Bitcoin (fixes)? this

A lot of social media preachers have been pushing the idea that “Bitcoin fixes this” for almost every money-related problem. Inflation? Bitcoin fixes this. Bank failures? Bitcoin fixes this. Government debt, inequality, geopolitical conflicts? Apparently, Bitcoin fixes all of those too.

And while there are real problems with today’s monetary system, and Bitcoin might offer solutions to some of them, I think we are missing the bigger picture.

What is this bigger picture?

Let’s start with a simple question: what do we actually need money for?

Money helps us exchange value. It gives us a way to price goods and services, store purchasing power, and transfer it to someone else. For something to work well as money, it helps if it is durable, portable, divisible and widely accepted. It also helps if its purchasing power is reasonably predictable, especially when people use it to pay their expenses or take on debt.

Bitcoin has some interesting properties in this regard. It is divisible, portable, and its issuance follows a predictable schedule. It can also be held and transferred without relying on a bank to maintain your balance.

These are meaningful properties. But do they automatically make Bitcoin the best foundation for the entire global monetary system?

I don’t think the answer is that simple.

The bigger picture: humanity is divided

Humanity is not one big group of people with the same culture, needs, interests and values. We are divided into countries, communities, political groups and all sorts of other groups, each with its own priorities.

That division does not mean we cannot use the same money. We already trade with people and countries whose views differ from ours. A shared currency or monetary network can make that trade easier.

But sharing a currency does not make our differences disappear either. Countries will still compete, people will still disagree, and those with economic power will still try to protect their interests.

So when someone says Bitcoin will create a fair and peaceful monetary system for everyone, I think we should ask a few more questions.

Who owns the Bitcoin? Who has the resources to acquire more of it? Who controls the businesses, financial institutions and infrastructure built around it? And what happens if a relatively small group owns a significant share before most of humanity starts using it?

This does not mean a fixed supply must lead to a totalitarian system or make everyone else a slave. That would be too strong a conclusion. But it does mean that changing the properties of money does not automatically eliminate inequality or the concentration of power.

History gives us reasons to take those questions seriously. After World War II, the United States held a large share of the world’s official gold reserves, and the dollar became central to the international monetary system. That system was shaped by economic and geopolitical power, as well as by the practical advantages of using a widely accepted currency.

Bitcoin would be different from that system in important ways. There is no single country issuing it, for example. But if it became the foundation of the global economy, we would still need to understand how ownership, institutions and political power interact around it.

Bitcoin can change the rules of money. It cannot change human nature by itself.

What happens when the economy grows?

Now let’s look at another part of the bigger picture: people are constantly creating new goods and services.

Someone catches fish. Someone builds a house. Someone writes software. Someone discovers a better way to produce medicine. Through work, knowledge and resources, we create things that other people find useful.

And over time, we can produce more of those things. We can also produce them more efficiently.

So what happens if the amount of money used to price all of this is fixed?

Let’s simplify it. Imagine an economy with 100 units of money and 100 apples. Then, over time, people find a way to produce 200 apples while the amount of money stays the same.

Under simplified conditions, the price of an apple could fall. Each unit of money would buy more apples than before.

Is that automatically a bad thing? No. A lower price does not mean the apple has lost its usefulness. If people can buy more with the money they have, that can be a good thing.

And this is an important point: a fixed supply of Bitcoin does not make it impossible to price a growing amount of goods and services. Bitcoin is divisible, and prices can adjust.

But the question is what happens while those prices are adjusting, especially when people have debts, wages and other obligations to pay.

Let’s say you borrow 1 BTC when you earn 0.1 BTC per month. Over time, Bitcoin’s purchasing power rises, and the price of the product you sell falls in Bitcoin terms. You now earn 0.05 BTC per month, but your debt is still 1 BTC.

Even though you might be producing the same amount as before, repaying the debt has become much harder relative to your income.

This will not happen to every borrower, and falling prices do not always lead to a crisis. But it illustrates a real question: how would an economy manage debts and investment if the money those debts are denominated in keeps appreciating, especially in an unpredictable way?

