The Bitcoin Standard

Release date: December 16, 2020
Duration: 51min
Guest(s): Saifedean Ammous
Saifedean Ammous

Let’s talk Bitcoin

Robert Kiyosaki has an exciting conversation about Bitcoin with Saifedean Ammous, author of The Bitcoin Standard: The Decentralized Alternatives to Central Banking. The book is a groundbreaking study of the economics of Bitcoin.

Robert is clear; he has Bitcoin, but his trust is in Gold and Silver, something he began when he was as young as sixteen. “I don’t trust the banks, just pure and simple…”

I don’t know if you follow American Politics…

…but Joe Biden has decided on Janet Yellen, former Chair of the Federal Reserve, to hold the office of Secretary of Treasury. In Kiyosaki’s words, “that’s Communism, that’s hardcore communism, that’s centralized government.”

In this way, Robert feels Biden’s choice validates the value of gold, silver and Bitcoin. Saifedean’s book, and his views on the value of Bitcoin, help to nail down the point of a currency that can function outside of a centralized government.

Saifedean uses Gosbank, the central and singular bank of the now broken up Soviet Union, as a prime example. Gosbank was “the beating heart of the communist…” says Saifedean. He believes the U.S. and other countries are heading in the same direction; towards centralized banking. He doesn’t believe Biden’s presidential victory is what is “necessarily taking us there”, though it may be accelerating the process; a process he insinuates has been in the making for some time.

So, what does Bitcoin have to do with it?

According to Saifedean, Bitcoin is the ONLY alternative to the process of centralized banking.

“…Whether you like Bitcoin or not, you have to admit that it is the only working alternative that exists today for (sic) central banking…” —Saifedean

Why? Because centralized banking has a monopoly on providing the currency, and on transferring the currency, internationally. Those two things must be done through central banking, until Bitcoin came along and offered the one and only alternative.

“Wait, wait, wait, hang on…”

Robert finds fault with the term ‘only’ and asks, “so you would dump all the gold and silver and real estate…” Robert is referring to what amounts to an on-going back and forth between ‘bitcoin’ people and ‘gold/silver’ people. What Robert calls a “pissing match”. There’s the idea that bitcoin is the only alternative, the only international currency that can operate outside a central banking process, and the idea that gold and silver could be or IS just as ‘decentralized’ as the digital coin.

Saifedean assures Robert he isn’t ‘dumping’ on gold and silver. But he makes clear that while they (gold and silver) are substitutes for the ‘monetary function’, the are not a substitute for international banking. “There’s no gold banking…You can't use your gold to pay international. You can't ship gold, and there's no gold settlement and clearance system”, he says.

“You think gold and silver is the enemy when it’s communism.”

Robert makes the point that he has age and experience on his side, especially when it comes to the topic of gold and silver. Saifedean breaks it down: “You can’t make a payment (with gold), you can’t buy something online…You can use it yourself. You can store it. You can buy it and sell it. You can gift it.”

In his book, Saifedean tells us he writes multiple chapters all about gold, and that at heart, he still loves investing in it.

The problem with gold…

“The problem with gold is that you can't make an international banking payment system work around gold since 1914, because the Bank of England and the Central Bank of the United States have essentially monopolized that trade, and Bitcoin gets around it.

It's been a century of people trying to build a payment system around gold and failing, and it gets captured by government. And that's really… the point of my book is that Bitcoin improves on gold's monetary policy. But more importantly, Bitcoin improves on gold in the fact that it's much harder for governments to capture it and co-opt it.”

Why do you think Bitcoin is going to the moon?

Saifedean answers with the fact that the software and hardware, and the equipment that can run Bitcoin, is relatively cheap, in the couple hundred dollar range. But why? As Saifedean puts it, “There’s communism coming…you don’t want to explore the other options that are out there?”

Robert discloses that indeed, he does own Bitcoin, but he has more in gold and silver. But Saifedean believes that Bitcoin appreciates more than silver. So owning all of the above, Bitcoin becomes the amplifier to those value of precious metals, in his opinion.

“You're going to get your ass stomped on…”

For Robert, years of experience in gold and silver, specifically the mining he continues to do, makes Saifedean’s belief in the role of Bitcoin versus gold and silver questionable.

Robert tells him, “You sit there with that arrogant young man's cocky attitude. You're going to get your ass stomped on because I've had my ass stomped on because I had the same stupid attitude. I'm just trying to say this. I'm asking this question, which nobody's ever answered me. Nobody has. The reason I like gold and silver, I've started gold mines and silver mines.”

Robert started a goldmine out of Toronto, Canada, on the Toronto Stock Exchange, and the Chinese Government took it from him, leading to his dislike of doing business with the Chinese. But an Argentina silver mine is currently doing very well, and not just for the production, but with sales of stock shares as well.

