Bitcoin Is King

Abstract

This chapter explains why Bitcoin is the king of cryptocurrencies, as of today, all 13,457 of them, and what that crown signifies. It provides a brief description of what Bitcoin is and how it works. Bitcoin is growing into a self-sufficient monetary stack without trusted intermediaries: the software automates monetary policy, the network effects final settlement, and second-layer solutions like lightning enable fast and cheap payments. Over longer time-frames, Bitcoin has outperformed every national currency. And, in shorter time-frames, even cherry-picking its worst months of performance, it still outperforms many national currencies. Since Bitcoin is also easier to attain, verify, transfer, and hide than physical gold, one can respect why some use it to help preserve their purchasing power. Bitcoin is also special in how users of all stripes stridently commit to its automated issuance schedule. Bitcoin’s victory as neutral money should have downstream consequences for academic research, too.