I read all the best Bitcoin content out there so that you can listen. This is a crypto. Kana me quick read with guys swan. Welcome back to the crypto Cana me everybody. We have got another great read today. We are actually going to continue to finish out our week. We're going to continue through the Unchained Capital series by Parker Lewis reading the next one in the gradually then suddenly series titled Bitcoin not blockchain. And this is a slightly longer piece and I'm low on time today because I'm working on a lot of other stuff. So I probably won't be doing any commentary but I think this one kind of speaks for itself. So without further Ado, let's go ahead and jump into Parker Lewis has posted at Unchained Capital Bitcoin not blockchain. Have you ever heard a smart sounding friend say that they aren't sure about Bitcoin but they believe in blockchain technology. This is like saying you believe in airplanes, but you're not sure about the wings and there's a good chance that anyone who thinks that may not understand either in reality Bitcoin and it's blockchain are dependent on each other. However, if new to bitcoin understanding how it works and parsing the landscape can be Really difficult frankly. It can be overwhelming given the complexity and sheer volume of projects who has the time to possibly evaluate everything there is in fact a manageable path, but you have to know where to start while there are seemingly thousands of cryptocurrencies and blockchain initiatives. There is really only one that matters Bitcoin ignore everything else like it didn't exist in first try to develop an understanding of why Bitcoin, Exists and how it works. That is the best foundation to then be able to think about the entirety of everything else. It is also the most practical entry point before taking a flyer in risking hard-earned value take the time to understand Bitcoin and then use that knowledge to evaluate the field. There is no promise that you will come to the same conclusions. But more often than not those who take the time to intuitively understand how and why Bitcoin Works more easily recognize the flaws inherent in the field. And even if not starting with Bitcoin remains your best hope of making an informed and independent assessment ultimately Bitcoin is not about making money and it's not a get-rich-quick scheme. It is fundamentally about storing the value you have already created and no one should risk that without a requisite knowledge base within the world of digital currencies Bitcoin has the longest track record to assess and the greatest amount of resources to educate which is why Bitcoin is the best tool to learn to start on this journey first realize that Bitcoin was created to specifically address a problem that exists with modern money the founder of Bitcoin set out to create a peer-to-peer digital cash system without the need for a trusted third party in a blockchain was one critical part of the solution in practice Bitcoin the currency and it's blockchain are interdependent one does not exist without the other bit. Needs its blockchain to function and there would not be a functioning blockchain without a native currency Bitcoin to properly incentivize resources to protect it that native currency must be viable as a form of money because it is exclusively what pays for security and it must have credible monetary properties in order to be viable. Without the money there is no security without the security the value of the currency and integrity of the chain both breakdown. It is for this reason that a blockchain is only useful within the application of money and money is not magically grow on trees. Yep. It's that simple a blockchain is only good for one thing removing the need for a trusted third party which only works in the context of money. A blockchain cannot enforce anything that exists outside the network while a blockchain would seem to be able to track ownership outside the network. It can only enforce ownership of the currency that is native to its Network Bitcoin tracks ownership and enforces ownership. If a blockchain cannot do both any records, it keeps will be inherently insecure and ultimately subject to change in this sense immutability is is not an inherent trait of a blockchain but instead an emergent property and if a blockchain is not immutable its currency will never be viable as a form of money because transfer and final settlement will never be reliably possible without reliable final settlement a monetary system is not functional and will not attract liquidity. Ultimately monetary systems Converge on one medium because their utility is liquidity rather than consumption or production and liquidity consolidates around the most secure long-term store value. It would be irrational to store wealth in a less secure less liquid monetary network. If a more secure more liquid Network existed as an attainable option. The aggregate implication is that only one block chain is viable and ultimately necessary every other cryptocurrencies competing for the identical use case as Bitcoin that of money some realize it While others do not but value continues to consolidate around Bitcoin because it is the most secure blockchain by orders of magnitude and all are competing for the same use case. Understanding these Concepts is fundamental to bitcoin and it also provides a basic Foundation to then consider and evaluate the noise Beyond Bitcoin with basic knowledge of how Bitcoin actually works. It becomes clear