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The Bitcoin Standard: The Decentralized Alternative To Central Banking by Saifedeen Ammous
The Blurb On The Back:
When a pseudonymous programmer introduced “a new electronic cash system that’s fully peer-to-peer, with no trusted third party” to a small online mailing list in 2008, very few paid attention. Ten years later, and against all odds, this upstart autonomous decentralised software offers an unstoppable and globally-accessible hard money alternative to modern central banks. The Bitcoin Standard analyses the historical context to the rise of Bitcoin, the economic properties that have allowed it tot grow quickly, and its likely economic, political, and social implication.
While Bitcoin is a new invention of the digital age, the problem it purports to solve is as old as human society itself: transferring value across time and space. Ammous takes the reader on an engaging journey through the history of technologies performing the functions of money, from primitive systems of trading limestones and seashells, to metals, coins, the gold standard, and modern government debt. Exploring what gave these technologies their monetary role, and how most lost it, provides the reader with a good idea of what makes for sound money, and sets the stage for an economic discussion of its consequence for individual and societal future-orientation, capital accumulation, trade, peace, culture and art. Compellingly, Ammous shows that it is no coincidence that the loftiest achievements of humanity have come into societies enjoying the benefits of sound monetary regimes, nor is it coincidental that monetary collapse has usually accompanied civilisational collapse.
With this background in place, the book moves on to explain the operation of Bitcoin in a function and intuitive way. Bitcoin is a decentralised, distributed piece of software that converts electricity and processing power into indisputably accurate records, thus allowing its users to utilise the Internet to perform the traditional functions of money without having to rely on, or trust, any authorities or infrastructure in the physical world. Bitcoin is thus best understood as the first successfully implemented form of digital cash and digital hard money. With an automated and perfectly predictable monetary policy, and the ability to perform final settlement of large sums across the world in a matter of minutes, Bitcoin’s real competitive edge might just be as a store of value and network for final settlement of large payments - a digital form of gold with a built-in settlement infrastructure.
Ammous’ firm grasp of the technological possibilities as well as the historical realities of monetary evolution provides for a fascinating exploration of the ramifications of voluntary free market money. As it challenges the most sacred of government monopolies. Bitcoin shifts the pendulum of sovereignty away from governments in favour of individuals, offering us the tantalising possibility of a world where money is fully extricated from politics and unrestrained by borders.
The final chapters of the book explores some of the most common questions surrounding Bitcoin: Is Bitcoin mining a waste of energy? Is Bitcoin for criminals? Who controls Bitcoin, and can they change it if they please? How can Bitcoin be killed? And what to make of all the thousands of Bitcoin knock-offs, and the many supposed applications of Bitcoin’s ‘blockchain technology’? The Bitcoin Standard is the essential resource for a clear understanding of the rise of the Internet’s decentralised, apolitical, free-market alternative to national central banks.
Saifedean Ammous is Professor of Economics at the Lebanese American University. This book has useful summaries of the history of money and the development of Bitcoin but his arguments as to how Bitcoin meets the definition of money are unconvincing - no matter how many times he repeats his points - and his Austrian school economic arguments about Bitcoin’s superiority for settlement smacks of wishful thinking over the real world practicalities.
I’m going to preface this review by saying that I am a cryptocurrency skeptic and I came at this book as someone who has a limited grasp of economics and finance (having studied it as part of regulatory theory and financial markets regulation during my Masters). However, I am interested in learning more about cryptocurrency and I think that I am open to having my mind changed. The other thing to say from the outset is that this book was published in 2018 and I am reviewing it in 2025 so I read this knowing about the subsequent tumult in Bitcoin pricing, which definitely affected how I read this book.
Bitcoin is actually the end point of this book. Ammous is a big fan of Austrian School Economics and Hayek in particular and what this book is really about is his opposition to so-called Government interference in monetary policy and how everything went wrong when the world moved off the gold standard.
The first seven chapters of this book set out the history of money and - for me - were probably the most interesting in the book as they set out the particular elements of what goes to make money important and what money should do. Ammous described how societies moved to using gold as the basis of money together with the benefits and disadvantages of the same (including the impact of clipping) and how this gradually sought to control the gold supply until the decision was taken to move away from the gold standard to fiat money. The big problems come when Ammous moves onto looking at the consequences of fiat money, including inflation and the influence of Keynes and move to Keynesian economics.
