iawomin

mempool

## Bitcoin Security Robustness:

**Introduction**

Understanding the fundamental importance of security in any financial system, I can confidently affirm that Bitcoin possesses a robust security structure that positions it as one of the world's most secure platforms.

**Transaction Security: Cutting-Edge Cryptography**

Bitcoin employs cutting-edge cryptography to safeguard all transactions on the network. This cryptography, based on complex mathematical algorithms, ensures that only intended recipients can view and utilize the sent funds.

**1. Public and Private Key Cryptography:**

* **Public Key:** Shared with the world, serves as an address to receive Bitcoins.
* **Private Key:** Kept secret by the user, allows sending Bitcoins and accessing the wallet.

This technology guarantees the confidentiality, integrity, and authenticity of transactions, preventing fraud, theft, and tampering.

**2. Digital Signatures:**

Each transaction is digitally signed with the sender's private key, authenticating the origin of funds and ensuring the transaction cannot be forged or duplicated.

**3. Hash Function:**

A hash function converts transaction data into a unique and irreversible code, guaranteeing transaction immutability and blockchain integrity.

**Controlling New Unit Creation: Robust Proof-of-Work Mechanism**

Bitcoin utilizes a consensus mechanism called Proof-of-Work (PoW) that controls new unit creation and network security. In this process, miners compete to solve complex mathematical problems using powerful computers.

**1. Competitive Mining:**

* Miners perform complex calculations to find a specific hash.
* The first miner to find the valid hash receives the right to add a new block to the blockchain.
* As a reward, the miner receives newly created Bitcoins.

**2. Difficulty Adjustment:**

The difficulty of mathematical problems is automatically adjusted to maintain a constant block creation rate, ensuring predictable Bitcoin inflation.

**3. Network Security:**

The PoW mechanism incentivizes honest miners to participate in the network, as the chance of a malicious miner obtaining the reward is extremely low.

**Network Security: Immutable and Unbreakable Blockchain**

The blockchain is the public and immutable record of all Bitcoin transactions. Each block contains a hash of the previous block, creating an interconnected and tamper-resistant chain. This structure guarantees network transparency and security.

**1. Immutability:**

Once a block is added to the chain, it becomes immutable. Any attempt to alter a past transaction would require modifying all subsequent blocks, a computationally infeasible task.

**2. Transparency:**

The blockchain is a public record accessible to anyone, ensuring transparency and allowing anyone to verify transaction validity.

**3. Collective Security:**

Blockchain security is guaranteed by the participation of all network users. Any attempt to attack the network would require controlling the majority of the network's computers, an extremely difficult and unlikely task.

**Enhanced Security: Continuous Evolution and Innovation**

The Bitcoin community is constantly evolving, seeking to enhance network security. New technologies, such as the Lightning Network and Taproot, are being implemented to increase Bitcoin's scalability, privacy, and security.

**1. Lightning Network:**

A second-layer solution that enables fast, cheap, and off-chain transactions, reducing the burden on the main network and increasing privacy.

**2. Taproot:**

An upgrade protocol that improves transaction privacy and efficiency, making Bitcoin more resistant to attacks and easier to use.

**Conclusion: Unparalleled and Unbreakable Security**

Bitcoin's security is the result of a combination of robust cryptography, a PoW consensus mechanism, and an immutable blockchain. This structure ensures transaction protection, control over new unit creation, and overall network security, making Bitcoin one of the world's most secure platforms.

It is important to emphasize that Bitcoin's security depends on several factors:

* **Decentralization:** The absence of a central authority makes Bitcoin resistant to attacks and censorship.
* **Hash Rate:** The combined computational power of miners makes the network resistant to malicious modifications.
* **Network Participation:** A network with more honest users and miners is more secure.

**Limitations and Precautions**

Despite its robustness, it is important to recognize that no system is completely invulnerable.

* **User Security:** The responsibility for Bitcoin security lies with the user itself. It is crucial to store private keys securely and use trusted wallets.
* **Emerging Attacks:** New types of attacks may emerge in the future. The Bitcoin community is constantly working to identify and mitigate these threats.

**Conclusion: Security Priority and Confidence in the Future**

Bitcoin security is an absolute priority for the community and for me. The advanced cryptographic structure, the PoW consensus mechanism, and the immutable blockchain offer an unparalleled level of security in financial systems.

As technology evolves and the network strengthens, confidence in Bitcoin's security will only increase.

**Remember:** 

* Bitcoin is a decentralized system, which means that security is a shared responsibility. 
* Take precautions to protect your private keys and transactions. 
* Bitcoin's security is constantly evolving to face new threats. 

**Disclaimer:** 

I am not a security expert and this information should not be construed as security advice. Consult a qualified network security professional for specific guidance.

Bitcoin Security Robustness - Learn it before it's too late

alter_native

The text highlights the recent increase in Bitcoin trading volumes in the United States, reaching levels not seen since 2022. This growth is primarily attributed to the introduction of Bitcoin ETFs, which have attracted $13 billion in inflows since their launch in January. ETFs have facilitated regulated access for institutional investors, increasing participation during U.S. market hours.

