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This paper proposes how bitcoin-backed fiduciary currency could be adopted by Central Banks and the various consideration points therein. The paper draws comparisons from the proposed Bitcoin Standard to the Classical Gold Standard once implemented by most major modern economies throughout the late 19 and early 20 century.
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The Bitcoin Standard
How Central Banks could and why Central Banks should implement
bitcoin-backed fiduciary currency, in a model resembling the Classical
Gold Standard from 1870-1920.
Central Bankings
Next Frontier
The Bitcoin Standard: Central Banking’s Next Frontier
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Abstract
This paper proposes how the Bitcoin Standard
1
could be adopted by Central
Banks and the various consideration points therein. It is worth noting that the recent
proliferation in central bank digital currency (CBDC) as a key focus point for central
banks around the world furthers the digital money issuance and broad monetary system
infrastructure that will be available to central banks in the foreseeable future, enabling
them to implement and manage the Bitcoin Standard with somewhat relative ease. The
paper draws comparisons from the proposed Bitcoin Standard to the Classical Gold
Standard once implemented by most major modern economies throughout the 19
century.
The paper finds frequent inspiration from Warren E. Weber’s March 2016
working paper for the Canadian Central Bank entitled ‘the Bitcoin Standard: Lessons
from the Gold Standard’, and it is therefore recommended that paper is read prior for
further context.
1
Defined as a monetary system in which all exchange media are bitcoin itself or are backed by bitcoin.
(Weber, 2016, p. iii).
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Abstract 0
Introduction 2
Section 1: Economic Impact 5
Section 2: Bitcoin Reserves 9
Section 3: Interest Rate Policy 12
Section 4: Utilization 15
Section 5: Bitcoin Selection 18
Section 6: Major Risks 20
Conclusion 22
Introduction
As bitcoin’s utilization for value storage and exchange medium purposes
continues to grow, its role as natively digital gold, or gold 2.0, is further solidified. This
paper quantifies that growth historically and conjectures potential performance with
regards to Central Bank issued bitcoin-backed fiduciary currencies accordingly. The
Bitcoin Standard as proposed in the paper strongly resembles the gold standard utilized
throughout the Classical Gold Standard Era that lasted from 1870 to 1920, and
therefore historical gold standard performance will also be used as a benchmark for
potential performance calculations for Central Bank issued bitcoin-backed fiduciary
currencies.
A common question regarding the Bitcoin Standard is how can the value-add to
economies be quantified? I address this in Section 1 by providing multiple calculations
displaying potential impact to GDP growth, inflation, and savings with having the Bitcoin
Standard in place. For initial reference, Figure 1 displays the difference in change in
purchasing power between bitcoin (BTC) and USD since bitcoin’s market inception in
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2011
2
. In just under 9 years, USD savers lost 13% in purchasing power to inflation while
BTC savers gained over 300,000% in relative market value. In other words, $1 kept in
USD since 2011 is now worth $0.87 in 2011 dollars, while $1 kept in BTC since 2011 is
now worth over $3,000 in 2011 dollars.
Figure 1: Purchasing Power Over Time: 1 USD vs 1 BTC
Note: The 1 BTC purchasing power scale is logarithmic for more comparable illustration.
Sources: Satoshi Capital Advisors, U.S. Labor Statistics Bureau
3
, Bitcoincharts, Bitstamp
4
In Section 2, I explore bitcoin reserve systems, and describe several methods
Central Banks can utilize to manage bitcoin reserves as well as accumulate initial and
additional bitcoin reserves. In Section 3, I conjecture that due to bitcoin price spreads,
and therefore bitcoin arbitrage costs, Central Banks will be able to effectively set
interest rates within a range that is comparable to what most major Central Banks
2
While bitcoin’s whitepaper was technically released in 2008 and its software launched in 2009, it did not
have a reliable and widely accessible market for active trading until the first automated electronic
exchange launched in 2011. The exchange was called Mt. Gox and subsequently suffered from a series
of hacks and mismanagement, eventually leading to insolvency in 2014. Liabilities (i.e. customer
deposits) totaled over 850,000 bitcoins, or $450 million when insolvency was announced.
