In The Bitcoin Standard: The Decentralized Alternative to Central Banking, Saifedean Ammous, an Austrian school economist, delivers a compelling case for Bitcoin as the future of money. Published in 2018, the book traces the evolution of money from seashells to gold to fiat currencies, arguing that Bitcoin’s fixed supply and decentralized nature make it the ultimate “sound money.” With over a million copies sold in 39 languages, it’s a cornerstone for Bitcoin enthusiasts, praised by figures like Michael Saylor, who credits it for MicroStrategy’s $425 million Bitcoin investment. Here’s a deep dive into Ammous’ arguments, Bitcoin’s role, and the book’s impact.
Read the book: The Bitcoin Standard by Saifedean Ammous
The Evolution of Money
Ammous begins by exploring money’s history, emphasizing “salability”—how well a medium transmits value across scale (divisibility), space (portability), and time (store of value). Early forms like seashells and limestone worked in small communities but failed to scale. Gold emerged as the ideal money due to its high stock-to-flow ratio, meaning its supply grows slowly relative to existing stock, preserving value. The gold standard fueled global trade and prosperity in the 19th century, but governments abandoned it in the 20th century, notably with the 1971 Nixon Shock, ushering in fiat currencies—money backed by decree, not commodities.
Fiat money, Ammous argues, is “unsound” because governments can print it at will, causing inflation and eroding savings. He cites historical examples, like Rome’s monetary debasement, linking unsound money to civilizational decline. This sets the stage for Bitcoin, introduced by Satoshi Nakamoto in 2008 as a “peer-to-peer electronic cash system” free from third-party trust.
Bitcoin as Sound Money
Ammous dedicates only 20-30% of the book to Bitcoin, focusing first on monetary theory. He argues Bitcoin excels as sound money due to its properties:
- Fixed Supply: Capped at 21 million coins, Bitcoin’s supply is immune to inflation, unlike fiat currencies.
- Divisibility: Bitcoin is divisible to 0.00000001 units (satoshis), enabling transactions of any size.
- Portability: As digital cash, Bitcoin transfers value globally in minutes, unlike gold’s physical constraints.
- Security: Its decentralized ledger, secured by proof-of-work, ensures integrity without relying on any single party.
Ammous envisions Bitcoin as a “digital gold,” primarily a store of value and settlement network rather than a currency for daily transactions. Off-chain solutions like exchanges handle smaller trades, while Bitcoin’s blockchain settles large, trustless transactions. He believes this makes Bitcoin a potential global reserve currency, restoring the stability of the gold standard era but with digital efficiency.
Critiquing Fiat and Central Banking
Rooted in Austrian economics, Ammous is sharply critical of fiat systems and Keynesian policies. He argues that fiat money incentivizes short-term spending over saving, fostering a “high time-preference” culture of consumption and debt. Sound money like Bitcoin, with its fixed supply, encourages long-term thinking, as seen in historical societies that built enduring structures like cathedrals. Central banks, he claims, exacerbate instability through money printing, fueling bubbles and inequality.
Critics note Ammous’ bias against centralized systems, with some calling his rhetoric “polemical” or overly simplistic, lumping all modern economic woes under “Keynesian economics.” For instance, he attributes Europe’s Dark Ages partly to the lack of sound money, a claim skeptics argue ignores other factors like political fragmentation. Yet, his punchy summaries make complex ideas accessible, earning praise for clarity.
Bitcoin’s Challenges and Promise
Ammous addresses common criticisms: Is Bitcoin mining wasteful? He argues its energy use secures an incorruptible ledger, a worthwhile trade-off. Is it for criminals? He counters that fiat cash is more anonymous, and Bitcoin’s transparency aids tracking. Can governments ban it? While possible, he believes Bitcoin’s decentralized nature and growing adoption—evident in El Salvador’s legal tender status—make suppression difficult.
He’s less optimistic about altcoins, viewing them as speculative “shitcoins” driven by easy money, lacking Bitcoin’s integrity. Recent X posts reflect this sentiment, with Ammous expressing confidence in Bitcoin’s trajectory, citing 360,000 additional blocks since 2018 as evidence of its resilience.
Impact and Reflections
The Bitcoin Standard is a polarizing yet influential work. Supporters like NFL star Russel Okung and Mises Institute’s Jeff Deist call it a “must-read” for understanding monetary tech and fiat’s flaws. Critics, however, find its libertarian tone and anti-government stance excessive, arguing that global trade thrives despite fiat systems. Still, its impact is undeniable: it inspired MicroStrategy’s massive Bitcoin bet and shaped El Salvador’s adoption strategy.
For readers, the book offers a rigorous yet readable journey through monetary history and Bitcoin’s potential to disrupt central banking. It’s not a technical guide but a philosophical and economic manifesto. While Ammous’ vision of a Bitcoin standard faces hurdles—regulatory resistance, public skepticism, and volatility—his case for sound money resonates in an era of rising debt and inflation. Whether you’re a crypto skeptic or enthusiast, The Bitcoin Standard challenges you to rethink what money is and could be.