Main points of the text:

1. **Bitcoin Trading Volumes on the Rise**: Bitcoin trading volumes during U.S. market hours represent 46% of the cumulative volume up to April 2024, a record level since 2022.

2. **Impact of Bitcoin ETFs**: The introduction of Bitcoin ETFs has provided a simplified and regulated way for institutional investors to access Bitcoin, significantly contributing to the increase in trading volumes.

3. **Retail Investor Participation**: Despite the increase in trading volume, retail investor interest appears to be waning, as indicated by the decrease in Google searches for the term "Bitcoin" in March, which was only half of the 2021 peak.

4. **Investor Confidence and Market Stability**: The increase in trading volumes may signal growing confidence in the stability and maturity of the Bitcoin market, although there are concerns about retail investor participation and the sustainability of this growth in the long term.

5. **Bitcoin Price Fluctuation**: At the time of writing, Bitcoin showed a significant drop of over 3% in the last 24 hours, with a price around $62,179. The recent approval of Ethereum ETFs by the SEC might be influencing this drop.

6. **Future Prospects**: The increase in trading volumes is seen as a positive sign for the cryptocurrency industry, potentially marking a new phase of growth and institutional recognition for Bitcoin. However, it remains uncertain whether this trend will continue and if it will lead to a significant increase in Bitcoin's price.

The article concludes by encouraging readers to maximize their experience on the Cointribune platform through the 'Read to Earn' program, which rewards readers for each article read.

---

Bitcoin is gaining strength! Trading volumes are skyrocketing!

## Bitcoin: A Revolutionary Currency with Unique Characteristics

Bitcoin stands out as a new type of digital currency, operating on a decentralized, immutable blockchain system secured by robust cryptography. This innovative structure differentiates it from traditional currencies controlled by governments and central banks, offering several advantages:

**1. Censorship Resistance:** Governments and institutions cannot interfere with or freeze Bitcoin transactions, granting users complete control over their funds.

**2. Unparalleled Transparency:** All Bitcoin transactions are publicly recorded on the blockchain, allowing for complete visibility and security for all network participants.

**3. Inherent Scarcity:** The supply of Bitcoin is limited and mathematically predefined to 21 million, protecting against inflation and devaluation caused by excessive money printing.

**4. Unparalleled Efficiency:** International Bitcoin transfers are fast, inexpensive, and without intermediaries, facilitating global trade and capital movement.

**Bitcoin as a Reserve Asset: A Comparison to Gold**

Throughout history, gold has been considered the ultimate reserve asset, a safe haven for protecting wealth against inflation and economic instability. Bitcoin exhibits similar characteristics that make it a promising candidate to assume this role:

**1. Unmatched Durability:** Bitcoin is digital and immutable, resisting physical deterioration and loss, unlike physical gold that is susceptible to theft, damage, and loss.

**2. Unrivaled Portability:** Bitcoins can be easily transported and stored anywhere in the world through digital devices, unlike gold that requires secure physical storage.

**3. Unparalleled Divisibility:** One Bitcoin can be divided into smaller units called satoshis, enabling transactions of any value, unlike gold that requires physical division which can be costly and impractical.

**4. Unparalleled Scarcity:** The finite supply of Bitcoin, mathematically predefined at 21 million, protects against devaluation caused by excessive money printing, unlike gold that is subject to new discoveries and mining which can increase supply and reduce value.

**Understanding the Risks and Investing Responsibly**

It is crucial to recognize that Bitcoin is still a relatively new and developing asset. Its volatility and speculative nature can lead to significant losses for unprepared investors.

Therefore, it is essential to conduct thorough research, understand the risks involved, and only invest what you can afford to lose. Diversifying your portfolio with other assets is also crucial to mitigate losses.

**The Future of Bitcoin: An Optimistic Outlook with Solid Evidence**

Despite the risks, I believe that Bitcoin holds immense potential to transform the global financial system. Several factors reinforce this perspective:

**1. Growing Institutional Adoption:** Large companies and institutions like Tesla, MicroStrategy, Square, and PayPal are investing heavily in Bitcoin, signaling confidence in its value and future potential.

**2. Increasing Demand for Crypto Investments:** Individual and institutional interest in cryptocurrency investments is growing exponentially, driving demand for Bitcoin.

**3. Innovative Technological Developments:** New technologies related to Bitcoin, such as the Lightning Network and Taproot, are being developed to increase the scalability, security, and usability of the cryptocurrency.

**4. Growth of the Digital Economy:** The expansion of the digital economy and the rise of e-commerce increase the need for a decentralized and efficient global digital currency like Bitcoin.

**Conclusion: A Transformative Opportunity with Essential Precautions**

Bitcoin is not for everyone. It is a high-risk, high-potential investment. For those who understand the risks and believe in the vision of a decentralized and digital future, Bitcoin can be a transformative opportunity.

