Cheaper to make, more expensive to buy
Twenty five years ago, sharing 50 photos with your friends meant buying a film, paying to get it developed, and paying the postage. Call it £25. Today you take 500 photos on your phone and share them with the world for nothing. The same has happened to maps, music, calculators, calls abroad, a torch, and a stereo. They’re all on the one device, and most of them cost nothing.
But your weekly shop, your rent, and your energy bill tell the opposite story. Coffee is a good example. Growing it and shipping it both cost far less to do than they did decades ago, and yet you pay more for a cup today. A house takes two incomes and a longer mortgage than it used to, where one income once did it. Something doesn’t add up. We’re clearly getting better at making almost everything, and yet life feels more expensive year after year.
Why?
Because two forces are colliding. One pushes prices down. The other is our money system, and it’s built to push them up.
The first force: technology pushes prices down
In any open market, a business only wins customers by offering more for less. Wherever someone charges a fat margin, a competitor copies the idea and undercuts them. Keep that up for years and the price of almost anything should fall toward what one more of it costs to make, once the set-up is done. For software that cost is close to nothing, which is why the calculator app that once cost a pound is now free.
This force is getting stronger. Software took over work that needed a person thinking, and that work got far cheaper. Robots are now doing the same in warehouses, on farms, and in factories. And AI writes the software, so the tool that does the work on everything else is now improving itself. Each improvement compounds on the last, because better tools build better tools. So under a money nobody can add to, the natural direction of prices is down, and the push behind that fall keeps getting stronger, because the tools are improving faster than they did. You won’t see that in the official productivity figures yet.
Prices falling because we get better at making things is what progress looks like. That’s deflation. But the same word gets used for something else, an economy seizing up, with people too poor or too frightened to buy. Prices falling for that reason really is a disaster, and it’s where the word got its reputation. Prices falling because things got cheaper to make ended up with the same bad name, without ever earning it. It’s the natural state of a free market. Left alone, it means your money buys more year after year, and your saved hours of work grow in value while you sleep. That’s what technology has been trying to deliver to you your entire life.
The second force: money that’s built on debt
Nearly all money today is created through lending. When a bank issues you a mortgage, it doesn’t hand over other people’s savings. It writes a new deposit into your account, new money, matched by your new debt. Repeat that across every bank, add what governments borrow, and the money in the system is roughly a mirror of the debt in the system. If the loans were all repaid, most of the money would vanish with them.
So nearly all of the money was borrowed into existence, and that gives the system a weak spot. The system can take a slow fall that comes with better tools. What it can’t take is a sudden fall in the prices credit pushed up, houses first, because then the losses spread through the banks. Houses come first because they’re bought with borrowed money, so house prices are where that lending shows up first. Your mortgage is fixed in pounds. If prices across the economy fall and nothing is done to stop it, wages eventually follow them down, but the mortgage payment doesn’t shrink, so the debt takes a bigger and bigger bite of your income. And where the loan was written against a house, the house is worth less too, so the bank stands to lose more on that loan. Multiply that across every indebted household, company, and government, and a sudden broad fall sets off a cascade of defaults. Borrowers fail, so banks fail, so the lenders to the banks fail. In 2008 we saw a preview. For a few days that autumn, even fully guaranteed shipments sat on docks, because banks had stopped trusting each other’s paper.
In ordinary years, central banks aim for prices to rise by about 2% a year, and call that success. Two percent isn’t where prices would settle on their own. While technology keeps making things cheaper to make, prices would drift down, so getting them to plus two takes new money that cancels that drift first, and then adds two on top. That new money is loaned into existence, like nearly all the rest. Central banks publish why they aim there. They want room to cut interest rates in a downturn, they know wages resist falling, and they say the official measure of prices overstates the rise. The debts aren’t among those reasons. The debts show up in the rescues, the new money created whenever a sudden fall threatens, not in the everyday 2%.
The collision
So technology pushes prices down, and the push keeps growing. The money system aims to keep prices rising, and it can’t take a sudden fall in the prices it pushed up. Something has to cover the gap between those two forces, and new money and credit are what cover it.
