Bitcoiners should listen to Keynes, at least this one time

The economist warned of centralization long before we coined the phrase "not your keys, not your coins".

In 2018 I had the pleasure of hosting the first ever book presentation of “The Bitcoin Standard” in Vienna. Saifedean Ammous was an almost completely unknown figure back then. After finishing his book he had googled “Bitcoin Austria” in order to find, well, Bitcoiners in Austria - because he didn’t want to unveil his work anywhere else than in Vienna, the birthplace of Austrian Economics.

Saif got in contact with the association “Bitcoin Austria”, which was founded in 2011 and is one of the oldest organized group of Bitcoiners anywhere in the world. It was them who asked me to be the moderator of the evening.

You can still watch the whole thing here.

I remember two things about this evening. First that my eyes were burning like hell thought the event because the doctor gave me some ointment that day that I had a bad reaction to.

I also remember thinking that Saifedean is completely nuts.

See, I wasn’t having a “Bitcoin phase” back then. The gold bug in me was in control and while many of the attendees tell me to this day that this presentation changed their view of Bitcoin forever and made them firm believers, I went the other way.

I remember Saifedean arguing that Gold couldn’t be a solution to the current monetary mess because the physical stuff has long been centralized by central banks. Again I thought: “Who is this crazy guy and why doesn’t he understand gold?”

Well, he does.

And Bitcoin too.

I was the fool.

And yes, that’s a long way of saying: I could have bought Bitcoin much, much sooner...

Well.

A short while ago I read “Lords of Finance” - a rather brilliant book about the central bankers who “broke the world” in 1929. The book is also about a man that Saifedean doesn’t like very much and certainly doesn’t agree with: John Maynard Keynes.

Keynes famously was a staunch opponent of reinstating the gold standard after WW1. He called it a “barbarous relic”. It’s unlikely that Keynes would have ended up a Bitcoiner if he was alive today as he proposed a “managed currency” back then.

But it seems he understood the problems with the gold standard much better than we give him credit for today.

In the book I found a quote by Keynes that gave one of his reasons for opposing the gold standard - a reason, many Bitcoiners can relate to today.

Here is the quote from Keynes:

“Almost throughout the world, gold has been withdrawn from circulation. It no longer passes from hand to hand, and the touch of the metal has been taken from men’s greedy palms. The little household gods, who dwelt in purses and stockings and tin boxes, have been swallowed by a single golden image in each country, which lives underground and is not seen. Gold is out of sight—gone back into the soil. But when the gods are no longer seen in a yellow panoply walking the earth, we begin to rationalize them; and it is not long before there is nothing left.”

- JM Keynes

Do you see where I’m going with this?

This is basically Keynes prehistoric version of “not your keys, not your coins”, isn’t it?

Today, in 2024, ETFs are amassing Bitcoin. There is talk of a “Strategic Bitcoin Reserve” in the US and other countries. Nation states are getting in!

Of course, this is what many Bitcoiners want and what we should expect to happen - given that Bitcoin seems to be the most important invention in the field of money for hundreds of years.

But imho this quote does serve as a stark reminder that the hardcore Bitcoiners who warn of centralization and giving up your coins to third party custodians have a very good point.

In my last article I wrote about the conflict between Store-of-value-Bitcoiners and Unit-of-exchange-Bitcoiners. But the truth is that both need each other.

Bitcoin needs to be monetized as a store of value first. But it also needs to be used for more than just storing value - or at the very least needs to be used as a truly decentralized store of value - in order to gain relevance and then keep it.

Otherwise it would end up just another tool for speculation and irrelevant on the monetary stage. Or, maybe even worst, a tool to wield centralized state power, like gold is today.

So, let’s listen to Saifedean and all the other Austrians arguing for Bitcoin to save us.

But let’s also listen to Keynes. At least this one time.

Till next time, Niko