This is a real-world application of Wittgenstein’s ruler, a concept that states that “Unless you have confidence in the ruler’s reliability, if you use a ruler to measure a table, you might as well use the table to measure the ruler.”
Fiat watchers’ view of the bitcoin asset is obscured 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 discouraged from taking a deeper look at the Bitcoin network. They find comfort in the familiar. They are unwilling to do the work to understand why their arbitrarily chosen system is wrong. As Jeff Booth points out, “Perhaps the biggest obstacle for people understanding Bitcoin is bringing the baggage of how the monetary system works today and in the past, versus how it will work in the future.”
All the misinformation inside the fiat system is pushing its constituents away from connecting the dots…while simultaneously sitting on a sporadic and spastic merry-go-round. They have either knowingly or otherwise accepted that the fate of their money (in its form as a store of value, medium of exchange and unit of account) will potentially change about every four years of election cycles. They have been conditioned to believe that there must be a small group of elites who “know best” how to manipulate the growth of an economy (while ignoring the inherent incentives of elites). They overlook the fact that the currency they are forced to use has lost 99% of its value over its lifetime.
This last point pushes those inside the fiat system to adopt a high time preference, knowing that the value of their time and effort will be devalued over time. This further distorts their frame of reference, and thus their ability to make sound financial decisions; choosing between a volatile, alternative asset that requires a low time preference and a lot of effort to understand versus a new gadget that provides endless dopamine dumps…well, I can see how it’s an easy choice for them.
The theory of monetary relativity
Source
All of this can be simply stated as: Bitcoiners determine volatility based on the reference to the network and protocol, while fiateers derive volatility from the reference to the bitcoin asset.
As says Gigi , “Bitcoin is not volatile. People are.” Therefore, we must continue to reframe the conversation from the resource to the network and the protocol. The asset will continue to show volatility (to the upside in the long term), which is not due to the Bitcoin 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 the opinions of BTC Inc or Bitcoin Magazine.