And because technology compounds, what it takes to cancel the fall keeps growing. It’s one reason why each rescue is bigger than the last. The 2008 rescue was measured in hundreds of billions of dollars of government spending and bond-buying. The 2020 one was measured in trillions.
Nearly everything that comes next flows from those two forces colliding. Other things explain the details, like why one price rises while another falls, or why houses cost more where building is limited. But the money system sets the level for all of it.
What this does to your money
The most direct effect is the one you never see, the price fall that never arrives. Technology made the things you buy cheaper to make. Under a money nobody can add to, that saving would reach you as lower prices. Instead, new money and credit push prices back up, so the price tag holds or rises. You worked just as hard, making things got cheaper, but the saving never came to you as a lower average price.
It’s an invisible pay cut. If prices rise 5% but your pay only rises 2%, you’re working more hours for less life. So inflation and a wage that buys less are the same thing. When Malawi cut the value of its currency by around 44% in a day, the supermarkets closed so they could put new prices on everything. Everybody took a pay cut. Richer countries do the same thing, just slowly.
And your savings lose value too. If the safest savings account in the country pays 2% while your costs rise 6%, the system is promising you a guaranteed loss on the money you already earned.
The official inflation number makes the theft look small, because it starts counting from zero. Imagine technology would have made life 3% cheaper this year on its own, but instead prices rose 2%. Counted from zero, that’s a 2% rise, and 2% is what the official number reports. Counted from the 3% fall you were owed, it’s about 5%. Picture a moving walkway sliding backwards. If you have to keep walking forward just to stand still, the effort is real even though you get nowhere.
Who gets the new money
New money arrives in some places before others. It comes in through the banks, through government spending, and through cheap loans. The people closest to where it comes in get it first, and they spend it before prices have caught up. This has a name, the Cantillon effect. Asset owners, the people who already own houses, shares, and land, are first in line. Wage earners are last.
Whether you’re first or last in that line decides how the rest of this lands on you.
Houses stop being homes and become savings accounts
When money leaks value, people put their savings into whatever holds its value instead, and of those, a house is the one an ordinary family can borrow to buy. So a house does two jobs now. It’s a place to live, and it’s a savings account. You pay for both in one price. The extra you pay for that second job has a name, a monetary premium. A landlord with three mortgaged properties gets richer in his sleep while a paramedic saving for a deposit falls further behind year after year, and neither of them changed how hard they work.
Everyone is forced to become an investor
If your cash loses value every year, you’re forced to become an investor just to stand still, whether or not you have the time, skill, or stomach for it. The money system makes a safe place for your savings hard to find. But in a free market with a money nobody can make more of, an ordinary saver could simply hold it and get richer as prices fall.
Money goes to the wrong places
When borrowing is kept cheap, a project only has to earn more than the interest on its loan to look worth doing. Hold that interest near zero and almost anything clears the bar, including projects that use up more in wages, materials, and energy than what they make is worth. Firms that should fail don’t. They take out new loans to pay off the old ones and carry on. That ties up the staff, the customers, and the premises a new firm needs to get started. Cheap credit also favours whoever is biggest and closest to it, so the firms already on top buy their rivals instead of making something better. Competition stops being about serving customers and becomes about getting the cheap money. A market fixes its own mistakes by letting bad businesses fail, and that’s the part that stops working.
Automation happens faster than it would have
Year after year, new money pushes up rent and energy, and pushes staff to ask for more, because their own bills have risen. Every year the law raises the minimum wage on top of that. And every year the machines get cheaper. Take a café. It can’t just charge more, because the one across the road would undercut it. So it puts in self-order screens, years sooner than it would have. The screens were always coming. The pay rise sold as helping the staff brought the day forward.
What this does to people and politics
Give those effects a decade or three and they start reshaping society.
