Learning about Bitcoin is difficult when you don’t know where to look. There is a lot of misinformation all over mainstream media, and even ‘crypto’ news websites frequently get it wrong. What are they getting wrong? The errors are many:
- Viewing it as ‘crypto’ and not primarily Bitcoin
- Viewing it only as a technology, and not as a money and economic phenomenon
- Fundamental misunderstandings about what money is, and why we hold money
Newbies to Bitcoin are best advised to understand it through a ‘Bitcoin Austrian’ lens, which is a view informed by the Austrian School of economics. Read some of the recommendations in this guide to get started on your journey down the Bitcoin rabbit hole. For readers who prefer an audio format for learning, I recommend listening to SLP71 of my podcast.
Carl Menger is recognised as the founder of the Austrian School of economics. In this seminal essay from 1892, Menger lays out a very important thesis behind what forms a good money: the most saleable (marketable) one. In a spontaneous, bottom-up sense, people individually select goods that perform well as a medium of exchange. No top-down government decree is necessary for money to arise on the market of voluntary interaction. Money is not a ‘belief system’.
If you were going to read one essay about the problems of fiat money, this would be the one to read. In this fantastic piece, Hoppe explains how it is that we came to be operating under a paper fiat money world, due to government intervention into the market for money. Some key ideas:
- Self-interest and recognition of divisibility of labour are sufficient to drive adoption of a singular monetary commodity and global money standard
- Goods have differing degrees of marketability (saleableness)
- It’s beneficial to select a medium of exchange that is already being used by other people
- Competition amongst monies leads to a tendency of convergence towards a single money – the most easily resold and readily accepted
In this essay from 2002, Nick Szabo builds on the view of Carl Menger, explaining how collectibles were part of the evolution of money. In this essay, Szabo discusses various concepts such as proto-money, and intergenerational wealth transfer.
In this essay, Nick Szabo explains why blockchains are so incredibly costly, but they might actually be worth it in providing one specific thing: social scalability. By providing certain assurances about the qualities of a certain strong kind of money, e.g. that it won’t be inflated beyond 21M – Bitcoin may help us achieve something that is not possible with regular human-controlled institutions such as a government, or company.
Instead of thinking of blockchain technology as this general purpose technology that can be used to solve many different problems such as supply chain, we should instead realise that blockchain is a very specific solution to a very specific problem of the production of money. This should disabuse the reader of this notion of ‘blockchain technology’ that is commonly pushed. Those who say “I don’t like Bitcoin, but I like the underlying blockchain technology” are generally people who don’t know what they’re talking about, or have a questionable product to sell you.
Hans Hermann Hoppe explains why we hold money. Ultimately it is because of future uncertainty. If we were certain about the future we could instead place our money into instruments that return the desired yield. Once we understand the reason why we hold money, Bitcoin’s position as being part of an individual’s cash balance makes much more sense.
Vijay writes a great ‘one stop shop’ article on why Bitcoin has very attractive monetary characteristics, and has a focus on why it is one of the few asymmetric bets that anyone in the world can participate in. A small amount of bitcoin bought today, could yield a great increase in wealth for the bitcoin holder in the future.
This is the single best book that you could read on Bitcoin and its importance in the broader context of monetary history with a strong focus on Austrian economics. Saifedean popularises the concept of stock-to-flow analysis amongst Bitcoiners and articulates a case for why there are tendencies towards the hardest money. This is a fantastic jumping off point for newbies to Bitcoin.
This short book is a fantastic explanation by one of the Austrian economics greats. You will learn how it is government can destroy money, through certain monetary interventions. One particular intervention is the existence and imposition of a central bank.
In this essay, Hülsmann goes through some of the reasons why deflation is not something to fear. Deflation can actually help in undoing the negative consequences of the prior monetary inflation. Deflation can be understood as a liquidation of prior malinvestments, and repurposing those resources to where consumers demand production.
This book is fantastic explanation helping newbies understand the problems of government monetary interventions. Hülsmann articulates how it is that interventions such as legal tender laws cause a deterioration in the quality of money, and how it was specifically these interventions that cause changes in the way individuals use money. Hülsmann also masterfully explains cultural and spiritual consequences of fiat money, in changing the underlying behaviours of people in society.
Listen to Guido Hülsmann’s appearance on my podcast here: SLP51
This is a fantastic and timeless series of articles by my friends Michael and Pierre at the Nakamoto Institute. For those of us going through our early days in Bitcoin in 2013/14, this set of articles helped articulate a specifically “Bitcoin Austrian” vision of Bitcoin’s potential, and why we could come to be so bullish on Bitcoin. Many concepts are explored, such as:
- Hoarding bitcoin
- Bitcoin’s marketing
- Problems with altcoins
- Speculative attacks
- Everyone’s a scammer
Many articles that came later in ‘crypto’, were in fact derivative or unfortunately, watered-down versions of this article series.
Listen to Michael Goldstein’s appearance on my podcast here: SLP6
Bitcoin is only going to become more important and those people who understand it will be well placed professionally and monetarily in years to come.
If you found this reading list useful, make sure you also check out our Ministry of Nodes webinars. We will be running in webinars to help educate interested people, and will have bitcoin books and gear for sale.
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