**Remember:**

* Conduct thorough research and understand the risks involved.
* Invest only what you can afford to lose.
* Diversify your portfolio with other assets.
* Do not invest based on hype or fear.
* Seek professional financial advice if needed.

**Disclaimer:**

I am not a financial advisor, and this information should not be construed as financial advice. Please consult with a qualified financial professional before making any investment decisions.


Bitcoin: A Revolutionary Currency with Unique Characteristics

The text discusses an innovation in the cryptocurrency market, ZKThreads, developed by StarkWare. This new scaling framework aims to prevent financial pitfalls and improve the scalability of decentralized applications (DApps).

### How does ZKThreads work?
ZKThreads allows transactions to continue uninterrupted even during disruptions, ensuring market efficiency, especially in futures markets. If a centralized exchange fails, users can continue their transactions using the base layer, ensuring operational continuity.

### Development and Structure
Developed in collaboration with Cartridge, ZKThreads combats fragmentation by providing a standardized environment for easily verifiable applications. This aligns with StarkWare's fractal scaling vision, introduced in 2021, as an alternative to modern zero-knowledge (ZK) systems, which often result in fragmented liquidity and reduced application connectivity.

### Implications for DApps
Guthmann believes that ZKThreads can revolutionize the creation of DApps by promoting horizontal scaling as a complementary approach to traditional layer-based scaling. This enables the creation of more efficient and secure DApps.

StarkWare's Layer-2 solution, Starknet, enhances this horizontal scaling through shared execution supported by zero-knowledge proofs (ZK-proofs). This method breaks down tasks into smaller parts, maintaining confidentiality and accuracy, while synchronizing with the main chain to increase security and trust.

### Key Advantages for Users
1. **Transaction Continuity**: Allows transactions to continue smoothly even if a centralized exchange fails.
2. **Unified Environment**: Provides a standardized environment for verifiable applications, reducing fragmentation.
3. **Horizontal Scaling**: Improves the security and connectivity of DApps.
4. **Confidentiality and Efficiency**: Shared execution with ZK-proofs ensures confidentiality and task accuracy.

Guthmann emphasized that ZKThreads integrates joint processing with the main chain, avoiding the typical isolation of traditional models. This increases security and trust, creating a cohesive network of interoperable applications.

### Summary
In summary, StarkWare's ZKThreads is a significant innovation that promises to improve the scalability, security, and efficiency of DApps in the cryptocurrency market, while protecting against centralized exchange failures and promoting a more connected and less fragmented environment.

https://coinmarketcap.com/community/articles/664f3c844a927865363c0f0f/


StarkWare Boosts Blockchain Efficiency - I ONLY BELIEVE BY SEEING

The text highlights the significant increase in investments in BlackRock’s bitcoin ETF, with over $100 million inflows on May 19th and 20th. This increase coincides with bitcoin’s price recovery to around $70,000, signaling growing institutional interest in the cryptocurrency market.

The ETF, listed on the New York Stock Exchange (NYSE), allows investors to track bitcoin’s price without holding the asset directly. It is backed by physical bitcoin stored securely, offering transparency and security to investors. This approach contrasts with derivative-based tracking methods, providing a direct link to the underlying asset.

The growing popularity of BlackRock’s ETF reflects a broader trend of institutional involvement in cryptocurrencies. The entry of established financial players like BlackRock into the market boosts credibility and signals growth opportunities. A survey by Fidelity Digital Assets shows that institutional investors increasingly view digital assets as a viable portfolio component, with plans to increase allocations in the coming years.

Despite the positive sentiment, some experts warn of speculative forces driving the current market rally. Cryptocurrencies remain volatile, with regulatory uncertainties and potential risks of manipulation and fraud. Environmental concerns related to bitcoin mining practices also raise questions about sustainability within the industry.

In summary, the recent inflows into BlackRock’s bitcoin ETF highlight growing institutional confidence in cryptocurrencies. While challenges persist, the participation of reputable financial institutions like BlackRock could foster industry growth and development. The evolving landscape of institutional investment in cryptocurrencies underscores the need for a balanced approach that considers both opportunities and risks in this dynamic market.

https://usnewsper.com/2024/05/investors-flock-to-blackrock-bitcoin-fund/?feed_id=476206&_unique_id=664df95f5ea40

Investors Flock to BlackRock Bitcoin Fund!

The text reports on the significant achievement of Midas, a prominent investment application in Turkey, which secured a $45 million Series A funding, the largest ever recorded in the Turkish fintech sector. This funding round involved contributions from various global investors, spotlighting Midas on international platforms.

### Expansion of Services and Investor Confidence
The new capital influx will enable Midas to expand its zero-commission trading services, currently available for the Istanbul Stock Exchange and U.S. stock markets, to include cryptocurrencies and investment funds. This milestone was celebrated with a feature on Nasdaq in Times Square, highlighting Midas's significant impact.

### Global Partners Rally Behind Midas
The investment round was led by Canada-based Portage Ventures, alongside other notable entities such as Spark Capital, Earlybird Digital East Fund, and Revo Capital. Paul Desmairas, Founding Partner at Portage Ventures, expressed his enthusiasm about partnering with Midas, emphasizing their commitment to enhancing investment tool accessibility in Turkey.