Resentment becomes the political weather
Asset owners pull ahead of wage earners because of where each stands in the line for new money, and neither of them worked any differently. It doesn’t feel like a place in a line, it feels personal. Renters watch landlords get richer for doing nothing and decide the game is rigged. It is rigged, just not by the neighbour they can see. So politics turns into a fight about who to blame, the rich, the immigrants, the boomers, the bankers, whoever your side points at. The one thing never on your ballot paper is the money system that decides where everyone stands in that line.
The help works, then makes things worse
All of those effects squeeze voters, and squeezed voters demand help. The help arrives as rent controls, subsidies, minimum wage rises, and eventually direct cash payments. The subsidies and the cash payments are paid for, in the end, with newly created money. That new money pushes costs up again, so the squeeze tightens, and voters demand the next programme. The loop feeds itself, and with every turn more of who gets what is decided by politics instead of prices.
Trust decays
Money loses value year after year, so everyone holding it is losing, and passing that loss on to someone else pays better than taking it yourself. Firms shrink the chocolate bar instead of raising the price, so the number on the shelf holds while the bar in your hand gets smaller. Service gets worse because pay buys less and morale follows it down. Lobbying beats building, because changing a rule pays better than making a better product. People sense that cheating pays, and what counts as normal drifts toward what pays.
Time horizons collapse
Money is stored time. You trade hours of your life for it, to spend later. When the store leaks, waiting costs you, so people grab what they can now, borrow now, and spend now. A society’s patience runs on its money. People save less, gamble more, and plan less far ahead, in everything from business plans to saving for a deposit.
Control creeps in
The whole money system runs on belief. Money is created as debt, and a debt is only worth something while people believe it will be repaid. So a system that has to keep that belief alive ends up managing what gets said and, eventually, what gets spent. Money outranks law in practice. When the money system itself is threatened, laws bend to protect it, and so does the way they’re read. Speech rules tighten and payments get watched. Step after step is justified by an emergency, and the emergencies keep coming, because no policy can change the arithmetic. A democracy where you can vote on everything except the money is voting on less than it thinks.
Where the road ends
The same collision that squeezes one household squeezes whole countries, and then sets them against each other.
Between countries, a race to the bottom
Governments caught in the same trap reach for the same lever, which is to make their own currency cheaper. A cheaper currency makes a country’s goods cheaper for foreigners to buy, so exports hold up and the factories keep their workers. But one country’s cheaper currency is its neighbour’s lost sales, so neighbours retaliate and cut their own. Currency wars become trade wars, and history says that path often ends in a real war when the pressure behind it keeps rising. Creating money also makes war itself easier to start. A government that can create money doesn’t have to send its citizens the bill up front. A war paid for by visible taxes runs into resistance fast. A war paid for by quietly shrinking everyone’s savings can go on for years before people connect the two.
When the money gets rewritten
When belief in the money finally breaks, the state rewrites the money’s rules and the pattern starts again. Weimar Germany is the famous case. Savings were wiped out, a population was humiliated, and a strongman was welcomed by people who a few years earlier had dismissed him. It doesn’t always look that dramatic. America ordered its citizens to hand in their gold in 1933, and in 1971 it ended the promise that dollars could be swapped for gold. Both were the same move in a gentler form. When the money’s promise can’t be kept, the rules change by decree, and the citizens take the loss.
Money the state can turn off
This time the tools of control are stronger. Today your money is held by a bank, and a bank is a private company. A central bank digital currency moves your money to the state itself, so your balance becomes something the state can watch and program directly. Add AI to that and the state gets powers past regimes only dreamed of, money that expires if you don’t spend it, payments that fail because of what you bought or where you stood, a switch that can shut off any business that steps out of line. No one has to play the villain for that to arrive. The next crisis, and a population asking to feel safe, are enough. And AI under this system concentrates power instead of spreading it, because AI’s gains flow to whoever stands nearest the money, while the workers it replaces are managed with benefit payments and rules.
Even the planet is caught in it
A money system built to push prices and consumption upward forever can never let the world use less. Every gain in efficiency should mean less material used for the same result. But new money arrives to keep the numbers growing, so the amount we use keeps rising anyway. You can’t demand more from a finite planet every year and expect it to keep up.