why there is no Block Chain without Bitcoin. There is no blockchain. Often Bitcoins transaction Ledger is thought of as a public blockchain that lives somewhere in the cloud like a digital Public Square where all transactions are aggregated. However, there is no Central source of Truth. There are no oracle's and there is no Central Public block chains, which everyone independently commits transactions instead every participant within the network constructs and maintains its own independent version of the blockchain. Stone a common set of rules. No one trusts anyone and everyone validates everything everyone is able to come to the same version of The truth without having to trust any other party. This is core to how Bitcoin solves the problem of removing third-party intermediaries from a digital Cash System. Every participant running a node within the Bitcoin Network independently verifies every transaction in every block by doing. So each node Aggregates its own independent version of the blockchain consensus is reached across the network because each node validates every transaction and each block based on a core set of rules in the longest chain wins, if a node broadcast a transaction or a block that does not follow the consensus rules. Nodes will reject it as invalid. It is through dysfunction that Bitcoin is able to dispose with the need for a central third party the network converges on the same consistent state of the chain without anyone trusting any other party. However, the currency plays an integral role in coordinating Bitcoins consensus mechanism and ordering locks, which ultimately represents Bitcoins full and valid transaction history. Or it's blockchain. the basics of Bitcoin blocks and Mining think of a block as a data set that links the past to the present technically individual blocks record changes to the overall state of Bitcoin ownership within a given time period in aggregate blocks record the entire history of Bitcoin transactions as well as ownership of all Bitcoin at any point in time only changes to the state are recorded in each passing block. How blocks are constructed solved and validated is critical to the process of network consensus. And it also ensures that Bitcoin maintains a fixed Supply 21 million minors compete to construct and solve blocks that are then proposed to the rest of the network for acceptance to simplify think of the mining function as a continual process of validating history in clearing pending Bitcoin transactions with each block miners. Has add new transaction history to the blockchain invalidate the entire history of the chain. It is through this process that miners secure the network. However, all Network nodes then check the work performed by minors or validity ensuring Network consensus is enforced more technically miners construct blocks that represent data sets which include three critical elements again simplifying One reference to the prior block validating with the entire history of the chain to bitcoin transactions. It clears pending transactions changes to the state of ownership and three coinbase transaction plus fees which is compensation to minors for securing the network. To solve blocks miners perform what is known as a proof of work function by expending energy resources in order for blocks to be valid all inputs must be valid and each block must satisfy the current Network difficulty to satisfy the network difficulty a random value referred to as a nons is added to each block and then the combined data set is run through Bitcoins cryptographic hashing algorithm sha-256. the resulting output or hash must achieve the Network's difficulty in order to be valid think of this as a simple guessing check function, but probabilistically trillions of random values must be guest and checked in order to create a valid proof for each proposed block the addition of a random nonce may seem extraneous, but it is this function that forces minors to expend significant energy resources in order to solve a block which ultimately makes the network more secure by making it extremely costly to attack. Adding a random nonce to a proposed block which is an otherwise static data set causes each resulting output or hash to be unique with each different knots checked the resulting output has an equally small chance of achieving the network difficulty or in other words representing a valid proof while it is often referred to as a highly complicated mathematical problem in reality. It is difficult only because a valid proof requires. Guessing and checking trillions of possible solutions. There are no shortcuts energy must be expended a valid proof is easy to verify by other nodes, but impossible to solve without expending massive amounts of resources as more mining resources are added to the network the network difficulty increases requiring more inputs to be checked and more energy resources to be expended to solve each block. Essentially there is material cost to minors in solving blocks. But all other nodes can then validate the work very easily at practically no cost in aggregate the incentive structure allows the network to reach consensus miners must incur significant upfront cost to secure the network, but are only paid if valid work is produced and the rest of the network can immediately determine Ermine, whether work is valid or not based on consensus rules without incurring costs while there are a number of consensus rules, if any pending transaction in a block is invalid. The