### Points to Take into Account
- **Expansion of Services**: Midas's approach to expanding zero-commission trading services could set a new standard in Turkey’s fintech scene.
- **Confidence of International Investors**: The involvement of international investors reflects confidence in Turkey’s growing fintech market.
- **Acceleration of Fintech Solution Adoption**: This funding could accelerate the adoption of fintech solutions in regional markets.

The successful funding round not only underscores Midas's robust market position but also signals a growing interest and confidence in Turkey’s fintech capabilities globally. This development could have far-reaching effects on how financial services evolve in the region, providing users with more accessible and comprehensive financial tools.


https://coinmarketcap.com/community/articles/66265bbe064731468ca62d85/

Midas Achieves Record Series A Funding in Turkey’s Fintech Sector

### Benefits and Challenges of Blockchain

Blockchain, the technology that underpins cryptocurrencies, is gaining increasing attention due to its transformative potential across various industries. While its benefits are widely recognized, there are also significant challenges that need to be addressed for widespread adoption to become a reality. Let's explore these aspects in more depth.

#### Benefits of Blockchain

1. **Increased Transparency**
   - **Immutable Ledger:** Blockchain creates a permanent and immutable record of all transactions. Once a transaction is recorded, it cannot be altered or deleted. This characteristic enhances trust, as all network participants can see and verify transactions.
   - **Simplified Auditing:** The transparent nature of blockchain makes auditing and data verification easier. Organizations can track and verify transactions more efficiently, which is particularly useful in sectors like finance and healthcare, where accuracy and compliance are crucial.

2. **Precise Tracking**
   - **Supply Chain Visibility:** Blockchain enables tracking products across the entire supply chain, from raw materials to the end consumer. This improves visibility and accountability, helping to identify and address inefficiencies.
   - **Product Authenticity:** Companies can ensure the authenticity of products, reducing fraud and counterfeiting. For example, in the pharmaceutical industry, blockchain can help track medicines to ensure they are legitimate and unadulterated.

3. **Permanent Record**
   - **Reliable History:** Since all transactions are permanently recorded, blockchain creates a reliable history that can be accessed at any time. This is valuable for resolving disputes, providing transaction evidence, and maintaining record integrity.
   - **Data Security:** Blockchain's immutability protects data against tampering and malicious attacks, offering a level of security that is often superior to traditional systems.

4. **Cost Reduction**
   - **Elimination of Intermediaries:** Blockchain enables peer-to-peer transactions, eliminating the need for intermediaries such as banks and brokers. This not only reduces costs but also speeds up transaction processing.
   - **Operational Efficiency:** Process automation through smart contracts can significantly reduce operational costs. Smart contracts are self-executing with the terms of the agreement directly written into the code, eliminating the need for manual oversight.

#### Challenges of Blockchain

1. **Technological Complexity**
   - **Learning Curve:** Blockchain technology is complex and requires significant technical understanding. The learning curve can be steep, making adoption challenging for organizations and individuals without prior experience with distributed ledger technology.
   - **Development and Integration:** Developing and integrating blockchain-based solutions can be challenging and expensive. Qualified personnel and investment in infrastructure are required, which can be a barrier for many companies.

2. **Regulatory Implications**
   - **Legal Ambiguity:** Regulations surrounding blockchain and cryptocurrencies are still evolving in many parts of the world. Lack of regulatory clarity can cause uncertainty and hesitation among investors and businesses.
   - **Compliance and Governance:** Companies adopting blockchain need to ensure their operations comply with local and international laws. This can be complicated due to the decentralized nature of the technology and different jurisdictions involved.

3. **Implementation Challenges**
   - **Scalability:** Many blockchains face scalability issues, meaning they cannot efficiently handle a large number of transactions. Solutions like Ethereum 2.0 are being developed to address these issues, but there is still much to be done.
   - **Interoperability:** There are numerous blockchain platforms, each with its own technical specifications. Lack of interoperability between these platforms can hinder adoption and system integration.

4. **Competing Platforms**
   - **Market Fragmentation:** The growing number of competing blockchain platforms can lead to market fragmentation. Companies and developers may struggle to choose the right platform, and the coexistence of multiple platforms can create data silos.
   - **Standards and Protocols:** Lack of common standards and protocols can limit interoperability and efficiency of blockchain solutions. The industry needs to collaborate to develop standards that facilitate integration and collaboration.

#### Conclusion

Blockchain technology offers significant potential to transform a variety of industries by providing increased transparency, precise tracking, permanent records, and cost reduction. However, widespread adoption faces notable challenges such as technological complexity, regulatory implications, implementation challenges, and the existence of competing platforms.

For blockchain to realize its potential, it is essential for companies to invest in education and development, collaborate to establish common standards, and work with regulators to create a clear and favorable legal environment. With these efforts, blockchain can truly revolutionize the way we conduct transactions and manage data in the digital world.

Benefits and Challenges of Blockchain - Is that really the case?

