Stone Ridge 2020 Shareholder Letter
Money has always been technology for making our wealth today available for consumption tomorrow.
Throughout history, various monies have always existed simultaneously along a continuum of soundness.
Each human’s Darwinian instinct naturally optimizes for the soundest money - the one that will best store the sum total of our daily labor (our life force).
To save is intuition as unstoppable as evolution because humans understand their survival is at stake.
Toxic Centralization
The edifice of central banking is to print money to stabilize the economy.
Through unintended side effects, they cripple the wisest regulator - the market and therefore end up being the ultimate cause of economic problems.
Big Three Bitcoin Aha-Moments
1. Perfectly Inelastic Supply
Bitcoin is the first store of value in history whose supply is unaffected by increased demand.
Gold was the soundest money because of its scarcity and steady supply growth of 1-2% a year. But if gold went 10x up tomorrow, the annual supply growth would skyrocket because more miners would come to extract more gold from the Earth.
Unlike gold, Bitcoin cannot be mined faster, making unexpected inflation impossible.
Bitcoin is, therefore, more salable across time
2. Salability Across Space
Despite fiat’s massive regression in salability across time (demonetization through hyperinflation), it was an enormous step forward in salability across space. Gold is tough to transport.
Contrary to common belief, Bitcoin moves much faster across space than fiat.
Bitcoin completes final settlement in an hour, whereas current state-of-the-art international settlement takes 3-5 days (some even longer) - 96 times slower.
A Visa payment is not final settlement - no settlement occurs when you buy a coffee at Starbucks. Your bank and Starbucks’ bank generally settle 2-3 days later, each taking credit risk for the time being.
Not only is it faster, but as a bearer instrument, Bitcoin doesn’t suffer from credit risk either.
3. Energy
Bitcoin mining is the first and only profitable use of energy in human history that is location-independent.
It can be done from anywhere.
This unique trait allows it to finance (bootstrap) the development of cheap, clean energy infrastructure in remote, previously-isolated places on a massive scale.
Since fossil fuels are expensive, the only long-term profitable Bitcoin mining will be powered by hydro.
Historically, our energy challenge has been to bring energy to the people.
All the world’s cities were geographically located there because of waterways and trade routes - energy was not a factor because they predated it.
Bitcoin enables us to bring people to the energy.
Beyond its revolution in monetary policy - Bitcoin can also be the most significant catalyst the world has ever known for developing abundant, clean, cheap energy.
Counter-intuitively, Bitcoin can serve as the tool that enables humanity to transition to a more abundant and sustainable energy future.
— originally posted on 2 minute bitcoin https://2minutebitcoin.org and https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter
Original Author: Ross L. Stevens
Original Word Count: 8601
Original Posted Date: 2020
Original Source: https://www.microstrategy.com/en/bitcoin/documents/stone-ridge-2020-shareholder-letter / https://www.stoneridgefunds.com/documents/AnnualReport.pdf
In the digital age, things happen gradually, then suddenly fast. Hyperinflation, bank runs and crises all unravel at the speed of light. Bitcoin exists as a life raft - the solution to the money problem that is global QE.