A depression, or the long road to war
So the current design leaves two doors. Door one is to stop creating money and let prices fall suddenly. When prices fall across the whole economy, businesses take in less for what they sell, so what they pay out in wages follows prices down, through pay in a deep fall and through jobs and hours in a mild one. On its own that would be survivable, because the things you buy are getting cheaper at the same time. The debt is what breaks it. A debt is a fixed number of pounds, and that number doesn’t move when prices do. The same squeeze hits households, companies, and governments at once. Your mortgage payment stays the same while your pay falls. A company’s loan repayments stay the same while its takings fall. And a government still owes what it owes, even as tax receipts drop. Every borrower is caught, so defaults spread. Then the defaults reach the banks. Banks own those loans, so when borrowers fail, banks fail, and whoever lent to the banks fails after them. That’s a depression, the falling prices that gave deflation its bad name. Door two is to keep creating money, and take widening inequality, deepening control, and rising risk of conflict. One end of that road is an arrangement where the interest on savings is held below rising prices, so money moves from savers to borrowers year after year. That has a name, financial repression. Growing faster than the interest on the debt looks like a third way through, and it holds only while the interest rate is kept below rising prices, which is that same end of the road. The other end is war. Most of the policy debates you watch are arguments about which door to edge toward. Neither door fixes it, because the design is the problem.
The way out
You can’t fix this by electing better people, because the design does the damage whoever is in charge. Any leader who tried to stop the money creation would set off door one on their own watch, a depression with their name on it. They’d lose the next election to someone promising rescue, and that rescue would be the biggest expansion yet. Politician after politician learns not to try. Incentives beat intent. Parliaments have written money rules before, and some capped how many banknotes a central bank could issue, for decades at a time. Most of those caps were loosened or repealed by the same kind of parliament once they began to bind, and none of them capped the money banks create when they lend, which is most of the money. So the fix has to be built into the money itself. It has to be money that nobody, however powerful or well intentioned, can make more of.
Why gold failed
The last time we tried a money nobody could make more of at will, it was gold, and the way gold failed is what to watch for again. Gold is heavy to move and hard to check, so a whole economy couldn’t trade the metal itself. The gold went into vaults, and people traded paper claims on it instead, promises that the vault would hand the gold over. Nobody outside could count what was in the vault, so whoever ran it could write more claims than there was metal. And when the pressure came, governments changed the rules for swapping paper back into metal, or seized the metal outright. The scarcity was real, but to use gold across a whole economy it had to sit in someone else’s vault. That vault is a single place the rules can be reached.
What would actually work
So write down what the fix requires. Every item on it removes someone you’d otherwise have to trust. Money with a fixed supply, so nobody can make your savings worth less by creating more. Money anyone can check cheaply, so you never have to take an institution’s word for it. Money anyone can hold themselves, so there’s no vault to lean on. Rules that no company, government, or majority of insiders can change. And a record of payments that’s too expensive to fake, so you don’t have to trust anyone to be honest.
That list describes what Bitcoin makes available. There will only ever be twenty one million coins. Anyone can check the money themselves. Ordinary software on an ordinary computer, called a node, checks the rules for itself, so you don’t have to take an institution’s word for what you’ve been paid. A block of transactions that created extra coins wouldn’t exist for you. Anyone can hold their own keys, and whoever holds the keys controls the coins, so nobody has to keep their savings with a custodian. New coins are issued through proof of work. Miners spend real electricity to add each block of transactions, so rewriting the record means outspending everyone else, and for anyone after a profit that sum doesn’t work. Bitcoin’s base layer stays small and boring by choice, and speed runs on layers built on top of it. One of those layers, called Lightning, settles small payments in seconds for fractions of a penny.
Technology is what pushes prices down. An expanding money supply absorbs that fall before you ever see it. A money that can’t expand doesn’t absorb it.
