There is immense value in the broader crypto ecosystem of decentralised financial technologies but the bright shiny lights of the fastest appreciating token also pose a risk.

Stablecoins are an important and revealing innovation. With deep liquidity, lightning-fast settlement, and dramatic user growth these crypto USDs pose important questions for regulators and traditional financial markets.

The environment is precious, resources are scarce, and we are compelled to sustain this beautiful planet for future generations. Bitcoin’s detractors single out bitcoin mining as regressive and environmentally damaging, which catches the eyes of the increasingly powerful ESG and green movements. But this approach reveals a gross misunderstanding of the technology.

Skeptics often argue that governments will ban Bitcoin when it becomes too important and threatens national sovereignty. At least these critics understand Bitcoin’s importance and the power that state currency monopolies exert over us. What they fail to understand

Today, bitcoin is idiosyncratic to traditional financial markets. Unlike bonds, equity and property, bitcoin’s returns are uncorrelated with economic growth, inflation, or risk premia.

Tesla has announced that it purchased $1.5bn worth of bitcoin in Q4 2020. Bitcoin adoption by a globally renown company is exciting, and it’ll probably trigger the next phase in this bitcoin bull-market, but I’ve got mixed emotions.

This is a very short note that gets to the essence of the what and why of bitcoin.

Bitcoin’s detractors often refer to it as a speculative asset. This is partially true – an investment in bitcoin involves speculation on an inherently uncertain future. But the connotation implied by ‘speculation’ is often unhelpful because it associates bitcoin with fly-by-nights who are merely trying to make a quick buck.

Whilst bitcoin demand is variable, bitcoin supply is perfectly known and pre-determined. There will only be 21 million. The architectural design is very unlikely to change. It’s incredible how known supply meets variable demand and results in adoption waves, which centre around the halving*.

TLDR: The foundations of social trust are being tested. Our unsound monetary system with its negative consequences is a driver of this trust deficit. Communities that adopt sound money assets take a proactive step towards trustworthy relationships and away from the insidious consequences of unsound money.

Have you ever wondered why it’s challenging to buy a house and save for your family’s future? Debt and its unequal impact on wealth is the focus of this edition of the Sound Money Money. TLDR: Debt is driving wealth inequality.