ECON105: Hard Questions on Hard Money

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  • Time: 12 hours
  • Free Certificate

  Welcome to ECON105: Hard Questions on Hard Money. Applying the framework of Dr. Ammous' book "The Bitcoin Standard", this course takes the analytical framework of The Bitcoin Standard and applies it to related concepts such as the economics of fiat food.

  In the first unit of this course we focus on analyzing banking in a Bitcoin economy, in particular, whether a fractional reserve banking system can be developed on top of Bitcoin or not. Is fractional reserve banking necessary for a growing economy? Can fractional reserve banking survive in a free market? In unit 1 you will explore the answers to these questions. This course examines how Bitcoin’s monetary properties behave in various types of financial crises.

  In units 2 and 3 we discuss environments where Bitcoin can continue to grow as it is further monetized. If Bitcoin were to indeed become a global money, how would that come to be? These units argue that Bitcoin is unlikely to cause hyperinflationary collapse in credit money because its continuous growth would likely reduce the creation of credit. We will consider the possibility that Bitcoin’s growth would be a more orderly technological upgrade that allows for the demonetization of debt and widescale reduction of indebtedness.

  In units 4 and 5, we explore Bitcoin mining, its role in securing Bitcoin, and its impact on energy markets. Mining difficulty adjusts based on network hash power, and miners can source electricity globally, which encourages the development of off-grid energy and likely leads to cheaper energy production. These units explain how difficulty adjustments price out miners with high electricity costs, making Bitcoin mining profitable at lower electricity costs.

  In unit 6, we study the link between fiat money and food quality. We explore how the shift to centrally-planned money in the twentieth century impacted food standards and how interest rate controls incentivize industrial agriculture for short-term gains but deplete soil over time. Government policies have also driven mass production of industrial foods to combat price increases, often at the cost of nutrient content and safety.

  In the course’s seventh unit, we explore Bitcoin’s chances for survival. We examine scenarios that could cause its destruction, such as software bugs, government bans, or insufficient fee-generated security. Unit 7 argues that Bitcoin is difficult to destroy without undermining the economic incentives for using it, discussing two scenarios: improved government monetary policies or a hyperinflationary collapse of national currencies before Bitcoin achieves significant liquidity.

  In units 8 and 9, we examine how Bitcoin might aid poorer countries. Beyond small payments, Bitcoin’s real impact for the developing world lies in providing a non-political, technical solution for building a global financial system. Persistent balance of payment issues and hyperinflation in many developing countries may be tied to relying on national currencies as global reserves.

  Custody and credit allocation are essential services in most financial systems and will likely remain so in a Bitcoin economy. The demand for Bitcoin as hard money may exceed its on-chain transaction capacity, making second-layer solutions necessary. Unit 10, the course's final unit, expands on layered scaling, focusing on the economics of second layers like the Lightning Network and factors driving its growth..

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• Unit 1: Bitcoin, Central Banking and Fraction Reserve Banking

  In the first unit we explore the intricate relationship between Bitcoin, central banking, and the system of fractional reserve banking. Through in-depth analysis and critical examination, students will gain a comprehensive understanding of the potential implications of Bitcoin's rise and its impact on central banking and fractional reserve banking systems. The central bank plays the role of the lender of last resort in a system of fractional reserve banking. In a world where Bitcoin could replace central banking, would fractional reserve banking survive? We also refute the idea that fractional reserve banking is necessary for a growing economy. We analyze if banking on Bitcoin could possibly open the door for manipulating the Bitcoin price.

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• Unit 2: Bitcoin Monetization Scenarios

  This unit examines various economic theories regarding Bitcoin's potential role in today's monetary systems. It explores different scenarios for Bitcoin adoption, including theories about what conditions might drive greater adoption of Bitcoin. The unit also covers the evolution of monetary concepts, theories of asset behavior during financial crises, how Exter's pyramid might apply to modern financial systems, and a discussion of liquidity preferences in various economic conditions. It focuses on Bitcoin's potential impact on financial markets and monetary policy, considering opportunities and challenges within established economic frameworks.

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• Unit 3: Bitcoin Monetization Scenarios Part 2

  In unit 3, we continue our exploration of Bitcoin monetization, but with a specific focus on the repercussions of financial crises. In this unit, we delve into the concept of Exter's pyramid and its application to Bitcoin. By examining the behavior of individuals during times of financial turmoil, we analyze how capital flows into the most liquid assets, such as cash and gold. We then extend this framework to assess the implications for Bitcoin as a potential safe haven asset.

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• Unit 4: Bitcoin Mining: Energy and Security

  Unit 4 discusses the relationship between Bitcoin mining and energy. It presents a perspective on the Bitcoin network's energy consumption, a theory on the connection between energy use and network security, and hypotheses about Bitcoin mining's impact on global energy markets. The unit explores a perspective on how Bitcoin mining might interact with energy systems, including ideas about energy transfer and demand for isolated energy sources. Key topics include Bitcoin mining processes, energy consumption in blockchain networks, global energy market dynamics, and theories on energy utilization.

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• Unit 5: Bitcoin Mining: Energy and Security Part 2

  In unit 5, we continue on the topic of Bitcoin mining and energy consumption. We explore the global liquid energy market by making the case for how Bitcoin can be used to transfer energy cheaply across the world. Considering the potential profit that come from mining Bitcoin, it could massively increase demand for cheap and isolated energy.

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• Unit 6: Fiat Money and Fiat Food When: Ludwig von Mises Met Weston Price

  Unit 6 explores the concept of a correlation between fiat money and the consumption of unhealthy foods, referred to as "fiat food." The objective is to comprehend how the introduction of fiat money has influenced the dietary preferences of the majority.
  

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• Unit 7: How To Really Kill Bitcoin

  Unit 7 discusses the potential challenges to greater Bitcoin adoption. It discusses how, due to its decentralized network structure and usage of open-source software, it might be resilient to perceived external threats. It argues that these factors contribute to the overall robustness of the Bitcoin system.

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• Unit 8: Bitcoin and the Developing World

  In Unit 8, we delve into the origins of fiat money by examining significant historical events, including World War 2 and the Bretton Woods agreement. Through this exploration, we examine how these events have shaped the global economic structure. We thoroughly analyze topics such as Monetary nationalism and the balance of payments, focusing on their impact on developing countries.

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• Unit 9: Bitcoin and the Developing World Part 2

  Unit 9 focuses on examining the role of international financial institutions, such as The International Monetary Fund and The World Bank, in implementing centralized planning strategies.

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• Unit 10: The Bitcoin Standard as a Scaling Solution

  Unit 10 focuses on the challenge of scaling the Bitcoin network while maintaining its fundamental properties of decentralization and self-custody. It discusses the ongoing debate on finding solutions to scale Bitcoin effectively without compromising these essential characteristics. The need to address scalability concerns has become increasingly significant as Bitcoin attempts to gain more adoption.

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• Certificate Final Exam

  Take this exam if you want to earn a free Course Completion Certificate.

  To receive a free Course Completion Certificate, you will need to earn a grade of 70% or higher on this final exam. Your grade for the exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again as many times as you want, with a 7-day waiting period between each attempt. Once you pass this final exam, you will be awarded a free Course Completion Certificate.

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