itself energy.

Burning wood in a lakeside firepit converts a chemical reaction into heat.

But you know why we are really here...How in the world does this relate to Bitcoin?

This is best described by comparing Bitcoin as a closed, thermodynamically sound system, to many of the world's fiat, open, and leaking systems.

Truth and Lies

When Bitcoin is created/rewarded, there is a significant amount of work that needs to be completed. The miners earn this reward through energy expenditure and this energy is transformed into Bitcoin. Bitcoin at its core is pure digital energy in byte form. As a closed system, Bitcoin also does not have any loss in the system.

1 Bitcoin will always equal 1 Bitcoin.

Because of its hard cap/finite supply, it is the purest asset with no energy leakage. The first successful demonstration of digital scarcity.

The current fiat system is in contrast to nature's laws. As an energy system, it fails from step one. Fiat money is created with no energy expenditure or work, and with the stroke of a pen or entry on a spreadsheet, new dollars are created, almost always in the form of credit.

If you can even call it a system anymore, fiat money leaks value terribly. For example, the dollar has continued to lose purchasing power since it first stepped on the scene.

That "leaking of value" or reduction in purchase power is energy being destroyed. If you stowed away some cash under your mattress, (money that you have already earned mind you), and pulled it back out 5, 10, or 15 years later, you could buy fewer goods and services with that money than if you had spent it the day those sweet greenbacks hit your wallet. We call this inflation.

Inflation is the destruction of energy from our money.

The world needs Bitcoin.

All around the world, there are people whose currency is hyperinflating. Often this means that the loss of money that we discussed earlier is happening at such an alarming rate, that their currency loses value on a daily or weekly basis.

The Answer

Bitcoin represents the solution to the problem fiat currencies of the world are creating. As the hardest and most sound money available, it must be created through work, and there is no shortcut or way to cheat the system. You are required to play by the rules that have been agreed upon.

As an energy system that we use every day to survive, to share with loved ones, and to show our appreciation for those who do good work, I want that system to be the arbiter of truth. To not steal value from its citizens.

Bitcoin offers that, as a thermodynamically sound natural system.