3
https://www.bls.gov/data/inflation_calculator.htm
4
https://bitcoincharts.com/charts/bitstampUSD#rg60zczsg2011-12-18zeg2020-10-10ztgSzm1g10zm2g25
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currently operate within. Section 4 explores potential exchange mediums for bitcoin-
backed fiduciary currency, including bitcoin itself, Central Bank issued fiduciary
currency-denominated cash in paper form, blockchain-based Central Bank digital
currency, and fiduciary currency-denominated earning assets issued by Central Banks
and traditional banks. In Section 5, I explore the reasoning as to why bitcoin was
chosen as the commodity to back the proposed Central Bank issued fiduciary currency.
To conclude, in Section 6 I explore the major systemic risks brought about by adopting
the Bitcoin Standard as proposed in this paper.
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Section 1: Economic Impact
The leading arguments against the Bitcoin Standard are that low inflation due to
money supply scarcity would hamper economic growth and rising relative value also
due to scarcity would disincentivize spending because consumers will hoard their
money in savings. However, economic data collected during the Classical Gold
Standard Era suggest these arguments to not be accurate. In this section, I research
historical economic output growth, inflation rates, savings rates, and money velocity
amid the Classical Gold Standard era and use it to estimate economic impacts should
the Bitcoin Standard be adopted.
GDP growth numbers for Denmark, Sweden, Belgium, Australia, and France
throughout the Classical Gold Standard Era compared to current GDP growth over the
same time periods are quite strong, and at times outperform their contemporary
counterparts.
Figure 2: GDP Growth Over Time: Classical Gold Standard Era vs Current
Sources: Satoshi Capital Advisors, Angus Maddison
5
, World Bank
6
5
http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_03-2007.xls
6
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
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In addition, inflation rates during the Classical Gold Standard Era are consistently
lower than current inflation rates over the same time periods, as one would expect
under the Bitcoin Standard.
Figure 3: Inflation Rates Over Time: Classical Gold Standard Era vs Current
Sources: Satoshi Capital Advisors, Coos Santing, International Monetary Fund, Organisation for
Economic Co-operation and Development (OECD), Brian Mitchell
7
, World Bank
8
Despite prevalent economic theory that low inflation (i.e. less than the common
2% inflation target among central banks) should correspond with low economic growth,
low inflation (i.e. average less than 0.5% in observed economies) during the Classical
Gold Standard Era corresponded with strong economic growth comparable to that
realized in observed economies over the past few decades, outperforming the latter in
many cases. The data suggests that despite the low inflation environment that would
exist under the Bitcoin Standard due to bitcoin scarcity induced limited M1 money
supply growth, as was the case with the gold standard, strong economic output growth
would be maintained over long time periods.
With regards to the second common primary argument against the Bitcoin
Standard that low inflation would lead to hoarding from consumers through excess
savings and in turn decreased spending, the data again suggests otherwise. Savings
7
http://www.iisg.nl/hpw/data.php#world
8
https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG
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rates throughout the Classical Gold Standard Era were less than current savings rates,
yet M1 money velocity greater by wider margins.
Figure 4: Savings Rates Over Time: Classical Gold Standard Era vs Current
Sources: Satoshi Capital Advisors, Ian McLean
9
, World Bank
10
Figure 5: M1 Money Velocity Over Time: Classical Gold Standard Era vs Current
Sources: Satoshi Capital Advisors, Paul Cashin
11
, Federal Reserve, OECD
12
The data suggests that, under the Bitcoin Standard and counter to common
belief, low inflation due to scarcity induced limited money supply growth, as was the
case with the gold standard, may lead to decreased savings rates (i.e. no hoarding) and
increased spending (i.e. greater M1 money velocity). Further, the latter may do so at a
9
https://media.adelaide.edu.au/economics/papers/doc/wp1991-07.pdf
10
https://data.worldbank.org/indicator/NY.GNS.ICTR.ZS
11
https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1694&context=egcenter-discussion-paper-
series
12
https://fred.stlouisfed.org/series/MYAGM1AUM189S
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wider margin than the former; spurring economic activity due to wealth effects and
therefore maximizing money supply utilization.
