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Bitcoiner Robert Breedlove on Twitter | How Bitcoin Works

Bitcoiner Robert Breedlove on Twitter

How Bitcoin Works Robert Breelove on Twitter. As ambassadors of #Bitcoin, I believe we must speak the common tongue and avoid esoteric language so that our message can penetrate minds far and wide. Here, I will shed some light on the Bitcoin and cryptoasset universe in an exoteric nutshell.
How Bitcoin Works Robert Breedlove on Twitter 2 When we look at the cryptoasset universe, there are two distinct hemispheres: 1) Bitcoin and 2) everything else, which are commonly known as Alternative Cryptoassets or Alts
How Bitcoin Works Robert Breedlove on Twitter 3 Bitcoin is free market money competing against monopoly money (pun intended). Bitcoin is disintermediating the market for money, which today is monopolized by central banks
How Bitcoin Works Robert Breedlove on Twitter 4 In the other half of the cryptoasset universe, we have Alternative Cryptoassets (also called Alts or Altcoins) So far, the use cases for Alts are mostly unproven (with the possible exception of Ethereum) and Bitcoin is positioned to capture the vast majority of the value created during this entire wave of innovation
How Bitcoin Works Robert Breedlove on Twitter 5  Alts are venture capital investments that can be launched at extremely low cost and are subjected to little, if any, professional due diligence (hence their other nickname - shitcoins)
Robert Breedlove on Twitter how bitcoin works 5 Some alts may one day succeed meaningfully, however these venture-style investments are much more risky than Bitcoin
How Bitcoin works Robert Breedlove Twitter 7
How Bitcoin works 8 Similar to the purpose of telecommunications, the purpose of money also remains the same: to communicate value across space and time. As newer monetary technologies are invented that provide higher hardness, divisibility, portability, durability or recognizability – they become the dominant method of communicating value across space and time.
How Bitcoin Works Robert Breedlove on Twitter 9 
Money has many characteristics, but the primary trait which determines whether it succeeds or fails in the free market is called ‘Hardness’ (on which we will now focus)
Hardness is the difficulty to produce an incremental unit of the monetary instrument (ie. the energy expenditure necessary to mine an ounce of gold or produce a US dollar, for instance)
How bitcoin works Robert Breedlove Twitter 10 n a free market, people naturally and rationally choose to store their wealth in the monetary technology which is hardest to inflate (by mining, printing, counterfeiting, etc.). 
Gold eventually became global standard for money precisely because of its Hardness (as quantified by a superior stock-to-flow ratio).
Gold is virtually indestructible, so nearly every ounce ever mined throughout history remains extant today (high stock).
how bitcoin works The Hardness of gold resulted in it outcompeting silver several times throughout history and is the reason silver is almost entirely demonetized today. This competitive dynamic is easily explained from a game theory perspective:
However, gold has one major drawback, the divisibility problem: Gold is heavy and difficult to deeply subdivide, which makes it difficult to use as a medium of exchange (ie. buying coffee with gold coins is not practical).
Eventually, national governments stepped in and solved the divisibility problem of gold by issuing bank notes (essentially paper IOUs), which are light and easy to transact with, that were fully redeemable for gold
As governments created more bank notes than they could support with their gold reserves, they started revoking bank note redeemability for gold, thus implementing the ‘money backed by nothing’ we all use now - fiat currencies
How Bitcoin Works
how bitcoin works history
In 1971, US President Nixon unilaterally cancelled the direct international convertibility of the US dollar to gold and promised that the US would eventually return to the Gold standard, which of course never happened, leaving the world on a fiat standard. 
How Bitcoin Works
o today, the world is dominated by government fiat money which is backed by absolutely nothing and is in fact the Softest form of money that has ever existed (the cost to produce an additional unit of fiat money is near-zero)
How Bitcoin Works
In the wake of the 2008 Great Recession, when central banks all over the world were busy printing more fiat currencies to reflate their respective economies, Satoshi Nakamoto released an open-source software project into the world called Bitcoin.
How Bitcoin works
Bitcoin is the Hardest form of money that has ever existed. This momentous innovation is made possible by an ever-rising production difficulty that requires expenditure of real world energy (in a process called proof-of-work or mining). Bitcoin’s stock-to-flow ratio increases inevitably every 4 years will surpass that of gold in May 2020. Bitcoin’s monetary policy is enforced by unbreakable cryptography, hence the inevitability.
With Bitcoin, no matter how much its price increases, it is absolutely impossible to create any new supply flow beyond its mathematically enforced and universally transparent production schedule
Bitcoin is also the world’s first instance of ‘absolute scarcity’ as its monetary policy is fixed, only 21M units will ever exist. Before Bitcoin, only time itself was absolutely scarce (the formula for Bitcoin's fixed monetary policy is pictured here).
his means that its stock-to-flow ratio will continue to increase and eventually become infinite when the last Bitcoin is produced sometime in the middle of the 22nd century
Bitcoin runs countervailing to government monetary policy which is uncertain, opaque and subject to change based on the whim of bureaucrats
So we have Bitcoin, the Hardest form of money in history, competing directly with government money, the Softest form of money in history…
How Bitcoin Works: Game theory and history shows us that people will naturally and rationally seek to store their wealth in the Hardest money available to them. This emergent market behavior is based on the anticipated decisions of others and will eventually spiral into an adoption frenzy.
So long as Bitcoin continues to exist (and without even considering its other superior traits as a form of money) we believe it will continue to outcompete gold and government money in the free market and appreciate in value
itcoin is the most credible monetary policy in human history disrupting the most untrustworthy monetary policies in human history. 
A bet on Bitcoin is that the competitive dynamics inherent to the market for money will continue to play out in the same way they have throughout all of history
This is the Bitcoin and cryptoasset universe in a nutshell.
How bitcoin works in a nutshell

Link to the original thread on Twitter below: