🔎[Analysis] A Skeptic’s Guide to Bitcoin - Su Zhu and Hasu

Bitcoin has enabled a conversation around money and its impact on society according to Zhu and Hasu. Proponents of Bitcoin are often sound money advocates, meaning they prefer money that at least is not created or destroyed by a central party like a government, leading to a predictable supply. Sovereign currencies have seen numerous abuses, with instances of hyperinflation being most prominent. Still, sovereign currencies can allow nation states tailor to create custom solutions for their unique problems. Governments can print money to build public services, demonetize or freeze assets related to crime, manage fiat liquidity to influence business cycles, hold their currency to a peg to increase usableablity or even boost trade by devaluing it.

The problem of course is that over time inflation tends to erode the value of fiat currencies. Furthermore, when central parties are responsible managing the banking system various services becoming hopelessly intertwined. The mixing of payments, lending, investment, and insurance by commercial banks has created a scenario where if one function fails, the rest of the system could collapse.

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