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Section 2: Bitcoin Reserves
Under the Bitcoin Standard, Central Banks are required to maintain bitcoin
reserves, largely to back fiduciary currency issuance, provide capital for open credit
facilities and structured debt issuance, and to act as last resort lenders if there is a
financial market shock or sustained economic downturn. Reserves in the proposed
Bitcoin Standard are maintained by each respective Central Bank and mutli-national
central banking institutions, like the Bank for International Settlements. This section will
explore the different mechanisms that will be available to central banks to accumulate
bitcoin reserves, including bitcoin mining, taxation, and deposits.
Central Banks will be able to leverage energy infrastructure to mine bitcoin
13
and
store corresponding bitcoin-denominated earnings in national bitcoin reserves. Similar
to oil-rich nations developing government-owned entities or public-private partnerships
to mine oil to create government revenue and bolster oil reserves, countries with ample
energy generation capacity can establish such ventures to power bitcoin mining
facilities. Newly minted bitcoins and transaction processing fees would create bitcoin-
denominated revenue that the respective governments could add to bitcoin reserves
backing their fiduciary currency, enabling them to issue more fiduciary currency or
improve the convertibility ratio corresponding to already issued fiduciary currency.
Bitcoin mining is an energy intensive process and therefore would require energy
generation infrastructure to be possible. When accounting for renewable energy
generation capacity
14
, there are numerous economies around the world with sufficient
energy generation infrastructure to support a mining-based bitcoin reserve accumulation
strategy without leading to significant detrimental environmental effects.
Figure 6: Global Renewable Energy Generation Capacity
13
Bitcoin mining is the mechanism that mints new bitcoins and processes transactions into the bitcoin
blockchain for a fee.
14
Renewable energy generation capacity is observed due to the ongoing global focus on shifting from
fossil fuels to renewable energy that we expect will lead to the former’s dominance within a few decades.
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Sources: Satoshi Capital Advisors, British Petroleum
15
Markets with comprehensive and globally recognized bitcoin sector regulatory
frameworks in place tend to attract bitcoin businesses generating bitcoin-denominated
revenue, which can be taxed to grow reserves. Bitcoin sector companies have
developed and matured most in jurisdictions where regulators have established clear
and comprehensive regulatory frameworks and are active in licensing companies
through these frameworks. Bitcoin exchanges alone already represent more than $750
million in annual corporate tax income in different markets around the world, with
multiplicative growth expected in the years ahead. Under the Bitcoin Standard corporate
taxes would be payable in bitcoin, generating bitcoin-denominated government income
that would bolster bitcoin reserves; enabling central banks to issue more fiduciary
currency or improve the convertibility ratio corresponding to already issued fiduciary
currency.
15
https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-
economics/statistical-review/bp-stats-review-2019-full-report.pdf
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Figure 7: Global Bitcoin Exchange Corporate Taxes
Sources: Satoshi Capital Advisors, Exchangewar
16
, Deloitte
17
Direct bitcoin deposits into and withdrawals from reserves by institutions with
accounts at participating Central Banks will be largely incentivized by each respective
Central Bank’s interest rate policy, as well as expected future purchasing power
increases in fiduciary currency due to the chosen structure for each respective Central
Bank’s Bitcoin Standard and therefore its fiduciary currency’s exposure to bitcoin’s
relative value appreciation. Interest rate policy under the Bitcoin Standard will be
explored further in the next section.