entire block is invalid for a transaction to be valid. It must have originated from a previous valid Bitcoin block and it cannot be a duplicate of a previously spent transaction separately each block must build off the momentum. Most up-to-date version of history in order to be valid and it must also include a valid coinbase transaction a coinbase transaction rewards minors with newly issued Bitcoin in return for securing the network, but it is only valid if the work is valid. Coinbase rewards are governed by a predetermined Supply schedule and currently 12.5 new Bitcoin are issued in each valid Block in approximately eight months. The reward will be cut in half to six point two five new Bitcoin and every 210,000 blocks or approximately every four years. The reward will continue to be halved until it ultimately reaches zero if miners include an invalid reward and Proposed block the rest of the network will reject it as invalid which is the base mechanism that governs a capped total supply of 21 million Bitcoins. However, software alone is insufficient to ensure either a fixed Supply or an accurate transaction Ledger economic incentives hold everything together. consensus on a decentralized basis Why is this so important within one integrated function miners validate history clear transactions and get paid for security on a trustless basis. The Integrity of Bitcoins fixed Supply is embedded in its security function. And because the rest of the network independently validates the work consensus can be reached on a decentralized basis. If a minor completes valid work it can why on the fact that it will be paid on a trustless basis conversely. If a minor completes invalid work the rest of the network enforces the rules essentially withholding payment until valid work is completed in supply of the currency is baked into validity. If a minor wants to be paid, it must also enforce the fixed supply of the currency further aligning the entire network, the incentive structure of the currency is so strong that One is forced to adhere to the rules which is the chief facilitator of decentralized consensus. If a minor solves and proposes an invalid block specifically when the either includes invalid transactions or an invalid coinbase reward, the rest of the network will reject it as invalid separately. If a minor builds off a version of history that does not represent the longest chain with the greatest proof of work any proposed block. Would also be considered invalid essentially as soon as a minor sees a new valid block proposed in the network. It must immediately begin to work on top of that block or risk falling behind and Performing invalid work at a sunk cost as a consequence in either scenario. If a minor were to produce invalid work, it would incur real cost but would be compensated nothing in return. Through this mechanism miners are maximally incentivised to produce honest valid work in to work within the consensus of the chain at all times. It is either be paid or receive nothing. It is also why the higher cost to perform the work the more secure the network becomes the more energy required to write or rewrite Bitcoins transaction history the lower the probability that any single Miner could or would undermine the The network the incentive to cooperate increases as it becomes more costly to produce work which would otherwise be considered invalid by the rest of the network as network security increases Bitcoin becomes more valuable as the value of Bitcoin Rises and as the cost to solve blocks increases the incentive to produce valid work increases more Revenue, but more cost and the penalty for invalid work becomes more punitive. No. the new and more cost Why don't miners collude first? They can't second they tried but third the fundamental reason is that as the network grows the network becomes more fragmented and the economic value compensated to minors in aggregate increases from a game theory perspective more competition and greater opportunity cost makes it harder to collude and all Network nodes validate the work performed by minors, which is a constant check and balance. Miners are merely paid to perform a service and the more miners there are the greater the incentive to cooperate because the probability that a minor is penalized for invalid work increases as more competition exists and recall that random nonce value. It seemed extraneous at the time, but it is core to the function that requires energy resources to be expended it is this tangible cost the skin in the game combined with the value of the currency. So which incentivizes valid work in which allows the network to reach consensus? Because all Network nodes independently validate blocks and because miners are maximally penalized for invalid work. The network is able to form a consensus as to the accurate state of the chain without relying on any single source of knowledge or truth. None of this decentralized coordination would be possible without Bitcoin the currency all the Bitcoin network has to compensate minors in return for security is as its native currency whether that is largely in the form of newly issued Bitcoin today or exclusively in the form of transaction fees in the future. If the compensation paid to minors were not reasonably considered to be a reliable form of money the incentive to make the Investments to perform the work would not exist. the role of money in a blockchain All right. Let's take a quick break right here and hit our sponsor. I'll go grab something to drink and we'll jump back in on this section. 