The Bitcoin Standard by Saifedean Ammous is one the most helpful books in exploring the relationship between the soundness of money & time preference.
“Sound money is chosen freely on the market for its salability, because it holds its value across time, because it can transfer value effectively across space, and because it can be divided and grouped into small and large scales..”
“One of the prime functions of the monetary unit is to serve as the unit of measure for economic goods, whose value is constantly changing.
A theoretically ideal money would be one whose supply is fixed..”
“[It’s] supply cannot be manipulated by a coercive authority that imposes its use on others.”
“Unsound money, being controlled by central banks whose express mission is to keep inflation positive, will offer little incentive for holders to keep it, as they become more likely to spend it or to borrow it." 
Sound money "gives people a bigger incentive to think of their future..
[because] the wealth stored into it would not depreciate over time, incentivizing people to save.
Sound money is a prime factor in determining individual time preference: the ratio at which individuals value the present compared to the future.
Because humans do not live eternally...there is always a discount on the future compared to the present."
“Human beings' lower time preference allows us to curb our instinctive and animalistic impulses, think of what is better for our future, and act rationally rather than impulsively.”
Determinants of Time Preference:
1. Security of person (exposure to conflict or violence)
2. Security of property (exposure to criminal theft or govt expropriation)
3. Tax rates (does it incentivize working more or less at the margin?)
4. Expected future value of money (will it hold its value?)
The essence of investment: "as humans delay immediate gratification, they invest their time and resources in the production of capital goods which will make production more sophisticated or technologically advanced and extend it over a longer time‐horizon..
The fisherman who builds a fishing rod is able to catch more fish per hour than the fisherman hunting with his bare hands. But the only way to build the rod is to dedicate an initial amount of time to work that does not produce edible fish, but instead produces a fishing rod.."
“A society in which individuals bequeath their children more than what they received from their parents is a civilized society: it is a place where life is improving, and people live with a purpose of making the next generation’s lives better.”
“Sound money is chosen freely on the market for its salability, because it holds its value across time, because it can transfer value effectively across space, and because it can be divided and grouped into small and large scales..”
“One of the prime functions of the monetary unit is to serve as the unit of measure for economic goods, whose value is constantly changing.
A theoretically ideal money would be one whose supply is fixed..”
“[It’s] supply cannot be manipulated by a coercive authority that imposes its use on others.”
“Unsound money, being controlled by central banks whose express mission is to keep inflation positive, will offer little incentive for holders to keep it, as they become more likely to spend it or to borrow it."
Sound money "gives people a bigger incentive to think of their future..
[because] the wealth stored into it would not depreciate over time, incentivizing people to save.
Sound money is a prime factor in determining individual time preference: the ratio at which individuals value the present compared to the future.
Because humans do not live eternally...there is always a discount on the future compared to the present."
“Human beings' lower time preference allows us to curb our instinctive and animalistic impulses, think of what is better for our future, and act rationally rather than impulsively.”
Determinants of Time Preference:
1. Security of person (exposure to conflict or violence)
2. Security of property (exposure to criminal theft or govt expropriation)
3. Tax rates (does it incentivize working more or less at the margin?)
4. Expected future value of money (will it hold its value?)
The essence of investment: "as humans delay immediate gratification, they invest their time and resources in the production of capital goods which will make production more sophisticated or technologically advanced and extend it over a longer time‐horizon..
The fisherman who builds a fishing rod is able to catch more fish per hour than the fisherman hunting with his bare hands. But the only way to build the rod is to dedicate an initial amount of time to work that does not produce edible fish, but instead produces a fishing rod.."
“A society in which individuals bequeath their children more than what they received from their parents is a civilized society: it is a place where life is improving, and people live with a purpose of making the next generation’s lives better.”
Let’s start with exchanging one good or service for another is a process known as barter exchange.
Barter can work at small scales.
Here’s an example with 6 unique items.
This economy of 6 items requires keeping track of 15 different exchange rates.
But an economy with just 500 unique items will have 124,750 exchange rates, making the barter system infeasible for a complex economy of millions of items.
This problem (known as a coincidence of wants) is solved by using a single common medium between all transactions.
Usually, the most tradable good in a society is termed ‘money’.
Previously, this was decided by the free-market, based on
a good’s monetary properties.
Today, it’s a top-down phenomena, imposed on citizens by sovereign governments.
Money may differ in different places if there are significant enough barriers between them.
In the case of sovereign nations, a few things help create barriers and ensure a monetary monopoly: physical borders, capital controls, legal tender laws.
But we now have a global digital communications network (the internet).
This is breaking down borders and creating a single market, enabling international commerce at the level of the individual.
We now come across a similar version of our barter problem, but this time with the currencies themselves.
And once again we'll converge, this time on a single global monetary medium.
The chosen medium to bridge this gap will need to be:
1. Neutral (no single group has seigniorage)
2. Global (accessible everywhere)
3. Transparent (anyone can verify & audit)
4. Indestructible (cannot be shut down)
5. Peer-to-peer (enable commerce at the individual level)
By assessing the relative properties of all monetary goods, a winner emerges and the market converges.
Right now, all evidence points to that being bitcoin.
But it doesn’t end at simply intermediating currency exchanges.
Ultimately, we end up with a global economy, bypassing jurisdictionally-restricted money, transacting through one common digital monetary medium.
Thanks for reading.
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