What Robert really wants to know…

If the equipment is so cheap, why doesn’t everyone just make their own Bitcoin? And really it’s just CODE, right? It’s not a material item. It’s a currency made of tech. This is the question Robert wants an answer to. Saifedean breaks it down:

They can, but it won’t be traded or valued on the Bitcoin Network. It’s not material, it is code and tech but it’s valuable because WE give value to currency. Saifedean digs in deeper:

“If you think about economics, economics is in the minds of people. If you study the Austrian school, value is subjective. We give things value. So we decide that this yellow, shiny metal is very valuable. We decide that the silver shiny metal is a little less valuable, but also quite valuable. And we also can decide that digital tokens that can clear payments and clear messages with payments on a network that has a wide acceptability around the world, that has high level of reliability in the fidelity of its transactions, we can also decide to give that value. There's no difference. It doesn't have to be material. We got a lot of things that are immaterial that have value.”

What’s more interesting is that the Bitcoin Network has grown ‘since day one, almost independently’. It has grown and continued to grow, according to Saifedean, without control, and according to the rules of the protocol. It’s grown without the man who created it; he disappeared.

Okay. But Why can’t I just make my own with my Apple Computer?

You can. But you can’t start it and NOT be in charge of it. “How do you start one that you don’t control?” Saifedean drives the point further. “Bitcoin had a lucky set of circumstances where the guy who made it disappeared, for whatever reason. And then it continued to operate without anybody in charge. And the protocol continued to grow. And all the people who tried to take control of it have failed repeatedly, which suggests that there's a lot of inertia, and a lot of sclerosis (sic) in the network, which means that the main consensus parameters of the network should be around for a while.”

What about the coins? Why can’t I mine for them myself, the way I do gold or silver?

Saifedean tells us that you can, but you’d be wasting your time and energy. The result would be very, very few coins. It’s simply not efficient.

Can we talk about Shitcoins, now?

Surprisingly, the term Shitcoin is now in the Congressional Record. Representative Warren Davidson used the term last year in Congress, Saifedean tells us. The definition of the term, according to Saifedean, is this:

“a shitcoin is a form of money that has somebody at the top of it who can just make more of it at their will.”

There are five or six thousand digital shitcoins now that try to copy Bitcoin code, and in some ways, do the same thing Bitcoin does. The difference, Saifedean makes sure to point out, is that they ALL have people, groups or individuals, controlling the software, controlling the digital ‘currency’ where they can change the supply at any time. This makes them…Shitcoins.

On the flip-side, Robert points out that as Bitcoin’s value went up, the volume of Bitcoin went down. Robert continues, “whereas a US dollar, by your definition, is shitcoin because the value of the dollar comes down as volume goes up. They print more of it.”

Saifedean agrees; that is exactly his point in his book. The first seven chapters point out the most important thing in money is the stock to flow ratio. To clarify, Saifedean says;

“It's the ratio of the existing stockpile, of the existing supply, to the flow, to the new production. And things that have a high stock to flow have always historically been money. And historically, the thing that has had the highest stock to flow is gold. And second place is silver. Bitcoin is different because its stock to flow now is going to overtake gold's stock to flow. It's going to become higher than gold over the next few years.”

Which is exactly why Robert owns Bitcoin.

What about ICO’s, Initial Coin Offerings?

Those are shitcoins too. Any digital coin, including ICO’s, that is not bitcoin, is essentially useless, according to Saifedean. The reason is because all of them, without fail, have someone controlling them. They can change the supply.

With Bitcoin, that is very difficult to do. A concentrated group of big businesses in Bitcoin, along with Bitcoin developers has tried to change just one small parameter of the code behind Bitcoin, and failed. No other digital coin has that, Saifedean says. “Not even the U.S. dollar.” He believes not just the U.S. dollar, but all national currencies are effectively, shitcoins. Because someone can change the supply.

So, you’re saying it’s impossible for someone to duplicate Bitcoins code or write their own?

No, it’s possible, says Saifedean. But it’s useless. Because it won’t get the market value of Bitcoin. A good example, he tells us, is “if the Zimbabwe and Central Bank prints more dollars, that's not going to devalue the US dollars. People can tell the difference. Just because they're both called dollars, that's different.”

If you look at all the other digital coins out there and watch their charts, they flatline against Bitcoin. Their value tends toward zero, until there is zero liquidity.

“I think the U.S. dollar is criminal!”
“What they're doing, the centralized bank, the Fed, and the Treasury. They just keep printing more of it to solve our problems,” Robert asserts. This is one of the reasons Robert likes Bitcoin, along with gold and silver options.

But What if the Feds produce a Centralized Coin, their own digital currency?

Robert questions what happens when/if the government produces a digital coin, one that will be controlled by the Feds. Saifedean explains that to him, it’s more of an advertisement of what is really valuable; Bitcoin. It’s not a competition. If the Feds create a coin, it comes with the knowledge that they can control the supply of the currency.

Saifedean says it’s like this;

“Take our currency where the supply is up to us. We determine it at any point in time. And we can always give anybody as many as we want. And you get no say in the supply, and you can't even know how many there are. And also, we get to figure out all the transactions done by you. And if we don't like your Facebook posts, you don't get to eat for a month.”