The post is a detailed analysis of the role and importance of cryptocurrency consultants in the cryptocurrency market. It covers various topics related to the function of these consultants, the benefits of hiring one, and how to become a cryptocurrency consultant. Here are the main points of the post:

1. **What Are Cryptocurrency Consultants?**
   - Cryptocurrency consultants are individuals or companies with a deep understanding of the cryptocurrency market who help clients at every stage of trading, aiming to maximize profits and earning commissions for their services.

2. **Why Do You Need a Cryptocurrency Consultant?**
   - **Learning and Education**: They provide educational materials and training tools to help beginners understand the cryptocurrency market.
   - **Risk Management**: They offer tools to identify and mitigate risks, protecting against fraud and hacks.
   - **Blockchain Solutions**: They help companies use blockchain technology effectively.
   - **Trading Guidance**: They assist in making investment decisions, indicating when and in which cryptocurrencies to invest.
   - **Market Insight**: They offer live updates, news, and research reports to predict market movements.
   - **Strategy Formulation**: They help develop effective trading strategies, including entry and exit points.

3. **Top Cryptocurrency Consultants**
   - **Cryptosx Consulting**: Offers a variety of services related to digital assets, including education and portfolio management.
   - **PixelPlex**: Provides blockchain solutions, tokenization strategies, and NFT creation.
   - **CoinDesk**: Known for providing news and trends in the cryptocurrency market.

4. **How to Become a Cryptocurrency Consultant?**
   - **Market Knowledge**: It's necessary to have a deep understanding of terminologies, cryptography, and blockchain technology.
   - **Skill Certificates**: Obtain skill certificates from reputable organizations to prove credibility.
   - **Community Building**: Participate in events, workshops, and webinars to expand knowledge and build a client base.
   - **Starting Consultancy Services**: Establish a consultancy firm, offering quality services and promoting them on social media.

5. **Conclusion**
   - Cryptocurrency consultants play a significant role in the market, helping those who lack the time or knowledge to navigate the complex world of cryptocurrencies. It's essential to choose quality consulting services to achieve the best results.

In summary, the post explains the importance of cryptocurrency consultants, how they can help traders and investors, and provides a guide on how to become a consultant in the sector.

Why Do You Need Cryptocurrency Consultant? New Niche or more of the same?

**Thesis Title: The Evolution of Bitcoin as a Store of Value and the Influence of ETFs and Halving on the Market**

**Introduction:**

In this summary, we explore Michael Saylor's recent statement on Bitcoin's role as a store of value and key events that have shaped its recent trajectory. The analysis focuses on two crucial points: the approval of Bitcoin ETFs by the SEC and the fourth Bitcoin halving, which together have driven a significant shift in the supply and demand dynamics of the cryptocurrency.

**Development:**

1. **Michael Saylor's Statement:**
   - **Foundation of Store of Value:** Michael Saylor, an influential figure in the cryptocurrency space, stated that Bitcoin protects investors from the depreciation of fiat money. This argument reinforces the view that Bitcoin functions as a store of value, similar to "digital gold."
   - **Psychological and Market Impact:** Such statements by renowned figures not only influence public perception but also solidify investor confidence in Bitcoin as a robust asset against inflation.

2. **Bitcoin Price Recovery:**
   - **Market Resilience:** The recovery of the price to the $67,000 mark after a minor correction demonstrates Bitcoin's resilience and its ability to maintain value even in the face of short-term volatility.
   - **Confidence Indicator:** This price movement can be seen as an indicator of confidence from both retail and institutional investors in the strength and stability of Bitcoin.

3. **Approval of ETFs by the SEC:**
   - **Increase in Demand:** The approval of spot Bitcoin ETFs by the SEC in January allowed 11 ETFs to start operating, with ten of them aggressively accumulating approximately 10,000 BTC per day. This number is 12 times the daily production of miners, indicating a massive increase in demand.
   - **Facilitated Access:** ETFs make Bitcoin more accessible to a wider range of investors, including those who prefer to invest through traditional financial vehicles.

4. **Fourth Bitcoin Halving:**
   - **Supply Reduction:** The halving, which occurs approximately every four years, halves the miners' rewards, reducing the production of new BTC. This event creates a supply shock, increasing Bitcoin's scarcity.
   - **Price Impact:** Historically, halvings have been followed by significant increases in Bitcoin's price due to the reduced supply combined with constant or increasing demand.

**Conclusion:**

The combination of SEC approval of ETFs and the fourth Bitcoin halving has created a unique scenario in the financial market. On one hand, greater accessibility to Bitcoin via ETFs generated a demand shock, while the reduction in new BTC production due to the halving created a supply shock. These events, along with the reaffirmation of Bitcoin as a store of value by influential figures like Michael Saylor, are positioning Bitcoin not just as a speculative asset but as a central component in many investors' long-term investment strategies.