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So if you were thinking of starting a show or already have a podcast, there's no better platform out there check out anchor by downloading the app. Or go to Anchor dot f m-- today. the role of money in a blockchain Recall from Bitcoin can't be copied if an assets primary if not, Soul utility is the exchange for other goods and services and if it does not have a claim on the income stream of a productive asset such as a stock or a bond. It must compete as a form of money and will only store value if it possesses credible monetary properties Bitcoin is a bearer asset and it has no utility other than the exchange for other goods or services. It also has no claim on the income stream of a productive asset as such Bitcoin is only valuable as a form of money and it only holds value because it has credible monetary properties read the Bitcoin standard chapter 1 by definition. This is true of any blockchain all any blockchain can offer in return for security is a monetary asset native to the network without any enforceable claims out. Outside the network which is why a blockchain can only be useful in connection to the application of money the chart below from the Bitcoin standard articulates this point. How to decide if you need a Block Chain, do you need digital cash? No, you don't need a blockchain. Yes. Use Bitcoin the only Block Chain that works the blockchain decision chart. Without a native currency a blockchain must rely on trust for security which eliminates the need for a blockchain in the first place in practice the security function of Bitcoin mining which protects the validity of the chain on a trustless basis requires significant upfront capital investment in addition to high marginal cost or energy consumption. In order to recoup that investment and a rate of return in the future the payment in the form of Bitcoin must more than offset. The aggregate cost. Otherwise, the Investments would not be made essentially what the miners are paid to protect Bitcoin must be a reliable form of money in order to incentivize security investments in the first place. This is also fundamental to the incentive structure that aligns the network miners have an embedded incentive to not undermine the network because it would directly undermine the value of the currency in which miners are compensated if Bitcoin were not valued as money, there would be no minors and without minors there would be no chain worth protecting. The validity of the chain is ultimately what miners are paid to protect if the network could not reasonably come to a consensus and if ownership were subject to change no one could reasonably rely on bitcoin as a value transfer mechanism the value of the currency ultimately protects the chain and the immutability of the chain is foundational to the currency having value. It's an inherently self-reinforcing relationship. Immutability is an emergent property. Immutability is an emergent property in De Coyne. Not a trait of a blockchain a global decentralized monetary network with no Central Authority could not function without an immutable Ledger IE. If the history of the blockchain were insecure and subject to change if settlement of the unit of value or Bitcoin could not reliably be considered final no one would reasonably trade. Real world value in return as an example consider a scenario in which one party purchased a car from another in return for Bitcoin assumed the title for the car transfers in the individual that purchased the car takes physical possession. If Bitcoins record of ownership could easily be Rewritten or altered IE changing the history of the blockchain the party that originally transferred the Bitcoin in return for the car wind up in possession of both the Bitcoin and the car while the other Already could end up with neither. This is why immutability and final settlement is critical to Bitcoins function. Remember that Bitcoin has no knowledge of the outside world. All Bitcoin knows how to do is issue invalidate currency whether a Bitcoin is a Bitcoin Bitcoin is not capable of enforcing anything that exists outside the network nor is any blockchain. It is an entirely self-contained system and the Bitcoin Network can only ever validate one side of a two-sided value transfer. If Bitcoin transfers could not reliably be considered final it would be functionally impossible to ever trade anything of value in return for Bitcoin. This is why the immutability of Bitcoins blockchain is inextricably linked to the value of Bitcoin as a currency final settlement in Bitcoin is possible but only because it's Ledger is reliably immutable and it's Ledger is only reliably immutable because its currency C is valuable the more valuable Bitcoin becomes the more security it can afford the greater the security the more reliable and trusted The Ledger. Ultimately immutability is an emergent property but it is dependent on other emergent Network properties as Bitcoin becomes more decentralized. It becomes increasingly difficult to alter the Network's consensus rules and increasingly difficult to invalidate or prevent otherwise valid transactions often referred to as censorship resistance. As Bitcoin proves to be increasingly censorship resistant confidence in the network grows, which fuels adoption which further decentralizes the network including its mining function in essence Bitcoin becomes more