Bitcoin supporters may have answers to this. Perhaps loan terms would adjust, people would borrow more carefully, or businesses would rely more on equity. Those are worth discussing. But the discussion needs to go beyond “the supply is fixed, therefore everything works.”

What about credit?

In the last century, humanity has made incredible technological and medical advances. Our lives have changed through science, education, entrepreneurship, investment and countless other forms of work.

One important part of this picture is credit.

Credit allows people and businesses to access resources today and repay them over time. It can help someone buy a home, a business purchase equipment, or a company invest in a project before that project generates revenue.

Of course, credit is not some magical solution. Too much debt, bad lending and excessive risk can cause enormous pain. We have seen financial crises, bank failures and people losing their homes and savings.

But the fact that credit can be misused does not mean it has no purpose. The real question is how to make it useful without allowing the system around it to become dangerously fragile.

So, would credit be possible in a Bitcoin-based system?

Yes. If I own 1 BTC, I can lend it to you and you can agree to repay it with interest. No new Bitcoin needs to be created for that loan to happen.

Banks and other institutions could also issue Bitcoin-denominated deposits or claims and make loans against them. But then we need to ask: are those claims fully backed? Can everyone withdraw their Bitcoin at once? What happens if borrowers cannot repay? And who absorbs the losses if an institution fails?

In other words, a fixed supply of Bitcoin does not eliminate credit or the risks that come with it. A financial system built on top of Bitcoin could still have leverage, intermediaries and bank runs.

And if such a system did experience a major crisis, how would it respond? Under today’s monetary system, central banks can create money and provide emergency liquidity, although those powers also come with risks and can be abused. Under a Bitcoin standard, there would be no central issuer able to create additional Bitcoin to do the same.

That might be exactly what some Bitcoin supporters want. But it is still a tradeoff, and we should be clear about it.

The dollar and the question of power

You might say: “The US dollar is already used around the world. Why couldn’t Bitcoin replace it?”

Maybe it could play a larger role in international trade or savings. But replacing the dollar is about more than building a money transfer network.

The dollar is widely used because the United States has a large economy, deep financial markets and significant geopolitical influence. It is also used because other people already use it: businesses, banks and governments have built their systems around it.

Not everyone is legally obliged to use dollars. But in some parts of the global financial system, the practical costs of avoiding them can be high. And the United States can use its influence over that system to impose sanctions and exert pressure.

Bitcoin might offer an alternative in some situations, especially for people who cannot easily access existing financial services. But even if Bitcoin became widely used, it would not follow that all countries and individuals would have equal influence over the system built around it.

Again, the technology matters. So do the people and institutions using it.

Does Bitcoin fix this?

I think the better way to approach Bitcoin is to ask specific questions, instead of treating it as either the solution to everything or a solution to nothing.

For example:

1. Power and ownership: If Bitcoin became a major global currency, how would its ownership be distributed, and what power would large holders and financial institutions have?
2. Prices and debt: How would households and businesses manage loans if Bitcoin’s purchasing power rose substantially or unpredictably?
3. Credit and crises: What would a Bitcoin-based credit system look like, and how would it deal with bank runs, defaults and financial shocks?
4. Adoption: Why would people, businesses and governments choose Bitcoin over the currencies and financial systems they already use? In which situations would it offer a clear advantage?
5. Tradeoffs: Which problems could Bitcoin solve, and which new problems might emerge as more of the economy depends on it?

These are not questions meant to dismiss Bitcoin. They are questions anyone proposing a global Bitcoin standard should be willing to explore.

And before accepting the ideas promoted by the Saylors of this world, or anyone else, for that matter, we should try to understand the arguments, study history, listen to different perspectives and form our own views.

As a final thought, this post is not saying that Bitcoin solves nothing. I personally think it solves major problems usually seen during periods or deep crisis of various debt cycle lows, and I have stong belief that it will have its own similar cycles of very strong up and strong down momentum. I just hope Saylor doesn't somehow end up owning the whole supply...

But “Bitcoin fixes this” is a slogan. Whether it fixes a specific problem, and what it might change in the process, is a much more interesting question.

Thanks for reading!