Living On A Bitcoin Standard

Why do we use the money that we use? It is one of those things that you don’t think about until you start thinking about it. Or rather, it’s one of those things you don’t question until you have the right knowledge and awareness to realize something isn’t right. For the vast majority of the history of civilization, citizens have not had a choice in which money they use. It is entirely dependent on the country that they are born in.

The overwhelming majority of the world uses fiat money, with each government issuing its own currency. Have you ever thought about the difference between money and currency? I had not until early 2024. Money is a technology and a broader concept of value. It is something that represents a value that is agreed upon by others. Money can be a medium of exchange, a store of value, and a unit of account. Currency is a physical form of money. Its best use case is as a medium of exchange. Think of banknotes and physical coins.

Living in the United States, the money and currency of everyday life is the U.S. dollar. No ordinary citizen has any control over the dollar. Meaning that the citizenry is completely at the mercy of the Federal Reserve and US Treasury when it comes to the money that they use. If someone doesn’t agree with policies being put in place by these institutions and the effects that they will have on the dollar – the currency they’re forced to use – they historically had no power of choice. Enter Bitcoin.

When Satoshi Nakamoto gifted Bitcoin to the world in 2009 (technically 2008 but the network wasn’t online until 2009) they simultaneously gave the world the power of financial freedom, for the first time in history. No longer were people forced to save money in the currency of the government they lived under. For the first time, people had access to money that worked for and was for everyone. A money with rules but without rulers. A money that can’t be debased, can be easily verified and transacted with, and can’t be taken from you. A money that because of its unique properties, will continue to become more valuable with the passage of time and increased adoption. Taking all of this into consideration, I’ve decided to switch over to a Bitcoin Standard.

So what exactly does this mean, living on a Bitcoin Standard? It simply means that I will use bitcoin as my primary money and as my savings technology. Gone are the days of stockpiling dollars in a savings account that despite being high-yielding, is losing its purchasing power due to monetary inflation. I believe that bitcoin is the best money, and that saving in it is the best choice for my financial well-being and freedom. Beyond belief, I want to concentrate my energy on a different money and into a system that I agree with. I want to contribute as little as possible to the current monetary system and instead contribute my energy to a hard money system, Bitcoin.

However, since I live in the United States, I will continue to use dollars for day-to-day transactions since that is the legal tender and accepted everywhere. I’ve never used much physical cash or my debit card – unless I have to out of force or necessity – so continuing to use credit cards for all purchases stays the same. The main difference is that I will use bitcoin to pay off my debts and credit usage, by buying dollars with my bitcoin.

Deciding to move to a Bitcoin Standard does introduce new frictions to my life, though I accept them with open arms. I now need to balance two different monies and deal with the impedance of the legacy and current system. There will be hiccups as I adapt to this new standard, and that’s fine. We can’t improve and achieve a better life without the necessary work and struggle.

There are two mental challenges to deal with and overcome.

The first is that I will be selling my bitcoin for dollars. This is a radical shift from the “never sell” mindset that I (and countless others) have been in for years. I think of a conversation that I had with Jeff Booth recently about this mindset. We were discussing living on a Bitcoin Standard and if you’ve ever listened to any of Jeff’s interviews, you know he’s an advocate for using bitcoin in daily life when possible. He simply told me that even though he’s spending bitcoin he “can just buy more”. It is so simple yet I had never thought about it this way. Sure, I’ll be spending bitcoin, but like Jeff, I’m always going to be buying more.

The second challenge is more of a mental block. Since my bank account shows that I do not have many dollars, it can be a bit jarring to see my cash balance alongside my credit card balances and the knowledge that I have to pay rent and other bills. While I do have the money to finance my life, it is not always readily available in the currency to pay for it. It is a slight stressor to view all these balances and think that I’m insolvent as a person, but that is not true. I think this is something that will become less of a challenge for me as I spend more time living on this new standard.

If you are American, surely by now you must be thinking “but what about taxes? you’re gonna have to pay capital gains tax every time you sell bitcoin!”. This is true. I will have to pay taxes whenever I sell my bitcoin for dollars to pay my debts. But I see this as a positive thing. If I have to pay capital gains tax, it means that a capital gain has occurred. That’s great!

Since I think that bitcoin will continue to appreciate in dollar terms, it’s a good thing to be paying capital gains taxes. Because even though I will be paying taxes, my purchasing power will be increasing. Why wouldn’t you want to pay taxes if it means you actually got more value from your money? The alternatives are either A) don’t pay taxes and be a criminal, or B) keep my money in dollars and have its value siphoned away by the invisible tax that is inflation.

Another thing you may be thinking is “what about fees?”. Valid point. I need to pay roughly 1% every time I buy and sell bitcoin, which is a cost that I would not have to deal with if I kept all my money in dollars. I’m keeping track of what I pay in fees and will see how they compare over time to the appreciation of the bitcoin. If history is any indicator, I’m confident that appreciation will outperform the fees, by a lot.

I’m switching because the freedom to make this choice exists. A better money now exists and I want to use it as my primary means of savings and store of value. Fiat currencies and the current monetary system are broken, and I want to get as far away from them as possible. I want to contribute my monetary energy and efforts to a system that is fair and open to all. The best way I can fight back against an unjust monetary system is to no longer be a part of it. If enough people do the same, wait and see what will happen.