Course Syllabus

[p]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.[/p] [p]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 the fourth and fifth units, we look at the topic of Bitcoin mining, how it secures Bitcoin, and how it affects energy markets. In Bitcoin mining an adjustment of difficulty depends on the number of miners in a network and their combined hash power. Since Bitcoin miners can purchase electricity from anywhere in the world, this leads to Bitcoin incentivizing the development of stranded & off-grid energy sources, likely leading to cheaper & more abundant energy production. Units 4 and 5 explain how Bitcoin's difficulty adjustment prices out miners with high electricity costs, making mining Bitcoin reliably profitable at very low costs of electricity.[/p] [p]This course outlines several economic mechanisms through which a monetary standard could impact the economic decisions of food producers and consumers. In unit 6 we study the relationship between fiat money and fiat food. We examine how the move to an easy and centrally-planned money in the twentieth century affected the quality of food. Unit 6 also investigates how central planning of interest rates leads to a higher incentive for extensive industrial agriculture that generates short-term profits but depletes the soil in the long term. Government policies have also promoted the mass production of industrial foods which help fight price rises, but compromise food nutrient content and safety. In the course's seventh unit, we take a look at Bitcoin's chances for survival. We first examine some imagined scenarios that could cause Bitcoin's destruction such as software bugs, government bans, and the failure of fees to generate enough security.[/p] [p]Unit 7 argues that it is difficult to destroy Bitcoin because to successfully undermine it one needs to undermine the economic incentive that people have for using it, and two such scenarios are discussed: world governments improving their monetary & financial policies; or a hyperinflationary collapse of national currencies before Bitcoin has acquired significant liquidity.[/p] [p]In units 8 and 9 we turn our attention to the question of how Bitcoin can help poor countries. Rather than a solution to small individual payments, Bitcoin's real powerful contribution for the developing world lies in it offering a technical non-political solution to the problem of building a global monetary and financial system. The persistent occurrence of balance of payment problems and hyperinflations in many developing countries may be closely linked to the use of sovereign national currencies as global reserve assets. Additionally, the political incentives created by lenient sovereign lending practices of financial institutions, which face minimal accountability and funding constraints, further contribute to these issues.[/p] [p]Custody and credit allocation are in-demand market services in many monetary and financial system, and there is no reason to assume they will disappear in a Bitcoin economy. Additionally, the demand for Bitcoin as a hard money is likely to far exceed its capacity for on-chain transactions, necessitating the development of second layer solutions. Unit 10 - the final unit of the course - expands on the concept of layered scaling which was briefly discussed in The Bitcoin Standard. The economics of second layers are also discussed, with specific focus on the Lightning Network and the factors shaping its growth and evolution.[/p]

Unit 1: Bitcoin and the Banking System. Unit 2: Bitcoin Monetization Scenarios. Unit 3: Bitcoin Monetization Scenarios Part 2. Unit 4: Bitcoin Mining: Energy and Security. Unit 5: Bitcoin Mining: Energy and Security Part 2. Unit 6: Fiat Money and Fiat Food When: Ludwig von Mises Met Weston Price. Unit 7: Challenges to Bitcoin Adoption. Unit 8: Bitcoin and International Finance. Unit 9: Bitcoin and the Developing World. Unit 10: The Bitcoin Standard as a Scaling Solution

[1] Explain fractional reserve banking; [2] Evaluate Bitcoin's role in shaping a potential banking system; [3] Analyze situations that could lead to the monetization of Bitcoin and the achievement of the Bitcoin standard; [4] Explain how energy consumption relates to the security of the Bitcoin network; [5] Evaluate the link between fiat money and the consumption of fiat food; [6] Analyze potential vulnerabilities in the Bitcoin network and proposed countermeasures; [7] Describe the changes in the global monetary system after the Second World War and the ending of the Bretton Woods Agreement in 1971; [8] Explain how Bitcoin has attempted to scale, such as the creation of the Lightning network.