16
https://exchangewar.info/
17
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-corporate-tax-rates.pdf
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Section 3: Interest Rate Policy
Meaningful spreads in price exist between bitcoin markets, which can generally
be considered to represent arbitrage costs across these markets. A traditional argument
against Central Banks being able to set interest rate policy substantially different from
each other under the Bitcoin Standard is that interest rate arbitrageurs would cause
interest rates spreads to compress to zero over time due a common value backing
being utilized. However, interest rates and bond yields for high grade debt issued during
the Classical Gold Standard Era also suggest this to not be the case. In addition, the
spreads that exist today between different bitcoin-currency pairs suggest that there will
be room for central banks to set benchmark interest rates in a range comparable to that
which exists today among major central banks.
Under the Classical Gold Standard, spreads between government debt interest
rates could be presumed to represent the difference in arbitrage costs, gold reserves
solvency risk, default risk, and inflation risk between the compared debt issuers. Under
the current fiat standard, spreads between government debt interest rates could be
presumed to represent the difference in arbitrage costs and inflation risk, removing the
reserves solvency risk and default risk for local currency denominated debt due to the
fact that governments now have the ability to issue their own currency without limit. The
data shows that interest rate spreads for long term debt issued during the Classical
Gold Standard were significantly more compressed than current interest rate spreads
and interest rates writ large were consistently lower than they are currently, suggesting
that market perceived default risk and inflation risk were lower under the Classical Gold
Standard Era than they are today, justified by the economic growth and inflation figures
provided in previous sections in this paper. Applied to the proposed Bitcoin Standard,
this suggests that central banks would be able to maintain low interest rates due to
expected stronger economic growth and lower inflation rates, lowering the cost for credit
among all economic participants and further incentivizing sustainable economic growth,
home ownership, and entrepreneurship.
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Figure 8: Long Term Interest Rates Over Time: Classical Gold Standard Era vs. Current
Sources: Satoshi Capital Advisors, Sidney Homer, Richard Sylla
18
, Federal Reserve, OECD
19
20
21
22
23
Relatively compressed bitcoin price spreads between different currency pairs
today supports the conjecture that central banks will maintain their ability to differentiate
interest rate policy sufficiently. To illustrate this further, bitcoin price spreads between
different currency pairs today are significantly less than interest rate spreads have been
over the past 60 years, leaving much room for bitcoin reserves solvency risk, default
risk, and inflation risk that would altogether account for interest rate spreads under the
Bitcoin Standard.
18
https://www.amazon.com/History-Interest-Rates-Fourth-Finance/dp/0471732834
19
https://fred.stlouisfed.org/series/IRLTLT01DEM156N
20
https://fred.stlouisfed.org/series/IRLTLT01GBM156N
21
https://fred.stlouisfed.org/series/IRLTLT01USM156N
22
https://fred.stlouisfed.org/series/IRLTLT01NLM156N
23
https://fred.stlouisfed.org/series/IRLTLT01BEM156N
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Figure: 9: Price Spreads: Bitcoin vs Gold
Sources: Satoshi Capital Advisors, Brave New Coin
24
, Cointelegraph
25
, Kitco
26
,.World Gold Council
27
24
https://bravenewcoin.com/data-and-charts/assets/BTC/price-summary
25
https://cointelegraph.com/bitcoin-price-index
26
https://www.kitco.com/charts/livegold.html
27
https://www.gold.org/goldhub/data/trading-volumes
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Section 4: Utilization
There are numerous potential exchange media and distribution mechanisms for
Central Bank issued bitcoin-backed fiduciary currency and payment means that will
utilize it. Initial distribution for economic participants already active in the digital
economy can be achieved at the consumer level through public listings on open-access,
regulated bitcoin exchanges
28
. Distribution would occur for traditional economic
participants through integration into foreign currency trading activities and payment
systems facilitated by Central Banks and Central Bank member banks and broker-
dealers. Payment means for fiduciary currencies under the Bitcoin Standard would
include payment schemes that facilitate digital payments today, including credit & debit
cards and e-wallets.
