Bitcoin is Sound Money
Sounds weird, right? Read on for that and the strange tale of the couple who the feds say laundered billions in Bitcoin
I keep going back to one overarching point in The Bitcoin Standard, a book I recently read and reviewed in this newsletter. More than anything, Bitcoin is sound money. That’s something we have never truly seen before.
That’s an odd sentence to type.
Now, we’ve gotten close. Through history, humans have often deferred to gold or silver as a means of creating sound money, and in pervious iterations of civilization, that urge mostly worked. Before 1914, the most powerful countries operated on the gold standard, and that provided a economic stability that allowed confidence and connection that couldn’t be eroded by government policies or changes in power. Still, governments had some say in the price of gold, which kept it from being a true gold standard. A true gold standard would have created sound money with no government interference.
Since the end of WWI—things have been different.
Government money has become the standard, and by it’s nature that is unsound money. The US dollar operates this way. You probably already sense this—the purchasing power of the dollar ebbs and flows with inflation, circulation, interest rates, confidence in the US government, and the like. Right now, we are in a period of high inflation, and that means the dollar purchases a lot less than it did a few years ago. Did you see the January 2022 Consumer Price Index report? It showed an increase of 7.5% year over year.
Unsound money is money that you can never fully trust. Never. There’s always that small devil on your shoulder asking if you should change your investment, savings, or spending approach because of what might happen through an executive order, or what could happen after the next federal reserve meeting. Those questions never leave.
That’s not the case with sound money.
Sound money is not subject to the whims of a government, or to the constrictions of a central bank. There is no centralized authority to make decisions about truly sound money. There’s no one or entity to call about printing more cash.
Sound money is money with a purchasing power determined by marketplaces.
However, don’t mistake sound money with stable money. Stable money is money that maintains a specific value with little or no change. Bitcoin is not stable money; its price will still swing back and forth based on demand. We see that every day on the marketplace.
Bitcoin is sound money. It hits the high notes on all the properties required for a currency to succeed as sound money: durability, portability, divisibility, scarcity, acceptability, and uniformity.
As a subscriber to this newsletter, you’re probably already orange-pilled. You’re interested in Bitcoin, and likely invested. You probably also have positions in other cryptocurrencies too.
Even so, I’m here to remind you—this sector isn’t just speculative. It’s different. And while Bitcoin is sound money, that doesn’t make it perfect money. We’re humans, we live on earth, and nothing we have is perfect. Bitcoin can still be stolen, and exchanges can be beached. Investing in the asset comes with risk.
But Bitcoin itself is sound. Don’t believe me? Read this.
Meanwhile…
You might have seen the news about the couple arrested by federal agents on Tuesday. Investigators say Ilya Lichtenstein and Heather Morgan laundered billions of Bitcoin related to the 2016 Bitfinex hack.
The hackers stole just under 120,000 coin back then, which crippled that exchange. At the time, victims received a security token as a way to account for the losses, and the theft caused the price of Bitcoin to plunge about 20%. Here is the New York Times article about the 2016 hack.
As an aside, Bitfinex has experienced major problems over the years, and has been the victim of multiple security breaches.
Today, that stolen money is worth over $4.5 billion, and the feds say they recovered over $3.6 billion of the missing coin. It’s being called the largest asset seizure in history.
So, are these two the hackers? Maybe. Maybe not.
It’s a crazy story.
But here’s what makes it all even stranger— money launderer or not, Morgan was also a budding rapper under the stage name Razzlekhan. She had a pretty extensive social media presence, including videos on YouTube and posts on TikTok. Morgan also claimed to be a serial entrepreneur.
I wrote those above sentences in past tense because obviously… she’s had a few life changes this week. Sitting in jail on federal charges can really put a damper on your social media influencer and music careers. By the way, the judge gave Lichtenstein a $5 million bond, and Morgan a $3 million one.
Overall, Morgan appears to be a… unique individual.
Check it out for yourself:
Her original YouTube channel is wiped, but the internet is forever and plenty of people saved her videos.
Buzzfeed took a decent look at her rap career, as well as her status as contributor to Forbes.
Ilya Lichtenstein is also a unique figure. He’s a Russian immigrant with a past in the tech industry and a interest in crypto. He often appeared in his wife’s videos.
Also:
Lichtenstein was the co-founder of MixRank, a sales firm that went though the Y Combinator.
They seem to be the kind of couple that knew a lot of people, but whom now… no one knows. Make sense? The two face 20 years in prison if convicted.
More to come on this one, I’m sure.
Finally…
Bitcoin mining is a growing industry in the US, and states like Georgia are cashing in on the craze.
Some called Shiba Inu dead after its crazy rise and fall in 2021. Not so fast…
Crypto exchange FTX is getting into the DC lobbying game. As one does.
Russia is taking steps to become crypto friendly, a move that made headlines around the world.
The Crypto Connection is for entertainment purposes only and is not meant to be financial advice. Please do your own research before investing in any asset class. Sara Celi is not a financial advisor, and holds several cryptocurrencies. To purchase her books on Amazon, please click here.