So many parallels to what I’m analyzing these days, and such a clear-eyed assessment. “It is a story about institutional design and the incentives it creates.” Singing my song!

Great article and thoughtful analysis. Worth your time to read.

https://open.substack.com/pub/liyapalagashvili/p/ups-is-the-symptom-not-the-disease

Controversial take:

For those that want to explain to others the problems with fiat currency, don’t start with Bitcoin. I know it’s tempting to give “the solution” first, but it’s confusing and triggers an instant mental “immune response.”

Start with fiat currency vs. sound money.

Most people don’t realize what either of those terms mean in principle or in practice. In fact, I’d go as far as to say most people have never even heard the terms.
Con: This is totally new to them, so they don’t know the background.
Pro: This is totally new to them, so it doesn’t map onto preexisting biases.

Explain how money used to be backed by gold, how we got off of that, and what that means. Explain how money is no longer backed by assets. Then explain how money can effectively be created “out of thin air.” Tie that to inflation and debt. Take your time. Be patient. This is all new to them.

And now it’s starting to gel. You may even get the question: “Wait, so, money can just be created out of thin air, and that causes inflation? How does anyone save, then?”

Now you can start to talk about Bitcoin. Explain it as sound money—because it is one. Explain its benefits. Explain it as a new, not-yet-fully adopted money system. Patience. Let them argue and question it. Give calm answers.

This is how you reach people who dismiss this as a fad, a gimmick, or a Ponzi scheme. If fiat is all you know—which is most people—and you think money must be backed by a centralized institution with authority to be money, then yeah. Bitcoin sounds pretty fad-like, gimmicky, and Ponzi scheme–like. It doesn’t help that bad actors have used it, either (even though bad actors have used Dollars, Euros, and whatever else, too), or that there are genuine scam cryptocurrencies out there. It all looks the same to people who don’t know the difference.

It’s almost a problem of being too aware of a complex thing—it’s so known to you, you don’t necessarily remember what it was like to not understand this and be learning about it. My guess is it took some time. It took curiosity. That’s what you need to engender in others for them to want to understand. Curiosity. And then they need time to develop understanding.

If you don’t think this works—I’m here because of exactly that process. Curiosity. Time. Patience. Asking questions. Seeking answers. I didn’t get Bitcoin because of the blockchain technology, or out of a desire to speculate, or out of a distrust in other currencies per se. It all looked like *just* a digital fandom and technological nerdiness.

I did it once I understood enough to know *why* it was a good investment. Because I now understood what sound money and fiat currency were, and why Bitcoin is a sound money. It made logical sense. I could see how it would help me. I could defend that decision.

If Bitcoin is going to be *the* sound money in the future, it needs more adoption *as* a sound money. It only makes sense that it needs to be explained that way to people in terms they already understand from a perspective they already agree with. They need to be able to be curious about it, not defensive about it. And you can help with that.

Stay curious and stack sats, y’all.

Trying to explain to family and friends that “dollars in bank account” ≠ “dollars you have.” And that’s very hard to do.

Dollars in a bank’s possession is a promise for dollars. Not actual dollars you actually have. And even those are a promise on money backed by credit and faith, not actual money.

Sound money is institutional honesty—what things actually cost.

Just wrote a full 38-page dissent memo on democracy, representation, and institutional realism for a pro-democracy / reform group, with counterproposals.

Some early takeaways from the process and early discussion:
- Citizens’ Assemblies are good for showing a snapshot of public sentiment, but can’t replace deliberative policymaking in a republic;
- Especially in today’s America, any findings and/or policies from even a fully unbiased and good faith Citizens Assembly (and any supporting policy commission) will be polarizing, because enactment relies on existing legislative and executive, and therefore electoral incentive structures;
- Because of this, elected officials—both “good” and “bad” ones—are incentivized to make decisions that appeal to the base that can get them elected, anyway.
- As a result, the findings and any policy recommendations—whether good representations and solutions or not—instead become a new argumentative cudgel for politicians and parties to argue against each other.

- Citizens’ Assemblies are, however, crucial tools for a public to rewrite the incentive structures behind elections and social choice by demonstrating preference in expressing that choice. The key is then to approach that assembly with a coalition of good faith actors, incentive- and institutional-level problems, and get feedback on a better system.

In essence, good intentions that don’t address incentives and decision-making flows can do more harm than good.

What do you think?

I’ll bite. Here’s my two sats:

To be fair, most people don’t get the difference between sound money and fiat money, anyway. Bitcoin, to most everybody else, just looks like digital fanaticism at best or scammy and untrustworthy money at worst. I say this as somebody who didn’t know or understand. (Yes, despite my B.A. in Economics, which focused more on modern economic systems and laws of supply and demand than sound money vs. fiat money—more a function of what was practical to learn for a career than epistemically coherent.) My thinking on economics and finance and investment used to only live in my understanding of fiat money (and ignorant event to the term).

When I first learned about Bitcoin, it was only presented as a means of easy digital exchange—not as a store of value that couldn’t be inflated away by monetary expansion. It never occurred to me—and indeed confused me—why it would retain any intrinsic value. I scratched my head a bit around why any money inherently holds any value, and sort of filed that away to think about another time.

Had I then invested even $1,000 in Bitcoin, I’d have ~$7,300 today. It was just as clear a concept then as it is today. But I still didn’t get it. I might’ve if I’d learned about sound money and fiat currency more plainly.

It doesn’t help people in tradfi—everyday people, journalists, or analysts even—that there are actual scams, plenty of phishing and other dodgy digital kerfuffery. Bitcoin gets wrapped up with that in their heads, somewhat understandably, from that point of view. It certainly did for me. It seemed to be a fad.

Add in the ‘spectacle’ of equally understandable genuine fans of Bitcoin who *do* get what it means as sound money, and it starts to look exactly like what tradfi people who don’t get it as sound money thought it was to begin with—a fad.

We can argue that the actual tradfi experts should know the difference, but many may not. Many mainstream media outlets also likely don’t have much staff that really understands the difference or the global financial system, either. It IS complicated and pretty much all that most people have ever known is fiat money. The world seems to work okay on that money to them, and there are partial or plausible causes to many of the problems that fiat currency contributes to.

This is why I’m a newly huge fan of @Lyn Alden's approach to this topic in Broken Money (which I’m thoroughly enjoying reading) and in her 32-minute YouTube summary of the book. It’s a dispassionate and clear-eyed approach to highlighting the problems with the system.

Even if we had entirely good faith actors in that system, you would still get bad results because of the incentive gradients at play—as would be the case for so many other systems we can decry. There don’t even HAVE to be villains for this to fail—normal people making rational short-term decisions that they must make would still get us this outcome.

I am all for the energy—Bitcoin isn’t going anywhere, and on some level, it is genuinely laughable to think it will just die. But I think the cause of restoring sound money for what it can enable us as individuals and a species to do deserves more of us, and if there is to be a stable transition, demands more of us. That means a lot more patience with those who don’t yet understand why we’re out here cheering for it. After all, to them, it looks like we’re cheering for ‘just another asset’ that just dropped more than 40% of its value in less than a year.

Is that fair? Maybe not. Is it necessary? Most assuredly.

It may be easy for me to say—after all, I really just got here. I only really got here because my good friend @nprofile1q... patiently, but insistently kept talking to me about fiat and sound money—and how Bitcoin is a sound money.

Perhaps it’s best to face this music by talking through the basics, time and time again, with great patience and deference. After all, that’s the same patience behind, “Stay humble and stack sats.”

Stay curious, y’all.

Thoroughly enjoyed this article—and especially loved this passage.