**Thesis Defense:**

The analysis presented in the summary demonstrates that Bitcoin is evolving to become a widely recognized store of value, reinforced by significant structural events in the market. The combination of growing demand facilitated by ETF approval and reduced supply through the halving creates a favorable environment for the continuous appreciation of Bitcoin. This study highlights the importance of such events in consolidating Bitcoin as a store of value, as well as emphasizing the influence of key figures and regulations on market behavior.

Bitcoin Saving Your Money

The Race to Scale DeFi Without Sacrificing Decentralization Goals

andreas m antonopoulos on bitcoin etfs

You were very assertive in this definition.  🎯🎯🎯

earth

PRAYER OF THE DAY - Luke 5:32

prayer

tech

Worried about PRIVACY? Choose a SECURE email service.

bitcoin

Money and Time Preference 
(By Saifedean Ammous)

Sound money is chosen freely on the market for its salability, because it 
holds its value across time, because it can transfer value effectively across 
space, and because it can be divided and grouped into small and large 
scales. It is money whose supply cannot be manipulated by a coercive 
authority that imposes its use on others. From the preceding discussion, and 
from the understanding of monetary economics afforded to us by Austrian 
economics, the importance of sound money can be explained for three 
broad reasons: first, it protects value across time, which gives people a 
bigger incentive to think of their future, and lowers their time preference. 
The lowering of the time preference is what initiates the process of human 
civilization and allows for humans to cooperate, prosper, and live in peace. 
Second, sound money allows for trade to be based on a stable unit of 
measurement, facilitating ever-larger markets, free from government 
control and coercion, and with free trade comes peace and prosperity. 
Further, a unit of account is essential for all forms of economic calculation 
and planning, and unsound money makes economic calculation unreliable 
and is the root cause of economic recessions and crises. Finally, sound 
money is an essential requirement for individual freedom from despotism 
and repression, as the ability of a coercive state to create money can give it 
undue power over its subjects, power which by its very nature will attract 
the least worthy, and most immoral, to take its reins. 


Sound money is a prime factor in determining individual time preference, 
an enormously important and widely neglected aspect of individual decision 
making. Time preference refers to the ratio at which individuals value the 
present compared to the future. Because humans do not live eternally, death 
could come to us at any point in time, making the future uncertain. And 
because consumption is necessary for survival, people always value present 
consumption more than future consumption, as the lack of present 
consumption could make the future never arrive. In other words, time 
preference is positive for all humans; there is always a discount on the 
future compared to the present. 


Further, because more goods can be produced with time and resources, 
rational individuals would always prefer to have a given quantity of 
resources in the present than in the future, as they could use them to 
produce more. For an individual to be willing to defer her receipt of a good 
by a year, she would have to be offered a larger quantity of the good. The 
increase necessary to tempt an individual to delay her receipt of the good is 
what determines her time preference. All rational individuals have a 
nonzero time preference, but the time preference varies from one individual 
to another. 


Animals’ time preference is far higher than humans’, as they act to the 
satisfaction of their immediate instinctive impulses and have little 
conception of the future. A few animals are capable of building nests or 
homes that can last for the future, and these have a lower time preference 
than the animals that act to the satisfaction of their immediate needs such as 
hunger and aggression. Human beings' lower time preference allows us to 
curb our instinctive and animalistic impulses, think of what is better for our 
future, and act rationally rather than impulsively. Instead of spending all our 
time producing goods for immediate consumption, we can choose to spend 
time engaged in production of goods that will take longer to complete, if 
they are superior goods. As humans reduce their time preference, they 
develop the scope for carrying out tasks over longer time horizons, for 
satisfaction of ever-more remote needs, and they develop the mental 
capacity to create goods not for immediate consumption but for the 
production of future goods, in other words, to create capital goods. 


Whereas animals and humans can both hunt, humans differentiated 
themselves from animals by spending time developing tools for hunting. 
Some animals may occasionally use a tool in hunting another animal, but 
they have no capacity for owning these tools and maintaining them for 
long-term use. Only through a lower time preference can a human decide to 
take time away from hunting and dedicate that time to building a spear or 
fishing rod that cannot be eaten itself, but can allow him to hunt more 
proficiently. This is the essence of investment: as humans delay immediate 
gratification, they invest their time and resources in the production of 
capital goods which will make production more sophisticated or 
technologically advanced and extend it over a longer time-horizon. The 
only reason that an individual would choose to delay his gratification to 
engage in risky production over a longer period of time is that these longer 
processes will generate more output and superior goods. In other words, 
investment raises the productivity of the producer. 


Economist Hans-Hermann Hoppe explains that once time preference drops 
enough to allow for any savings and capital or durable consumer-goods 
formation at all, the tendency is for time preference to drop even further as 
a “process of civilization” is initiated.+ 


The fisherman who builds a fishing rod is able to catch more fish per hour 
than the fisherman hunting with his bare hands. But the only way to build 
the fishing rod is to dedicate an initial amount of time to work that does not 
produce edible fish, but instead produces a fishing rod. This is an uncertain 
process, for the fishing rod might not work and the fisherman will have 
wasted his time to no avail. Not only does investment require delaying 
gratification, it also always carries with it a risk of failure, which means the 
investment will only be undertaken with an expectation of a reward. The 
lower an individual's time preference, the more likely he is to engage in 
investment, to delay gratification, and to accumulate capital. The more 
capital is accumulated, the higher the productivity of labor, and the longer 
the time horizon of production. 