How it could still be lost
I’d be making this argument if bitcoin had never been invented. The problem is a money system fighting technology, and that’s true either way. What bitcoin offers is a way out, and it depends on ordinary people holding the coins themselves. The obvious way for it to fail is the way gold failed. The coins end up in a few big regulated companies, those companies write more claims than they hold, and everyone carries on pricing their life in pounds. Twenty one million would still be the limit. It just wouldn’t protect many people, because almost nobody would own a coin, only a claim on a company that owns some. This time you don’t have to hand your coins over. The key to your coins is a short list of words, and you can carry a list of words in your head. Gold couldn’t be checked at home or carried across a border in your memory, and bitcoin can be. Handing gold to a vault was a physical necessity. Handing bitcoin to a company is a choice. So what protects it is what people do with it. Hold your own keys and your coins never sit in someone else’s vault. Run your own node and you can check what you own without asking anyone. Pay through systems nobody can lock you out of. Price your life in bitcoin, and the pound stops being the unit you measure by.
What it would be like
If bitcoin stays in ordinary people’s hands, the force behind every effect above is removed, and the effects start to unwind. Prices fall as fast as we get better at making things, so your savings buy more year after year. Houses drift back toward what they’re worth as places to live, because money itself stores value again. Where the price was pushed up by land, that part stays, and where it was pushed up by law, that part holds until competition works round the rule. The forced scramble into speculation winds down. Credit shrinks to what genuine projects can pay back. Governments fund themselves through taxes people can see and contest, or through borrowing they have to repay in money that buys more year after year, so a war gets harder to start without people noticing the bill. Energy gets cheaper, because miners will buy electricity nobody else can use, from power stations too far from a city or producing at the wrong time of day. A guaranteed buyer makes new power plants worth building. And AI becomes good news instead of a threat, because its gains land as falling prices for everyone rather than concentrated control for a few. One effect is new. Whoever holds the money before everyone else arrives gains without producing, so how widely it’s held by then decides how widely that gain lands. After that, the only way to get ahead is to deliver something people will pay for.
Some of the unwinding is already visible if you change the unit. Priced in bitcoin, a laptop, a year of energy, and a house have all cost less across the cycles so far, even as their pound prices held or rose. The whole of that fall is bitcoin strengthening as it takes on savings, not those things getting cheaper to buy, because in pounds they held or got dearer. So it’s a preview and not the finished reversal. The abundance underneath is real. It’s invisible in the old unit, and the new one can’t show you its size yet.
Nobody has to wait for their government. Between countries the unwinding is uneven and slow, but for a person it’s immediate. The day you start saving in bitcoin, checking prices in it, and spending some of it, saving stops being a guaranteed loss.
Why this is so hard to see
The thesis isn’t hidden. Every piece of it is public, and still most people, including most economists, look straight through it. Here’s why.
1.You’re measuring with the thing that’s being changed
Every price, every wage, and every savings balance you’ve ever seen is measured in money someone can always make more of. So when your house “rises” in pounds, you can’t tell how much of the rise is the house becoming worth more and how much is the pound becoming worth less. The pound is the ruler, and it changed length while you were measuring with it. That never feels wrong from inside. The ruler just gives you numbers, and the numbers look like facts.
2.The two forces hide each other
Technology keeps lowering the cost of making things. New money is created faster than that cost falls, so the price you pay rises instead of falling. You can’t notice a fall that never happened. The money creation is hidden as well, because in a normal year all you see is what the two forces add up to, a rise of 2 or 3%. A rise that small makes the money creation look mild and responsible, and it makes rising prices feel like the weather, something that just happens.
3.The baseline is wrong
We judge inflation against zero. A 2% rise sounds mild and a flat year sounds like a success. But zero was never neutral. In a market that keeps getting better at making things, neutral would be prices falling, so even a flat year is a loss. And you can’t look up the fall you were owed, because that world never happened. It’s a theft with no crime scene.
4.Everything is moving faster than it feels
Technology, the force that pushes prices down, is improving exponentially, which means it keeps doubling, and each doubling takes about the same stretch of time. So the money created to cancel that push has to keep growing, just to keep prices rising. And that’s hard to grasp, because we tend to think in steps of the same size, adding a bit at a time. Stack 50 sheets of paper and you’ll have a pile about a fifth of an inch high. Now fold one sheet in half 50 times, so every fold doubles the layers, and the stack would reach most of the way to the sun. Most people guess a few inches. So both forces are far bigger than they feel.