decentralized and more censorship resistant as it grows, which reinforces the immutability of its blockchain. It becomes increasingly difficult to change the history of the blockchain because each participant gradually represents a Older and smaller share of the network regardless of how concentrated ownership of the network and Mining may be at any point in time both decentralised over time so long as value increases which causes Bitcoin become more and more the immutable. Bitcoin not blockchain This multi-dimensional incentive structure is complicated but it is critical to understanding how Bitcoin works and why Bitcoin and it's blockchain are dependent on each other. Why each is a tool that relies on the other without one the other is effectively meaningless and this symbiotic relationship only works for money Bitcoin as an economic good is only valuable as a form of money because it has no other utility. This is true of any asset native to a blockchain. The only value Bitcoin can ultimately provide is through present or future exchange and the network is only capable of a single aggregate function validating whether a Bitcoin is a Bitcoin and recording ownership. The Bitcoin network is a closed loop and an entirely independent system. Its only connection to the physical world is through its security and clearing function the blockchain maintains a record of ownership in the currency is used to pay for the security of those records. It is through the function of its currency that the network can afford a level of security to ensure immutability of the blockchain which allows Network participants to more easily and consistently reach Senses without the need for trust in any third parties, the cumulative effect is a decentralized and trustless monetary system with a fixed Supply that is global in reach and accessible on a permissionless basis. every other fiat currency commodity money or cryptocurrency is competing for the exact same use case as Bitcoin whether it is understood or not and monetary systems tend to a single medium because their utility is liquidity rather than consumption or production when evaluating monetary networks, it would be irrational to store value in a smaller less liquid and less secure network if a larger more Liquid and more secure network existed as an attainable option Bitcoin is valuable not because of a particular feature but instead because it achieved finite digital scarcity. This is the backbone of why Bitcoin is secure as a monetary Network and it is a property that is dependent on many other emergent properties. A blockchain on the other hand is simply an invention native to bitcoin that enables the removal of trusted third parties. It serves no other purpose. It is only valuable in Bitcoin as a piece of a larger puzzle and it would be useless if not functioning in concert with the currency the Integrity of Bitcoin scarcity and the immutability of its blockchain are ultimately dependent on the value of the currency itself confidence in the aggregate function Drive. Incremental adoption in liquidity which reinforces and strengthens the value of the Bitcoin Network as a whole as individuals opt into Bitcoin. They are at the same time opting out of inferior monetary networks. This is fundamentally why emergent properties in Bitcoin are next to impossible to replicate and why its monetary properties become stronger over time and with greater scale while also at the directive expense of inferior monetary Networks Quote, I don't believe we shall ever have a good money again before we take the thing out of the hands of government. That is we can't take them violently out of the hands of government. All we can do is buy some Sly roundabout way introduce something that they can't stop end quote fa Hayek. Ultimately, a blockchain is only useful in the application of money because it is dependent on a native currency for security Bitcoin represents the most secure blockchain by orders of magnitude because all other block chains are competing for the same fundamental use case of money and because Bitcoins Network effects only continue to increase its security and liquidity advantage over the field. No other digital currency can compete with Bitcoin. liquidity begets liquidity and monetary systems tend to one medium as a derivative function Bitcoin security and liquidity obsoleted any other cryptocurrencies before they left the proverbial Gates find me a cryptocurrency that comes close to bitcoin relative to security liquidity or The credibility of its monetary properties and I will find you a unicorn The real competition for Bitcoin has and Will Remain the Legacy monetary networks, principally the dollar euro Yen and gold. Think about Bitcoin relative to these Legacy monetary assets as part of your education Bitcoin does not exist in a vacuum. It represents a choice relative to other forms of money evaluate it based on the relative strength of its monetary properties. And once a baseline is established between Bitcoin in the Legacy systems. This will then provide a strong Foundation to more easily evaluate any other blockchain related? Act To learn more I suggest reading the Bitcoin standard by safety namas inventing Bitcoin by Yang pritzker and mastering Bitcoin by Andreas Antonopoulos. Probably in that order. All right, and that will conclude Bitcoin not Block Chain of the gradually then suddenly series by Parker Lewis. And of course available on the Unchained - Capital.com blog this again. I've