To understand the difference more vividly, contrast two hypothetical 
individuals who start off with nothing but their bare hands, and differing 
time preferences: Harry has a higher time preference than Linda. Harry 
chooses to only spend his time catching fish with his hands, needing about 
eight hours a day to catch enough fish to feed himself for the day. Linda, on 
the other hand, having a lower time preference, spends only six hours 
catching fish, making do with a smaller amount of fish every day, and 
spends the other two hours working on building a fishing rod. After a week 
has passed, Linda has succeeded in building a working fishing rod. In the 
second week, she can catch in eight hours double the quantity of fish which 
Harry catches. Linda's investment in the fishing rod could allow her to work 
for only four hours a day and eat the same amount of fish Harry eats, but 
because she has a lower time preference, she will not rest on her laurels. 
She will instead spend four hours catching as many fish as Harry catches in 
eight hours, and then spend another four hours engaged in further capital 
accumulation, building herself a fishing boat, for instance. A month later, 
Linda has a fishing rod and a boat that allows her to go deeper into the sea, 
to catch fish that Harry had never even seen. Linda's productivity is not just 
higher per hour; her fish are different from, and superior to, the ones Harry 
catches. She now only needs one hour of fishing to secure her food for a 
day, and so she dedicates the rest of her time to even more capital 
accumulation, building better and bigger fishing rods, nets, and boats, 
which in turn increases her productivity further and improves the quality of 
her life. 


Should Harry and his descendants continue to work and consume with the 
same time preference, they will continue to live the same life he lived, with 
the same level of consumption and productivity. Should Linda and her 
descendants continue with the same lower time preference, they will 
continuously improve their quality of life over time, increasing their stock 
of capital and engaging in labor with ever-higher levels of productivity, in 
processes that take far longer to complete. The real-life equivalents of the 
descendants of Linda would today be the owners of Annelies Ilena, the 
world's largest fishing trawler. This formidable machine took decades to 
conceive, design, and build before it was completed in the year 2000, and it 
will continue to operate for decades to offer the lower-time-preference 
investors in it a return on the capital they provided to the building process 
many decades ago. The process of producing fish for Linda's descendants 
has become so long and sophisticated it takes decades to complete, whereas 
Harry's descendants still complete their process in a few hours every day. 
The difference, of course, is that Linda's descendants have vastly higher 
productivity than Harry's, and that's what makes engaging in the longer 
process worthwhile. 


An important demonstration of the importance of time preference comes 
from the famous Stanford marshmallow experiment, conducted in the late 
1960s. Psychologist Walter Mischel would leave children in a room with a 
piece of marshmallow or a cookie, and tell the kids they were free to have it 
if they wanted, but that he will come back in 15 minutes, and if the children 
had not eaten the candy, he would offer them a second piece as a reward. In 
other words, the children had the choice between the immediate 
gratification of a piece of candy, or delaying gratification and receiving two 
pieces of candy. This is a simple way of testing children's time preference: 
students with a lower time preference were the ones who could wait for the 
second piece of candy, whereas the students with the higher time preference 
could not. Mischel followed up with the children decades later and found 
significant correlation between having a low time preference as measured 
with the marshmallow test and good academic achievement, high SAT 
score, low body mass index, and lack of addiction to drugs. 


As an economics professor, I make sure to teach the marshmallow 
experiment in every course I teach, as I believe it is the single most 
important lesson economics can teach to individuals, and am astounded that 
university curricula in economics have almost entirely ignored this lesson, 
to the point that many academic economists have no familiarity with the 
term time preference altogether or its significance. 


While microeconomics has focused on transactions between individuals, 
and macroeconomics on the role of government in the economy, the reality 
is that the most important economic decisions to any individual's well-being 
are the ones they conduct in their trade-offs with their future self. Every 
day, an individual will conduct a few economic transactions with other 
people, but they will partake in a far larger number of transactions with 
their future self. The examples of these trades are infinite: deciding to save 
money rather than spend it; deciding to invest in acquiring skills for future 
employment rather than seeking immediate employment with low pay; 
buying a functional and affordable car rather than getting into debt for an 
expensive car; working overtime rather than going out to party with friends; 
or, my favorite example to use in class: deciding to study the course 
material every week of the semester rather than cramming the night before 
the final exam. 