If the government produces a digital centralized coin, it won’t be any different than the currency now, he states. It will still be centralized and controlled.

"I think they can produce a shitcoin, but they cannot produce something that competes with bitcoin.”

They can’t compete with Bitcoin, Saifedean says, because the whole point of a Central Bank is to control the money supply and payment clearance. These are two things that Bitcoin takes away from Government and puts those actions into CODE; the very software coding behind Bitcoin.

In 2017, Bitcoin crashed from 20,000 to 3,000, reminds Robert. But, he notes that speaking with Raol Pal, the answer was that there was no money behind Bitcoin then. Now, in 2020, there’s “a WALL” of money behind Bitcoin.

Further, Saifedean breaks down the supply history of Bitcoin.

“The bitcoin supply, the mining of bitcoin, currently happens at a rate of 900 coins a day. Up until May this year, it used to happen at 1800 coins a day. Four years before that, it was 3,600. And then the four years before that was 7,200. So every four years, the new supply of bitcoin drops by half.”

How does 21 Million Bitcoins supply the world with money?

The supply of money doesn’t matter, says Saifedean. What matters is purchasing power. And you can fit infinite purchase power into each Bitcoin. Here’s how he explains the breakdown:

“So each bitcoin is divisible into 100 million Satoshis… and the way that Bitcoin solves this problem (of volume or supply) is the same way that Bitcoin scales, the same way that bitcoin can take on more value. It's what we like to call the ‘Number Go Up’ technology. As the price of Bitcoin rises, the volume of Bitcoin trades rises, and the amount of money that Bitcoin holds rises, and the value of each Satoshi rises, and it becomes a bigger market. You don't need more money. You don't need inflation. You don't need the supply to increase.”

How can a $15 per hour worker afford a $100k Bitcoin?

Robert points out that Bitcoin is expected to hit $100,000 next week. If that’s the case, he asks Saifedean, how does an average worker, or middle class family afford Bitcoin in that range?

They don’t, says Saifedean. They purchase Satoshis, or smaller portions of Bitcoin.

“You don't need a whole Bitcoin. There's only 21 million. The vast majority of people would never get to own one whole bitcoin.”

Where a dollar can be sliced down to 100 pennies, a bitcoin can be sliced down to 100 million Satoshis.

“In several years, it's just going to be unheard of for most people to think about owning a whole bitcoin… Think about the 400-ounce gold bar. That's what one bitcoin is like. So you don't have to own a whole one in order to use gold. You can buy a tiny little gold coin.”

Saifedean shares that he is writing a new book, the sequel to his first novel, called The Fiat Standard. Fiat (or fake) food, money, family, and the impacts on the world because of it. Fiat Money creates a Fiat (fake) world around it, allowing “…the people who create new money from nowhere to bestow economic value on things that are worthless, and that just disturbs the entire process of economic calculation and economic planning for everybody else.”

Gold and Silver ETF’s—They’re Fake

Robert’s feeling on gold and silver ETF’s-Exchange Traded Funds- are that they are fake; he doesn’t really know if there is gold or silver behind it. He doesn’t trust it. But there’s word that Bitcoin will start trading in ETF’s, and the question is that is this ‘fake’ Bitcoin?

Saifedean gives us this: “I don't know of any particulars, so I can't really say it is happening…however, Bitcoin really is a verification technology…it’s just a process of meticulous, astoundingly complicated verification, where everybody's verifying everything.”

The verification process is the basis of joining the Bitcoin Network. “You verify what everybody else is doing. Every 10 minutes, everyone checks everybody else's balances, and everybody checks to make sure that all the coins are in order and that the ownership is with the person or the address that should have them. So you're constantly verifying the supply. Anytime you go on the Bitcoin network, you can check exactly how many coins there are, and you can find out where and how they're distributed.”

The answer, it seems, from Saifedean, is that if there is an ETF on Bitcoin, it’s going to go through repeated and constant verification.

If it's not your keys, it's not your Bitcoin

Most Bitcoiner’s will tell you if you don’t own your own Bitcoin, and instead opt for other purchase options, you don’t really own bitcoin at all. You own a claim on those bitcoins. Saifedean doesn’t recommend other optional purchasing of bitcoins, such as those involving selling bitcoin for interest payments.

“If you own your private keys, then you have your own Bitcoins on the network, and that is the equivalent of holding your own physical bars of gold with your own hands.”

Saifedean believes that we’ll see the dollar-based economy shrink as Bitcoin becomes a bigger piece of the economic pie. Those with Bitcoin money will see appreciation, and those who don’t will see their money depreciate in value. Right now, Bitcoin makes up 0.2-0.3% of the global money supply. This, Saifedean believes, will continue to grow.

Please visit to check out his book, The Bitcoin Standard: The Decentralized Alternative To Centralized Banking and for future access to his upcoming book, The Fiat Standard.