Will Bitcoin become the world's newest reserve currency?
Saifedean Ammous looks at Bitcoin through the lens of monetary history, showing how time and time again money flows to from weaker currencies to harder currencies. Bitcoin is as hard as they come.
Ammous gives several examples of monetary systems that have existed in the past. Although the material of the money has differed from location to location, the common thread has been the scarcity, or hardness as he calls it, of the money. This is why the monetary system tended to the gold standard in ancient times and essentially throughout written history: gold is extremely scarce and difficult to make more of.
He then makes the case for why Bitcoin is the hardest money ever created: there is a finite amount of it, 21 million tokens. Other currencies, however, are 'soft' since they can be inflated at the will of the governments and central banks in charge of them. Since Bitcoin is salable through time, through space, and divisible by itself, he postulates that it is the best money ever created. According to him, it is likely that there will steadily be outflows of capital from today's fiat currencies into Bitcoin, and eventually Bitcoin will take over as the world's reserve currency.
I agree with the vast majority of his argument, but disagree with a small portion. First of all, although technically there is a finite amount of Bitcoin, as the block reward decreases for miners as time goes on, one should expect fees to increase proportionally. Although Bitcoin will not be inflated, the real spending power of one's Bitcoin will decrease as time goes on due to this predictable increase in fees.
Secondly, I disagree with his categorical dismissal of altcoins. Although Bitcoin clearly does have the first mover advantage, I do think it is possible for another cryptocurrency to overtake Bitcoin in market cap, with the most likely being Ethereum. He dismisses altcoins by saying that they are not truly decentralized and are therefore just a susceptible to inflation as fiat currency. I would say this is a gross misinterpretation of the state of altcoins. Although they are admittedly more centralized, I strongly disagree with the insuation that they could ever be changed to allow for inflation. These coins require a consensus for changes to occur, and I do not see any world in which a sufficiently decentralized coin like Ethereum could be changed to have more inflation. There would simply never be a consensus to allow for that, much like there will never be a consensus to increase the supply of Bitcoin.
This book opened my eyes to what money really is: something that is scarce that can be used to trade between specialized goods. It showed how throughout history money has flowed towards harder money, and how the same is likely to happen in the future.