really been loving this series and this is a great way to illustrate just one of the key points is that you can't use if there's any take away from this article is that you can't use a block. Chained to prove or what's the what's the term you can't secure without a third-party information that is not inherent to the blockchain. The idea is that the data that it can secure has always existed within the rules of the blockchain has always existed within the rules of the network. Therefore you can test it all the way back to when the information was created. But if the if the information itself if the transaction itself is out its external to the network if it's application is not secured by the rules like if it's if it's Relative to whether or not a house exists or whether or not a medical record is accurate. There has to be some other third party making that decision putting it on the blockchain doesn't solve anything because human input is the problem. That's the thing about the immutability of the Bitcoin blockchain is that the origin of all of this stuff? There's never human input into a coinbase transaction or the subsidy or the creation of new Bitcoin or any of the seems there's no subjective anything. It is all within the software of the system. So if you have this distributed payoff mechanism to minors and this elaborate this this easily provable enormous cost to actually going back and editing making changes to that blockchain. Immutability emerges as a property of the enormous cost and a result of the widespread vast Network that is validating whether or not the work is real or not. But it again something I've used so many times in the past on this show is that it's an artificial environment. It is entirely set up within the rules of the software. So if you're not running the Software you are not securing anything. You don't know you're just trusting the other people who are running the software. That's the key value in running a full node. And it's why the monetary properties are essentially just gone. They just don't exist. If you can't validate whether or not it's accurate back to the creation back to the inherent beginnings of every single token every single Bitcoin. In this network, if you can't validate its history, you're not checking whether or not a Bitcoin is a Bitcoin which is the one job that this network does perfectly and it does that with a lot of trade-offs and it's you can't just take that element out of it and think you're left with anything. It's genuinely like a puzzle piece like a puzzle this got 10 pieces and then you take one piece and like in your like look how cool my picture is it's like well, no, you've got one piece of something that's meaningless without all the other pieces. You can't do anything with it's not a puzzle. If you've just got one piece and the puzzle. Is it it without even one if any piece of it is missing. It's no longer the picture. It's no longer the puzzle and it no longer has these is property of immutability and decentralisation he talks about this a lot in Bitcoin can't be copied and I really went into it in the commentary as well is that this is a maturation process these properties emerge over time and the analogy I use that I really like is that you have a set of instructions which can create emergent security emergent immutability and emergent decentralisation, but by themselves mean I'm nothing without the growth and maturity of a network based on them. It's just like having a full copy of the DNA of something that could grow into a human being and a full grown man that can accomplish some sort of productive tasks that you're trying to get this person to do or you have a full-grown person to do a task that you were trying to get them to do. But just because you have the DNA doesn't mean you can perform the You have to there's this huge process of you know maturation and growing in the womb and then surviving as a child and like there's this huge long process with all these risks and all these challenges and years and years of proving that survival is continuous and able to happen in just like that these systems have that same maturation process or a very similar maturation process. And only after years and years of being widespread of being decentralized increasingly and increasing in value and having that feedback loop of its value and its security basically feeding on itself without any of these things. It doesn't provide any of the supposed Properties or any of the immutability or security that like the blockchain itself is just a part of DNA and without the entire maturation process. There's the blockchain is useless. It doesn't mean anything and it's not a real world cost like I can run a blockchain on my computer and it doesn't matter how much work I do. I could perform I could have it set to a difficulty that's multiples of the difficulty of the Bitcoin network, but it still doesn't make it immutable because I've got no network that cares. I've got no network that's checking that it's valid and seeing that. As secure because I'm the only one on the network. It's as centralized as it can be which means that I can essentially Define what the difficulty rules are and I can easily rehash anything under a completely different set of rules. If I wanted there's there's no there's no participation in the security model which means there's no security because the security model is dependent upon the participation and investment of other parties, and I love that he talks