This is a real-world application of Wittgenstein’s Ruler , a concept which states that, “Unless you have confidence in the ruler’s reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler.”
Fiat onlookers’ view of bitcoin the asset are obfuscated by their frame of reference, which is to say, an unnecessarily convoluted one.
What’s worse is that, because of this perceived volatility, onlookers are disincentivized to take a deeper look into Bitcoin the network. They find comfort in the known. They’re unwilling to do the work to understand why their arbitrarily-chosen system is flawed. As Jeff Booth points out, “Perhaps the biggest impediment for people understanding Bitcoin is bringing their baggage from how the monetary system works today and in the past, versus how it will work in the future.”
All of the misinformation inside the fiat system pushes its constituents away from connecting the dots… while they are simultaneously seated on a sporadic and spastic merry-go-round. They’ve either consciously or otherwise accepted that the fate of their money (in its forms as a store of value, medium of exchange and a unit of account) will potentially change roughly every four years with election cycles. They’ve been conditioned to believe there must be a small group of elites who “know best” how to manipulate the growth of an economy (while also ignoring the elites’ inherent incentives). They overlook the fact that the currency they’re compelled to use has lost 99% of its value over its lifetime.
This last point nudges those inside the fiat system to adopt a high time preference, knowing the value of their time and efforts will be devalued over time. This further distorts their frame of reference, thus their ability to make sound, economic decisions; choosing between a volatile, alternative asset which requires a low time preference and a lot of effort to understand versus a new, gizmo gadget providing endless dopamine dumps… well, I can see how it’s an easy choice for them.
The Theory Of Monetary Relativity
All of this can simply be stated as: Bitcoiners determine volatility based from the reference of its network and protocol while fiateers derive its volatility from the reference of bitcoin the asset.
As Gigi says , “Bitcoin isn’t volatile. Humans are.” Therefore, we must continue to reframe the conversation from the asset to the network and protocol. The asset will continue to show volatility (to the upside over the long term), which is not due to Bitcoin the network or protocol, but due to the volatility of human nature.
This is a guest post by Tim Niemeyer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
