The cat is out of the bag

Bitcoin isn’t a product, but an idea that represents the ability to opt-out of a financial system that redistributes wealth in a manner we have no control over. The unprecedented money creation of the past decade has manifested itself in the appreciation of financial assets owned almost exclusively by the top 10% coupled with dramatic increases in the costs of goods like education and healthcare. Known as the Cantillon effect, this phenomenon describes how money creation benefits those closest to it – namely commercial banks and large corporations who are able to issue loans and invest with this new money before prices begin to rise. Only then are the effects felt by the rest of the population who are faced with higher costs. Bitcoin exists to remove this type of incentive misalignment as no party stands to benefit disproportionately from its monetary policy. Its apathy towards users is its greatest strength as everyone is equal in the eyes of the protocol.

Why It matters

• The macro narrative for bitcoin is being strengthened every day as more capital is being injected into the system. These easy money policies are building systemic risk that could bode well in the long run for a non-sovereign store of value.
• The U.S. dollar’s role as the world reserve currency is increasingly being questioned. What it’s demise would look like remains unknown but “the cat is out of the bag” in the sense that bitcoin has already seeded the idea of a new monetary system in the minds of many who will not be looking to replace the USD with another fiat currency.