about I brings up that. I'm any degree of centralization at any given point in time is largely irrelevant because it is a trend. It's an ever-changing environment and ever-changing Market that is entirely permissionless, which means anybody can join or leave. So any party that has some degree of control only has it temporarily and the trend is what's important as long as the trend is in is always in one step slightly more decentralized. Eyes over time. Well, then you've got something that can be sustained indefinitely. But if your trend is one step more centralized it is inevitably going to be a centralized mess where you have to trust some other institution and it's just a matter of time. Is that are there are you taking 20 steps towards centralization every couple of days. Are you taking half a step towards centralization though just means that. Okay. Well you might have some degree of security for Ten years that is slowly waned and slowly eaten Away by your negative Trend to your Trend in the wrong direction or you know, is it going to take two years before you just have something this run by one institution that nobody is checking the full history of the chain. Nobody cares what the consensus rules are were hard for King left and right like all of those things 100% undermine the security and the monetary properties and when they Dresses so well in this piece is that you cannot it is a digital token. The only thing it can do is be used in exchange no matter what you do with it. No matter whether you call it a soup a utility token or you call it a I don't know whatever the hell you're smart contract platform. It doesn't matter what you call it it the only thing the digital token can do is behave as money whether it's in your network or somebody else's which means that it is competing with Bitcoin as money and the one value the one Critical element of monetary Goods is it is the most liquid good in the economic Network in the economic system liquidity is what makes something a brilliant or highly useful monetary instrument. That's why I like a bump too much people like misunderstand the whole regression theorem and like looking back in history about like all the other things that have been money in the past cattle salt we Eat all of these things, but the reason they were money wasn't because those things are good as money. It's because they inherently became a cuz they had so much utility elsewhere. They inherently became the most liquid good and therefore were used as money used as a medium of exchange and unit of account at some point in time, but it was a Content. It was a consequence of liquidity. It's actually got kind of weak man. Three properties outside of that for something like a wheat in particular salt is probably the best in those couple of examples because obviously cattle die cattle are more valuable at one point during their life than they are at another Point, etc. Etc. And wheat obviously goes bad all of it rots. And that's one of those things that made. commodity money's like like precious metal money so such a profound Innovation over that as they became more liquid in the market and they became adopted in a far more widespread manner is that they never rot like a gold coin from a thousand years ago 2000 years ago is still worth a gold coin like it doesn't it doesn't corrode nothing happens to it and you can always just smelt it down and Make it into a new coin. And you know gold is gold one ounce of gold is always one ounce of gold doesn't matter where you find it or what country it's from or you know, how much how much it was buried versus sitting on the Sun but none of that is true for wheat and none of that is true for cap cattle like like a cow. No one Cal is equal to another Cal exactly. So does this this end up getting misinterpreted at least like by by my estimation and by the understanding that I've seen that has grown quite a bit in the Bitcoin markets and like the Bitcoin education side of things to understand the Austrian Theory and understand how the regression theorem really applies. Is that the reason the retrogression theorem was It's basically showing how something can become money not showing how all monies become so it's showing why us some other vast utility that made it the most liquid good in some economic circles or economic Network then allowed something to become money because the prime the number one element of a good money is that it is the most secure as a highly liquid. Fluid reliable store value as a reliable means of holding and then exchanging again. It is the liquidity of those goods that made them useful for money at those times. But that does that has no implication or a prescriptive Reliance on the fact that that liquidity must happen for some other utility money is a utility in and of itself and a far more secure doesn't rot doesn't degrade can be easily it like unbelievably portable. You can store it in your mind is true pure information. have elaborate instructions written onto it can have contractual large contractual agreements can be used as building blocks to external higher layers of a network including additional payment networks and entire new systems on top of it can be extended like a tree to as many branches and leaves as you possibly want it just Bitcoin is one of the most fascinating and like capable monetary systems that's ever existed and it's absolutely 100% trustless. It is natural and independent in the same way that gold is just in the digital