Under the Bitcoin Standard, bitcoin’s increased utility and global adoption may
further incentivize its direct usage as a currency for payments. However, a government
requirement for tax payments to be made by individuals in fiduciary currency in addition
to capital gains taxes being applied to realized bitcoin value appreciations would slow
demand for retail payments in the digital asset. When these payments do occur, they
would be facilitated by the bitcoin network itself, with optional third party payment
processing solutions being utilized by merchants to convert received bitcoin into local
fiduciary currency.
Central Bank issued fiduciary currency-denominated cash in paper form is
another mechanism by which distribution among retail economic participants may occur.
These paper notes would resemble cash notes that are printed under the current fiat
standard and will be redeemable at any bank or financial institution branch that
maintains an account at the Central Bank for bitcoin at the respective Central Bank’s
pre-determined convertibility ratio corresponding to issued fiduciary currency. This
system is modeled after the system that existed under the Classical Gold Standard in
which all cash notes were redeemable for gold at the respective government’s pre-
determined convertibility ratio corresponding to issued fiduciary currency, when brought
into bank branches and certain government facilities. Retail payments with these cash
28
Bitcoin exchange is colloquially utilized as a catch-all term for digital platforms that enable digital asset
trading and have wide distribution among retail and institutional clients.
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notes would be done as retail payments are done with cash notes under the current fiat
standard; with different value notes being printed, merchants accepting cash notes for
payment, and providing change accordingly. Merchants would pay their suppliers, pay
taxes, and hold profits in these cash notes or deposit them into a financial institution for
electronic payments and profit holding.
Blockchain-based Central Bank digital currency also offers a compelling
mechanism for distributing fiduciary currency under the Bitcoin Standard. With Central
Bank digital currency becoming an increasingly dominant focus area for Central Banks
around the world, this mechanism would likely be the most appealing distribution
strategy under the Bitcoin Standard. Distribution can be accomplished among retail
economic participants through local currency denominated fiduciary currency being
issued directly to consumers for mass usage and convertible to and from bitcoin through
an online platform operated by the issuing Central Bank and third party secondary
marketplaces. Retail payments would be facilitated through payment system and e-
wallet infrastructure built into most widely accepted retail central bank digital currency
designs. Merchants will tap into this infrastructure directly or through third party payment
processors to accept payments, pay suppliers, pay taxes, and hold profits. Distribution
can be accomplished among institutional economic participants through local currency
denominated fiduciary currency being issued directly to institutions with accounts at the
issuing Central Bank exclusively for inter-institutional usage, backed by the institutions’
reserves held at the issuing Central Bank. Retail payments would be facilitated by
fiduciary currency denominated deposits at institutions with accounts at the issuing
Central Bank, transferred from consumers to merchants and peer-to-peer utilizing
common payment schemes such as debit or credit cards and e-wallets. Merchants
would tap into these payment schemes directly or through third party payment
processors to accept payments, pay suppliers, pay taxes, and hold profits.
Fiduciary currency-denominated earning assets issued by Central Banks and
traditional banks will find utility as collateral for financial markets activity; similar to how
USA treasuries are widely utilized across global financial markets in collateralizing
margin applied to trading accounts held at custody services providers and prime
brokers, due to their low volatility and deep liquidity. This utility would apply exclusively
to institutional financial markets participants (e.g. hedge funds, investment banks, family
offices, etc.) and not the average consumer, albeit still representing a multi-trillion-dollar
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market opportunity when considering that annual volumes exceed $1.5 quadrillion for
currencies trading
29
, $60 trillion for equities
30
, and $170 trillion for bonds
31
.
29
https://www.bis.org/statistics/rpfx19.htm
30
https://data.worldbank.org/indicator/CM.MKT.TRAD.CD
31
https://www.sifma.org/wp-content/uploads/2019/09/2019-Capital-Markets-Fact-Book-SIFMA.pdf
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Section 5: Bitcoin Selection
While gold served as a great backer for fiduciary currency under the Classical
Gold Standard, its physical nature limited verifiable auditability for fiduciary currency
issuers reserves and unknown supply led to volatility in production schedule that caused
unforeseeable impacts on gold’s relative value and in turn inflation rates.
