A dive into understanding the nature of Bitcoin as a monetary good. Based mostly on the article by Vijay Boyapati - The Bullish Case for Bitcoin Inflation schedule of Bitcoin Value of Monetary Goods Origins of Money Attributes of good store of value Evolution of money Monetary premium Bitcoin's value Gartner cycles Transition to a medium of exchange Misconceptions and risks of Bitcoin

1. WHY BUY
BITCOIN

2. New Phenomenon
New good acquiring monetary value
● Never happened in history of humanity
● Not backed by commodity or
government
● First time possible to send value without
intermediary
● Tulipmania or dot-com bubble?

3. Bitcoin
Bitcoin is a digital token
created through the process
called mining, similar to gold,
except the production follows
a designed, predictable
schedule. Out of 21M, 18.3M
have been mined

4. Monetary Goods
Unlike stocks, bonds, real-estate or commodities such, bitcoins
cannot be valued using standard discounted cash flow analysis
or by demand for their use in the production of higher order
goods.
Bitcoins are monetary goods - value is
set game-theoretically. Each market
participant values the good based on
their appraisal of whether and how
much other participants will value it.

5. Origins of Money
● Double coincidence of wants
● Collectibles for storing and transferring
wealth
● Game Theory for Store of Value
● Convergence on single SoV
Single money facilitates trade and division of
labor and growth of civilizations

6. Attributes of Good
Store of Value

7. Evolution of Money
● Collectibles
● Store of Value
● Medium of Exchange
● Unit of Account
The main criticism is Bitcoin is not a good medium of
exchange due to volatility
Same transition took many centuries for gold. No one alive has
seen the real-time monetization of a good (as is taking place
with Bitcoin)

8. Monetary Premium
In the process of being monetized, a
monetary good will soar in
purchasing power
● Soar in Value
● Purchasing power is higher than
the use value
● Difference - Monetary Premium

9. Assessing Bitcoin’s Value
● Similar to religion
● Evangelizing is rational
● Money is foundation of trade
and savings
● Fractal Gartner Cycles
Notions of “cheap” and “expensive” are essentially meaningless in reference to
monetary goods. Price is a measure of adoption for various roles of money.

10. Gartner Cohorts
● $0–$1 (2009–March 2011)
● $1–$30 (2009–July 2011)
● $250–$1100 (April 2013–December 2013)
● $1100–$20,000 (2014–2020)
● Nation States replacing Gold

11. Transition To A Medium Of Exchange
● Widely valued good - Store of Value
● Purchasing power increase
● Opportunity cost to relinquishing it for use in
exchange
● When the sum of opportunity cost and
transactional cost is below the cost of trade
without it - MoE

12. Misconceptions
● Bitcoin is a bubble - it’s a monetary premium (can
be a bubble and undervalued)
● Bitcoin is too volatile - is a function of its nascency,
market is too small and illiquid
● Transaction fees are too high - required for
security, not a payment but settlement system for
second layer solutions
● Competition (Alt-coins) - lack of network effect
(liquidity, users and developers), decentralization

13. Risks of Bitcoin
● Protocol - bugs, quantum computer
threats
● Regulatory - Exchange shutdown -
liquidity and price discovery
● Fungibility - Privacy
● Data loss - Private key management
● Inheritance planning

14. Owning bitcoins is one
of the few asymmetric
bets that people across
the entire world can
participate in. Much like
a call option, an
investor’s downside is
limited to 1x, while their
potential upside is still
100x or more.

15. Tips
● Backup your seed phrase
● Never Keep Coins on Exchanges
● Denis Serebryakov
twitter.com/ThatCryptoTO