space and that that is not that is not a problem the problem of payments and vast number of transactions is just a simple it's an incremental. Problem on top of a network that maintains and actually achieves the security and the scarcity of a of a reliable incontestable monetary policy. And and that's what Bitcoin provides a trustless independent monetary policy that no one can actually contest it is the law of Bitcoin and it is because one Bitcoin always equals one Bitcoin and because of that elaborate operation and incentive mechanism that emerges and feeds back on itself creates the immutability creates the security and a creates the district the global distribution that keeps this thing the most secure money and ownership Ledger that has ever existed that is 100% final and has no borders. No jurisdictions. Nothing. It is unbelievably profound and I think this piece does a Good job that this piece is actually more of a almost. I would say Thomas an introductory piece really. Maybe the wording is a little bit hard for the supernoobs in the space, but it does a really great job of explaining all the inter-workings of the currency Bitcoin and the network and then the individual participants in that Network who's checking and balancing whether or not information is accurate or Being used to cheat or edit and why there is a real cost to the network. It just just so many of the critical working parts of which blockchain is only one of them and just like a piece of a puzzle. You can't take one piece out and think that you've still got the picture that you originally were trying to get and similar to the whole DNA thing just because you've got the DNA Me of a human doesn't mean you've got someone that can chop down a tree for you. You've just got the instructions of something the if you put an enormous amount of work into it if you let it mature if you let it grow and test it in a living breathing real world environment for years for decades, then maybe it could actually produce or provide that service that you want. But in the meantime, it has to compete with Bitcoin that is already D unlike unquestionably the most liquid already unquestionably the most secure on by orders of magnitude of any other and there is none that could even come close in the Integrity of its monetary policy despite numerous people and years of attempting to change it. No one has been successful in doing so that is proof of its fundamental value and Yeah, this was just a great piece to illustrate all of that. And so we'll close this here. This was this was me not doing commentary how well did that work out? Right? So a thank-you to Parker Lewis and unchain Capital per usual for having such great stuff to read on the show. We're going to be doing this whole series if it wasn't obvious and so get excited for more we talked about whether or not it's a pyramid scheme next. I believe that's the the next one in line and you know, I'll actually Post in the show notes the entire series we have done up until this point of the gradually and suddenly series. I think this isn't like part 6, maybe maybe even part 7, I don't even remember I can't keep up with it. And and so if you want to go back and listen to those other ones, if you have not that'll be in the show notes. That'll be on the crypto economy.com or anchor FM / the crypto economy. Thank you all so much for listening. Don't forget to subscribe to the show don't To follow Parker Lewis and Unchained capital on Twitter those links will be available as well. And in the Twitter post so much more to come I got to get back to it. I got other things to record now. So thank you so much for listening. I love you all. Don't forget to share this out with everybody, you know in the Bitcoin and crypto Kana me space and I will catch you next time until then take it easy guys.
Next up in the Gradually, Then Suddenly series by Parker Lewis and available on the incredible blog over at unchained-capital.com is "Bitcoin, Not Blockchain." There is nothing about blockchain that makes it inherently immutable. Immutability emerges over time as the consequence of economic incentives and a native monetary unit that secures those incentives. It is hard won in the battle of monetary competition, something that cannot be copied or challenged with frivolous features, or arbitrary "utility." Parker breaks it all down in his great article, "Bitcoin, Not Blockchain." Don't forget to check out the Unchained Capital Blog for tons of great written works by Parker and others: https://www.unchained-capital.com/blog/bitcoin-not-blockchain/  Check out all the other great pieces we've covered recently in the Gradually, Then Suddenly series: Gradually, then Suddenly [the series so far] 1 - https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_290---Gradually--Then-Suddenly-Parker-Lewis-e55nu4 2 - https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_291---Bitcoin-Cant-Be-Copied-Parker-Lewis-e58g11 3 - https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_302---Bitcoin-is-Not-Too-Volatile-Parker-Lewis-e6diss 4 - https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_306---Bitcoin-Does-Not-Waste-Energy-Parker-Lewis-e7ojph 5 - https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_321---Bitcoin-is-Not-Too-Slow-Parker-Lewis-e93sbj 6 - https://anchor.fm/thecryptoconomy/episodes/CryptoQuikRead_324---Bitcoin-Fixes-This-Parker-Lewis-e97cia  If you want to support the show and join the Cryptoconomy Telegram crew, become a patron below! 