5.The official instruments can’t see it
GDP is the number governments watch to judge how the economy is doing, and it counts paid transactions. When your phone replaces hundreds of pounds of cameras, maps, and stereos with free apps, your living standard jumps and GDP falls, because nobody is paying for any of it any more. So the better technology gets at giving you things for nothing, the worse the economy looks in the official numbers. That invites a fix for a weakness that isn’t there. The fix is more money, which pushes prices up and absorbs the abundance the numbers couldn’t see. GDP was built for an economy where doing better meant spending more.
6.The language is loaded
In everyday speech, inflation is normal and deflation hardly ever appears except next to “spiral” and “depression”. And there’s no everyday word for prices falling because we got better at making things. It’s hard to think clearly about something when the only word for it means disaster. So people file the natural state of a free market under catastrophe.
7.Everyone has a reason not to look
The homeowner needs the rise in his house price to be real, because his retirement is tied up in the house. The politician gains nothing by understanding any of this. “Your pay will fall while your costs fall faster” loses an election to “your pay will rise”, and a leader who stopped the money creation anyway would be blamed for the depression that followed. The pension system needs asset prices up. The economist was trained in this way of thinking, hired for it, and promoted inside it, so questioning it means questioning his own career. Each person defends their small piece sincerely, and none of those positions gives its holder a reason to doubt the system as a whole. People even live the contradiction daily, hunting bargains all afternoon and cheering their house price all evening, and never notice.
8.Money beliefs are tribal badges
People pick positions to belong, and once a belief becomes a tribe’s badge, evidence feels like an attack. Labels do the thinking. “Crypto bro” and “gold bug” and “money printer conspiracist” each end the conversation before anyone gets to how the money works.
9.Nothing ever makes you question the pound
Someone measuring life in pounds sees rising prices and blames greed or supply chains. An investor measuring bitcoin in pounds sees a volatile asset that soared or crashed depending on when they looked.
And measuring in pounds, they’re both right. Property, the stock market, and the weekly shop really do go up in pounds. Bitcoin really does rise and fall in pounds. Nothing either of them sees contradicts what they already believe. Seeing the problem means questioning the unit you measure your whole life in, and nothing in ordinary life ever pushes you to. Ask a fish what the water’s like and it’ll say “what water?”. The water we swim in is the pound.
Those nine are why people find it hard to see the problem. Nothing needs to be hidden, and there doesn’t need to be a villain or a conspiracy to stop people working it out. The unit moves while you measure with it. The price fall you were owed never happened, so there’s nothing to point at. The official numbers don’t count what’s free. There’s no everyday word for prices falling because things got cheaper to make. And if you hold a piece of the system, that piece gives you no reason to look.
The objections
“Deflation is dangerous. Look at the 1930s.”
People point at the Great Depression and say falling prices are dangerous. Prices did fall in the 1930s, and it was a catastrophe. But what collapsed was a banking system built on borrowed money, and prices came down with it. Prices also fall when we get better at making things, which is why sharing 50 photos went from £25 to nothing. Both get called deflation. And a sudden broad fall in the prices credit pushed up, houses first, really would wreck today’s economy, for the same reason. Nearly every pound exists because somebody borrowed it, so when borrowers fail the money fails with them. A money nobody can create more of isn’t made of anyone’s debt, so falling prices can’t destroy the money itself. Credit built on top of it can still fail, but the loss lands on the people who chose that risk, and whoever kept their own keys still has their coins. Under a money like that, things would just cost less year after year, and the money in your account would buy more than it did. Nobody would have to take risks to stand still. The danger is the debt design, not the cheaper goods, and that design is the thing worth objecting to.
“If prices fall, people will delay every purchase and the economy stops.”