In each of these examples, there is nobody forcing the decision on the 
individual, and the prime beneficiary or loser from the consequences of 
these choices is the individual himself. The main factor determining a man's 
choices in life is his time preference. While people's time preference and 
self-control will vary from one situation to the other, in general, a strong 
correlation can be found across all aspects of decision making. The 
sobering reality to keep in mind is that a man's lot in life will be largely 
determined by these trades between him and his future self. As much as 
he'd like to blame others for his failures, or credit others with his success, 
the infinite trades he took with himself are likely to be more significant than 
any outside circumstances or conditions. No matter how circumstances 
conspire against the man with a low time preference, he will probably find a 
way to keep prioritizing his future self until he achieves his objectives. And 
no matter how much fortune favors the man with a high time preference, he 
will find a way to continue sabotaging and shortchanging his future self. 
The many stories of people who have triumphed against all odds and 
unfavorable circumstances stand in stark contrast to the stories of people 
blessed with skills and talent that rewarded them handsomely, who 
nonetheless managed to waste all that talent and achieve no lasting good for 
themselves. Many professional athletes and entertainers, gifted with talents 
that earn them large sums of money, nevertheless die penniless as their high 
time preference gets the better of them. On the other hand, many ordinary 
people with no special talents work diligently and save and invest for a 
lifetime to achieve financial security and bequeath their children a life 
better than the one they inherited. 


It is only through the lowering of time preference that individuals begin to 
appreciate investing in the long run and start prioritizing future outcomes. A 
society in which individuals bequeath their children more than what they 
received from their parents is a civilized society: it is a place where life is 
improving, and people live with a purpose of making the next generation's 
lives better. As society's capital levels continue to increase, productivity 
increases and, along with it, quality of life. The security of their basic needs 
assured, and the dangers of the environment averted, people turn their 
attention toward more profound aspects of life than material well-being and 
the drudgery of work. They cultivate families and social ties; undertake 
cultural, artistic, and literary projects; and seek to offer lasting contributions 
to their community and the world. Civilization is not about more capital 
accumulation per se; rather, it is about what capital accumulation allows 
humans to achieve, the flourishing and freedom to seek higher meaning in 
life when their base needs are met and most pressing dangers averted. 


There are many factors that come into play in determining the time 
preference of individuals. Security of people in their person and property is 
arguably one of the most important. Individuals who live in areas of conflict 
and crime will have a significant chance of losing their life and are thus 
likely to more highly discount the future, resulting in a higher time 
preference than those who live in peaceful societies. Security of property is 
another major factor influencing individuals’ time preference: societies 
where governments or thieves are likely to expropriate individuals’ property 
capriciously would have higher time preference, as such actions would 
drive individuals to prioritize spending their resources on immediate 
gratification rather than investing them in property which could be 
appropriated at any time. Tax rates will also adversely affect time 
preference: the higher the taxes, the less of their income that individuals are 
allowed to keep; this would lead to individuals working less at the margin 
and saving less for their future, because the burden of taxes is more likely to 
reduce savings than consumption, particularly for those with a low income, 
most of which is needed for basic survival. 


The factor affecting time preference that is most relevant to our discussion, 
however, is the expected future value of money. In a free market where 
people are free to choose their money, they will choose the form of money 
most likely to hold its value over time. The better the money is at holding 
its value, the more it incentivizes people to delay consumption and instead 
dedicate resources for production in the future, leading to capital 
accumulation and improvement of living standards, while also engendering 
in people a low time preference in other, non-economic aspects of their life. 
When economic decision making is geared toward the future, it is natural 
that all manner of decisions are geared toward the future as well. People 
become more peaceful and cooperative, understanding that cooperation is a 
far more rewarding long-term strategy than any short-term gains from 
conflict. People develop a strong sense of morality, prioritizing the moral 
choices that will cause the best long-term outcomes for them and their 
children. A person who thinks of the long run is less likely to cheat, lie, or 
steal, because the reward for such activities may be positive in the short run, 
but can be devastatingly negative in the long run. 


The reduction in the purchasing power of money is similar to a form of 
taxation or expropriation, reducing the real value of one's money even while 
the nominal value is constant. In modern economies government-issued 
money is inextricably linked to artificially lower interest rates, which is a 
desirable goal for modern economists because it promotes borrowing and 
investing. But the effect of this manipulation of the price of capital is to 
artificially reduce the interest rate that accrues to savers and investors, as 
well as the one paid by borrowers. The natural implication of this process is 
to reduce savings and increase borrowing. At the margin, individuals will 
consume more of their income and borrow more against the future. This 
will not just have implications on their time preference in financial 
decisions; it will likely reflect on everything in their lives. 


The move from money that holds its value or appreciates to money that 
loses its value is very significant in the long run: society saves less, 
accumulates less capital, and possibly begins to consume its capital; worker 
productivity stays constant or declines, resulting in the stagnation of real 
wages, even if nominal wages can be made to increase through the magical 
power of printing ever more depreciating pieces of paper money. As people 
start spending more and saving less, they become more present-oriented in 
all their decision making, resulting in moral failings and a likelihood to 
engage in conflict and destructive and self-destructive behavior. 
This helps explain why civilizations prosper under a sound monetary 
system, but disintegrate when their monetary systems are debased, as was 
the case with the Romans, the Byzantines, and modern European societies. 
The contrast between the nineteenth and twentieth centuries can be 
understood in the context of the move away from sound money and all the 
attendant problems that creates. 

This text is taken from the book: "THE BITCOIN STANDARD"