From the dollar standard to the currency standard, why is bitcoin a green technology?

Inflation-type "cheap" currencies can cause waste, increase indefinitely, and squander. The advantage of switching to a sound currency like Bitcoin for the planet will be incalculable.

Bitcoin

New technology needs new thinking

Today, many commentators are trying to define bitcoin in an analogy. They compare things to things they are familiar with, such as stocks, commodities, or payment services like PayPal.

Just as a car was originally described as a horse-drawn carriage, today's bitcoin is largely a digital pseudo-currency without any government support.

Similarly, bitcoin mining has also been criticized by the mainstream media. It is not uncommon for Bitcoin to consume more energy than “some country”; it is regularly reorganized and re-released.

However, such reports have been beaten again and again. At the same time, similar concerns related to the banking system have been deliberately ignored.

But bitcoin is different from the inflationary legal currency that is now driving the global economy, and it has the characteristics of a sound currency. Unlike the US dollar, it is deflated, cannot be double-flowered, and cannot be forged. This makes it a completely different thing that requires a new mindset to understand its potential.

Inflation is the cause of "squandering"

For several generations, dollar hegemony, Keynesian thinking, and inflation have been leading economic policies. Permanent quantitative easing (QE) and even negative interest rates are becoming the new normal. So it's no surprise that most people today can't understand things like Bitcoin.

Inflation-based monetary policy forces companies to develop high-time preference thinking. This means that they are pursuing rapid gains and achieving growth at all costs with “cheap” funds.

Today, most companies sell their products in environmental protection. Earth-colored tote bags, plastic bottles with lower plastic content, various green signs and recyclable materials, etc. Any move that can increase profit margins and alleviate consumers' concerns about over-consumption is their first choice. In other words, as long as the product is labeled as “environmentally friendly”, consumers who change their mobile phones every year will not be so guilty.

Cheap money doesn't care about the future

The phenomenon of inflation has led to the Cantillon effect, where the closest to the banknote maker determines the tone of economic activity. The issuance of money may not be beneficial to everyone. On the contrary, this may be accompanied by a redistribution process. Those who get the money first will promote the rise of commodity prices and generate inflation, while for another part of society, inflation policy is a kind of plunder.

The advantages of large companies are obvious because they have the special right to use the central bank discount window [1] . This “cheap money” will stimulate lending and encourage people to make choices that prioritize quantity rather than quality.

This also has a great impact on people's time preferences. High inflation or a decline in the purchasing power of money means that individuals also tend to pursue speed.

This is especially evident in the hyperinflationary economy, where people are spending as soon as possible knowing that the currency is worthless the next day.

Bitcoin investor Jimmy Song illustrates the difference between low time preferences and high time preferences.

People with lower time preferences are willing to give up what they are doing for better things in the future.

People with high time preferences will not think too much about the future. They don't save for tomorrow, they continue to spend, squander, and output is low. They don't save money for tomorrow, and they don't save money for starting a business or building a big project, because they all require careful planning.

Sound currency is green technology

Therefore, perhaps we should not focus on whether Bitcoin “wasted” more or less power than the current financial system. Instead, we should ask whether sound money will change the way we assess time, labor, and the environment, especially for future generations.

Bitcoin Center NY co-founder Austin E. Alexander said:

(Unrealized capital gains tax) and legal tenders have similar results. The shift in time preferences from the investment future to the current consumption encourages hedonistic activities, resulting in more environmental damage.

Sound currency is a green technology that encourages time-scale expansion and encourages investment in the technologies needed to achieve the sustainability and efficiency of human activities. The Federal Reserve is the world's most seriously damaged institution. In other words, Bitcoin can curb current high-time preferences, growth-centric economic policies that stimulate squandered consumption, damage the environment, and of course… a lot of energy wastage.

This is why the advantage of the Bitcoin standard (the currency standard) may be “incalculable,” says economist and Saifedean Ammous, author of Bitcoin Standards.

The advantages (from horse to car) are incalculable to us, mainly because we don't have to deal with the horse's excrement. Similarly, the benefit of Bitcoin is that the process of creating money is taken away from Keynesianism, which makes us no longer afraid.

On the other hand, Bitcoin offers a neutral, sound currency alternative. Due to its $21 million cap and anti-counterfeiting features, the scarcity of this digital product puts it in a deflationary state.

Switching to the Bitcoin standard will certainly help reduce individual time preferences and may ultimately be very beneficial to the environment.

1. The discount window is the business provided by the central bank to commercial banks to meet their short-term, non-permanent liquidity needs. Commercial banks borrow funds from the central bank with short-term high-quality notes such as treasury bills and bank acceptance bills. The interest rate of borrowing and borrowing funds is the discount rate, which is set by the central bank and generally lower than the market interest rate. The central bank regulates the stability of economic growth by adjusting the discount rate and regulating and controlling the money supply.