It is well established at this point that bitcoin is the best form of sound money the world has ever seen. To recap, bitcoin excels in each of the qualities of money: durability, portability, divisibility, uniformity, scarcity and acceptability. Most importantly, bitcoin is the scarcest money ever, with a fixed supply of 21 million bitcoin that will ever exist. Regardless of demand, the supply is programmatically defined and will never be changed.
This article focuses on why having a sound money system is important. How do economies, societies and individuals benefit from operating on a sound money system? Throughout history gold has been the most successful form of sound money. It is my belief bitcoin will be the sound money of the future.
Sound Money Imposes Fiscal Discipline On Governments
Sound money imposes fiscal discipline upon governments. Having a monetary system with a sound money base means that the money supply cannot be inflated at will by use of the printing machine. In turn, for governments to spend, they must provide value to their citizenry equal to the amount of tax revenue collected. Under a sound money system forever wars are not feasible, zombie companies (unprofitable companies still in business solely due to bailouts) don’t exist and individuals’ savings cannot be debased at will by bureaucrats.
Contrast the way in which governments must operate under a sound money system to how they operate today on an unsound (fiat currency) system. Forever wars are financed by endless money printing, zombie companies of all shapes and sizes are bailed out time and again, and individuals’ savings are debased at breakneck speeds.
Case in point: over 40% of all U.S. dollars in existence were printed[1] between May 2020 and May 2021. To hammer the point home, this means