Bitcoin has been selected as the commodity to back fiduciary currency in this
proposal due to its similarities to gold and its digital nature. Bitcoin’s digital nature and
underlying blockchain ledger ensures that all reserves held by fiduciary currency issuers
can be verifiably audited in real-time, inherently mitigating reserves solvency risks. its
scarcity through limited supply, and a known production schedule.
Figure: 10: Bitcoin Production Schedule
Source: Bitcoin.it Wiki
32
32
https://en.bitcoin.it/w/images/en/4/42/Controlled_supply-supply_over_block_height.png
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In addition, bitcoin has been live for more than a decade & traded in public
markets for nearly as long, and it is the most secure and antifragile natively digital asset
due to its immutable blockchain transaction ledger & immense resource commitment.
The bitcoin network can be most succinctly described as a decentralized and
distributed ledger that is maintained by diverse network participants around the globe.
New transactions, including bitcoin minting, are processed into the bitcoin network
ledger through a process colloquially referred to as mining. The mining process requires
significant computational power and electricity consumption, providing further backing to
the digital asset that differentiate it from other commodities with regards to providing
fiduciary currency backing. To provide a reference scale therein, the cumulative
computational power backing the bitcoin network is greater than all the supercomputers
in the world combined, by many multiples.
Figure 11: Bitcoin Network Specifications
Sources: Satoshi Capital Advisors, Bitinfocharts
33
, Bitcoincharts
34
, British Broadcasting Corporation
35
,
Ebang Mining
36
, Digiconomist
37
, Global Petrol Prices
38
33
https://bitinfocharts.com/comparison/bitcoin-hashrate.html
34
https://bitcoincharts.com/bitcoin/
35
https://www.bbc.com/news/world-asia-53147684
36
https://www.ebang.co/
37
https://digiconomist.net/bitcoin-energy-consumption/
38
https://www.globalpetrolprices.com/electricity_prices/
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Section 6: Major Risks
The primary systemic risk to consider under the Bitcoin Standard is a 51% attack
to the bitcoin network blockchain ledger
39
, potentially impacting bitcoin network reliability
and therefore its ability to properly function as the backing for a monetary system.
However, it should be noted that the cost for such an attack is currently in the billions
with costs rising as network value rises (i.e. bitcoin market capitalization), in part due to
a positive correlation existing between post-attack lost mining revenue and bitcoin
market value pre-attack. This can be represented in a formula as follows, whereby L is
missed opportunity cost, B is bitcoin quantity mined with utilized hashrate, Vpre is
bitcoin price pre-attack, and Vpost is bitcoin price post-attack.
L = B * Vpre - B * Vpost
Additionally, the hardware cost for maintaining such an attack on bitcoin’s
blockchain is currently in the billions with even greater electricity costs. Utilizing
calculations from the previous section in this paper, the hardware cost to maintain the
minimum hashrate required to perform a 51% attack today, which would require
doubling the total pre-attack network hashrate, would exceed $4.5 billion, with an
electricity bill per month exceeding $450 million. However, to secure electricity in the
significant amounts required would necessitate multi-year electricity purchasing
agreement contracts being secured with energy generation companies, resulting in an
electricity cost likely well into the billions. This equates to a total cost exceeding $22.4
billion to maintain the attack over only a 2-year period. It should be noted that the
Quantum Fund broke the British pound peg to major European currencies in 1992 with
a $18 billion short position
40
, adjusted for inflation
41
still well short the amount required
for a successful 51% attack against the bitcoin network.
39
This attack occurs when an entity with controlling market share in global bitcoin mining power (i.e.
