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“Those who want to accept bills and other forms of deferred payment show us that money is fundamentally hierarchical. If a merchant demanded a gold payment up front for the delivery of goods, it was his right to do so. But if another trader accepted an account that represented a promise to pay for gold later, his willingness to delay final settlement only proves that the layers of money are not a banker’s construction, but inherent in the human tendency to watch each other. to hold. ”

Nik Bhatia, “Layered money: from gold and dollars to bitcoin and central bank digital currency”

With the publication of figures is increasingthe market is filled with far too many books that are heavier than useful. But Nik Bhatia’s “Layered money: from gold and dollars to bitcoin and central bank digital currency”, published January 18, 2021, circumvents this trend by densely packing insights about the monetary system into less than 200 pages.

Layered Money ”is a paradigm-shifting book that provides an intuitive mental model for viewing the history, evolution and future of money. Concepts such as money supply M1 vs. M2, treasury repo markets and euro dollars can be quite difficult for laymen and “experts” to understand. In “Layered Money”, Bhatia consistently turns these intimidating concepts into approachable knowledge with concise explanations and examples. Ultimately, the reader is left with a comprehensive understanding of why money is inherently hierarchical, the vulnerabilities that exist within today’s monetary infrastructure, and how Bitcoin can provide the anti-fragile solution that humanity needs.

The central premise of “Layered Money” is to provide a new paradigm through which we can see the concept of money. This approach helps the reader to understand the increasingly complex money systems that humans have built over centuries.

Readers who would find it difficult to dive straight into the current monetary system and its complexity need not fear: the book itself is made up of progressive layers, starting with non-tiered monetary systems (i.e. gold coins) before continues to the first forms of layered money (ie bills backed by gold and silver). Once the reader has acquired a solid foundation in understanding the basics, the tiered money framework will be applied to more complicated monetary systems, from the first gold-backed central banks to the mind-numbingly complicated system that dominates today’s world.

One of the most impressive features of “Layered Money” is that it takes the Federal Reserve system (a topic that is not approachable to most people) and neatly packs it into something that the common person can understand using the layered money framework. . Rather than seeing all forms of money as the same thing, Bhatia is building the monetary pyramid, from US Treasury bills to money market funds, to physical dollar bills and everything in between. He explains how each layer of the money pyramid relates to the other layers, and how the Federal Reserve, commercial banks, and ordinary citizens interact with these layers.

“Over the centuries, currencies have ceased to exist because of one rudimentary fact: governments cannot resist the temptation to create free money for themselves.”

After “Layered Money” has provided the reader with a clear lens through which to view the hazy Federal Reserve system, it helps identify both the hidden risks and possible solutions inherent in the monetary systems of the past, present and the future. The reader is taken on a journey through several economic collapses, showing how each collapse led to an expansion of the reach and power of the Federal Reserve, taking it from a brand new government entity to arguably the most powerful entity on Earth in less than 100 years.

In the second half of the book, “Layered Money” delves into Bitcoin and the central bank’s digital currencies (CBDCs). First, Bhatia teaches the reader about Bitcoin from scratch, starting with Satoshi Nakamoto and the Cryptography Mailing List. Next, the reader is presented with Bitcoin’s main use cases, along with its inherent limitations and the possible solutions to these limitations.

The tiered money framework built upon in previous chapters is applied to Bitcoin, allowing the reader to use a better understanding of simpler money systems to understand Bitcoin: “Second-tier BTC was created for the same reasons as gold from the second layer, ”Bhatia wrote. “People were willing to take claims on BTC, just as people had claims on gold.”

Finally: “Layered money” answers key questions related to central bank digital currencies (CBDCs): Why are central banks drawn to the idea? How can CBDCs be implemented? And how can CBDCs deal with Bitcoin in the future?

“In the future, the currency you use will reflect not only your hometown or country of residence, but also your preferences,” Bhatia wrote.

A book review can’t get close to all of the ‘Layered Money’ insights. That said, here are a few examples of critical concepts that can be visualized and better understood using the tiered money frame:

  • Banking and currency crises, in which people rush to “climb the money pyramid, while holders of lower tier money rush to secure a superior higher tier money form.”
  • How and why central banks came to power, allowing a government to “take the central position between the first and second tier” and “monopolize the issuance of second tier money through public access to eliminate money from the first layer “.
  • The transition to the current monetary system, where “US Treasuries would eventually replace gold as the only asset of the dollar pyramid.”

While “layered” money is worth reading in its entirety, some of it stands out as the final conclusion of the book, masterfully connecting the key concepts from each chapter:

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“The underlying thesis of this book is that BTC will only be on the first money tier in the future. If only one word about Bitcoin could be used to describe why, we should pick one coined only a few years ago in 2014 by author and pioneering economic thinker Nassim Nicholas Taleb: antifragile. ”

Bhatia goes on to say:

“Bitcoin is anti-fragile because it thrives on the global monetary disorder within the dollar pyramid and resists the threats, defamation and legislation of dismissive bureaucratic entities. The clear truth about Bitcoin is that no one is checking it. It has become the very first government-free, universally accessible digital currency ever. And for these reasons, all currencies in the pure digital realm will face price discovery in BTC terms. This means that all digital currencies, from cryptocurrencies to CBDCs, will be measured in BTC, just as the Bretton Woods Agreement in 1944 required all currencies to be measured in USD. ”

Ultimately, Bhatia envisions “a future where BTC is the global reserve currency and nothing but first layer of money. “

For any reader who wants to learn more about the history of money, how the current monetary system works, or what the future of money may be, I highly recommend “Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies” On. The book can be purchased at Amazon in hardcover, paperback, or Kindle form, or through other channels available on the LayeredMoney.com website.

This is a guest post from Mitch, founder of YourBitcoin.Expert. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.


Mitch, a former CPA turned entrepreneur, is a graduate of the Real World Risk Institute taught by Nassim Nicholas Taleb (author of ‘The Incerto’), as well as the altMBA, taught by Seth Godin (author of ‘Linchpin’ and many other books ). Over the years, he has become increasingly interested in the Bitcoin space. After spending countless hours consuming Bitcoin content from around the world, he decided to help others learn, buy and hold Bitcoin at http://yourbitcoin.expert.





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