The worry is that if prices keep falling, nobody will buy anything today, because it’ll be cheaper next year. Then spending stops, and the economy stops with it. But some things already get cheaper every year. Phones, laptops, and televisions are better and cheaper each time, and people buy them constantly. You buy a winter coat because you’re cold now. You buy food because you’re hungry now. Having a thing you need or want today beats a discount on it next year, so what gets put off is the big purchase that could wait. A system that needs your savings to leak so you’ll spend faster is forcing you to spend and calling it policy.
“A little inflation is needed for growth.”
The argument is that a bit of inflation is needed to keep the economy growing. But the growth worth having is people getting more for the same work, and that comes from getting better at making things. Falling prices are the main way it reaches you. Inflation adds nothing to that, and it stops the gains arriving as lower prices. Getting prices to plus two takes new money that cancels that fall first, and then adds two on top. The debts show up in the rescues, not in the everyday 2%. A 2% target means a nurse’s savings buy 2% less every year, on purpose. The argument says the economy can’t work without that happening to her, every year, forever. No saver wants their money to buy less.
“Governments will just ban Bitcoin.”
The obvious move for a government that doesn’t want Bitcoin is to ban it. It can lean on the parts it can reach, the exchanges and the banks where bitcoin touches the old system, and some will. It can’t change the rules of the network by decree. It can reach named people, the handful who maintain the software and the few big groups of miners, and states have prosecuted people who wrote this kind of software. But reaching them doesn’t change the rules, because thousands of ordinary computers in different countries each check every block against the rules themselves. A change to the rules only runs on the computers whose owners choose to install it. And banning is expensive. When China banned mining, the network’s computing power recovered within months as the machines moved elsewhere, and the industry’s taxes, jobs, and capital moved with them. Every ban is an invitation somewhere else. Hostile states mostly succeed in exporting their most mobile and capable citizens.
“It’s far too volatile to be money.”
Bitcoin’s price swings look wild. That’s measured in pounds, and calling bitcoin the volatile one treats the pound as the fixed point. Bitcoin has a fixed supply, and it’s taking on the world’s savings one saver at a time. Every new buyer moves the price, because the supply can’t stretch to meet them. People arrive as they work out what the money is doing, and working that out takes most people years. So they arrive in waves, and the price moves in waves with them. The swings have got smaller as bitcoin has got bigger. The alternative is the pound, which is steady from week to week and loses value year after year, reliably. Ask anyone in Malawi, or Argentina, or 1923 Berlin. I’d rather hold the volatile thing that buys more every decade than the calm one that buys less.
Where this leaves you
The natural state of a free market is deflation, and nearly everything broken in our economics and politics flows from a money system built to fight that natural state. The saving that technology made is taken from you at the till, and what reaches your payslip comes late and unevenly. The takings pile up with whoever stands nearest the new money. Society reshapes itself around the resentment, and the state tightens its hold to stop the debt system failing. If nothing changes, this ends with payments watched, the money’s rules rewritten by decree, and war.
What breaks that chain is money nobody can make more of. Bitcoin is that money for as long as it stays open, decentralised, secure, a protocol rather than a platform, and bounded by energy. Open, so anyone can own it and anyone can check it. Decentralised, so it runs on computers all over the world with no switch anywhere to turn it off. Secure, so the record is too costly to rewrite. A protocol rather than a platform, a set of rules nobody owns rather than a product somebody runs, so the base layer stays small enough for an ordinary computer to check it. Bounded by energy, so rewriting the record would burn more electricity than the rewrite could earn back, for as long as miners are paid enough to keep buying that electricity. Take away any one of those five and it slides back into the thing it was built to escape.
Whether it stays that way is up to us. It’s a choice each of us makes. Will you hold your own coins, or leave them with a company? Will you check the money yourself, or take someone’s word for it? Will you measure your life in a money nobody can print more of, or keep saving your time in one that loses value every year?
You can start measuring today, without owning any bitcoin at all. Pick a few things you care about, a house, a year of energy, a laptop, and look up what they cost in bitcoin ten years ago, and what they cost now. Then keep tracking them alongside the pound, over years rather than months, because a year or two either way will tell you nothing. The pound chart will keep telling you they’re getting more expensive. The bitcoin chart will show you the unwinding that has already begun.