>50%) sends a payment to someone on the blockchain ledger while simultaneously creating and sending
across the bitcoin network a parallel blockchain ledger, intending not to include that payment in the
parallel blockchain ledger. It is generally considered a repeatable attack.
40
https://theeconreview.com/2018/10/16/how-soros-broke-the-british-pound/
41
https://www.bls.gov/data/inflation_calculator.htm
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The secondary systemic risk to consider with the Bitcoin Standard is blockchain
scalability solutions not being implemented before demand growth for bitcoin-
denominated transaction processing outpaces supply growth in transaction space on
the bitcoin network blockchain ledger so overwhelmingly that it impacts bitcoin network
reliability and therefore its ability to properly function as the standard for an economy.
As development and implementation for multiple scaling solutions progresses the
likelihood for this risk materializing decreases meaningfully. Solutions in this arena are
concentrated on what are colloquially referred to as layer 2 and layer 3 technology,
whereby transactional layers are built on top the bitcoin network that enable real-time
gross settlement (e.g. >1,000 transactions per second) with transactions net settled
onto the bitcoin blockchain through data anchoring
42
. Such solutions include Lightning
Network (>1,000,000 transactions per second)
43
and Rootstock RSK Lumino (5,000
transactions per second)
44
.
The tertiary systemic risk to consider with the Bitcoin Standard is an inability for
central banks to influence M0 money supply in reaction to economic downturns, which
have historically led to bad economic practices like currency debasement and fractional
reserve fiduciary currency issuance. However, in modern times the most prevalent
reaction by central banks to economic downturns is opening debt facilities for
systemically important institutions and government functions and in turn increases in
public sector and private sector debt, which can be accomplished through tax rate and
interest increases bolstering bitcoin reserves.
42
Data anchoring is a process whereby data sets are truncated into representative data hashes through
cryptographic mechanisms that enable data integrity validation. In context, these data hashes are
included as metadata into bitcoin transactions which are then processed into the immutable and
permanent bitcoin network blockchain ledger for future reference and layer 2 transaction set verification.
43
https://lightning.network/
44
https://www.coindesk.com/rif-launches-layer-3-network-to-scale-bitcoin-based-smart-contracts-tokens
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Conclusion
The Classical Gold Standard was an incredibly successful economic model that fell prey
to the 20 century hunger for unsustainable imperial expansion and world war. As the
generations that fueled this hunger and their ideologies die out, global society stands to enter a
progressive era focused on intellectual enlightenment and life quality improvements. While
bitcoin is often viewed as an unproven and high risk asset by the mainstream economics global
community, the data suggests it is far more market proven, secure, and reliable than given
credit for. Its future place in this newly burgeoning world as a global safe haven asset and
backing asset for fiduciary currency will likely take shape in time, just as gold once did.
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Appendix
Please see below for the spreadsheets utilized for reference data throughout the paper.
Market and Economic Data
https://drive.google.com/file/d/19YjpcGM5SbIf03-HlEPNS_6ouUG-ImJe/view?usp=sharing
Interest Rates
https://drive.google.com/file/d/18rAU4zCig_bzDn9EYZ0W9hICwI8fzugf/view?usp=sharing
Global Electricity Data
https://drive.google.com/file/d/1ReaCV5H94shen608z3LyGFNknE6x5g6w/view?usp=sharing
Bitcoin and Gold Price Spreads
https://docs.google.com/spreadsheets/d/1aMLNoiw07j9ja2Capz2jcmczJOLvPCpwRd0q6bXpYO
Y/edit?usp=sharing
Bitcoin Exchange Corporate Taxes
https://docs.google.com/spreadsheets/d/1auboRPYKOzdhAPoBCGP9kHt8hoxRF6JeahHqx8U0
DzA/edit?usp=sharing
Bitcoin Network Data
https://docs.google.com/spreadsheets/d/1HgZ_KJtGU4671hljkS0vQwRBRHQ5KAVtX9ZpQohT
N5k/edit?usp=sharing