I do not have a dog in the fight when it comes to Keynesian economics and if Ammous was making arguments purely about the theory and its impact on society then I would not have an issue. The problem is that Ammous decides to keep playing the man. He attacks him for his background, for the fact that he did not study economics (which is laughable as economics was not really a university degree at that time and Keynes did study maths) and at one point accuses him of being pedophile (citing a love rival of Keynes and citing only one “source”, which does not take into account context). The more he decides to make an attack, the more nasty, personal and childish it all reads - certainly not something that you would expect from a serious academic who wants to be seen as a credible source.
At the same time (and as someone who has some knowledge of central banking and financial regulation) Ammous clearly sees central banks as being subject to control by western governments when certainly recent history demonstrates that this is not the case, most recently the refusal of the Bank of England and the US Federal Bank to lower interest rates even when doing so would be political expedient.
It’s only in the final three chapters that Ammous moves onto Bitcoin. Again, there is interesting material here. He sets out how Bitcoin was created and how it works (including what the blockchain is) in a way that is easy to follow. Ammous clearly sees Bitcoin as a method of money that meets what - for him - the key requirement that it be beyond the control of Government. In this, I cannot disagree with him. Whatever the critiques of Bitcoin it’s a genie that’s out of the bottle and is so disseminated that it cannot be brought under central control of regulation.
I also cannot deny his argument that Bitcoin is something that stores value, although I think that this value is highly volatile and susceptible to market forces. However, Ammous doesn’t reconcile how the value of Bitcoin is dependent on users faith in it and I think this is a critical point. In his historical chapters he looks at how some forms of money (shells, stones and beads) lost value when people were able to copy it more cheaply, and Ammous thinks that it’s the replication that’s important when actually it’s the faith that people put in it. Yes, a flood of additional money undervalues it, but it’s undervalued because no one has faith in the intrinsic value of the original. Even gold - which is Ammous’s go-to as perfect money - is only valuable because people have faith that it remains valuable and in part that’s because it’s difficult to mine and has uses outside money (e.g. for jewellery).
Ammous does not ever set out what Bitcoin’s value is. Personally, I think it’s only valuable because it’s a means of exchange for other currencies - notably US dollars or Euros - and people only hold it because they think that it’s going to be worth more US dollars and Euros. That’s kind of ironic given how disparaging Ammous is about US dollars and the volatility of the same. It’s also why financial institutions tend to view it as an asset class more than a form of money in its own right because much as Ammous may claim that Bitcoin can be used to buy things (citing the fact that it was once used to buy a pizza in its early days) in practice very few places seem to take it.
I also wasn’t convinced by Ammous’s take on criticisms about Bitcoin. For example, his argument against the fact that mining Bitcoin uses huge amounts of electricity, he says that it's not wasted because the miners find it's worth paying for. This completely ignores the draining effect it has on the grid, demonstrated by the fact that one of the reasons China banned it was because of the effect it had on its grid and when miners moved to Uzbekistan and Kazakstan, the effect on their grids in turn sparked protests, not to mention the fact that here in Britain we have gone through massive increases in costs in electricity which means that any energy used by British Bitcoin miners has a detrimental effect on the prices paid by other electricity consumers, which is damaging. His argument that Bitcoin isn’t used by criminals is also unconvincing because although the ledger should make it easy to identify users, you still have to track those users down and verify who they are, which is not easy given that they can be located anywhere.
Ultimately there are some interesting elements in this book but I don’t think Ammou makes his case and frankly he undermined some of his own credibility with his attack on Keynes.
The Verdict:
Saifedean Ammous is Professor of Economics at the Lebanese American University. This book has useful summaries of the history of money and the development of Bitcoin but his arguments as to how Bitcoin meets the definition of money are unconvincing - no matter how many times he repeats his points - and his Austrian school economic arguments about Bitcoin’s superiority for settlement smacks of wishful thinking over the real world practicalities.
Thanks to the Amazon Vine Programme for the review copy of this book.
When a pseudonymous programmer introduced “a new electronic cash system that’s fully peer-to-peer, with no trusted third party” to a small online mailing list in 2008, very few paid attention. Ten years later, and against all odds, this upstart autonomous decentralised software offers an unstoppable and globally-accessible hard money alternative to modern central banks. The Bitcoin Standard analyses the historical context to the rise of Bitcoin, the economic properties that have allowed it tot grow quickly, and its likely economic, political, and social implication.
While Bitcoin is a new invention of the digital age, the problem it purports to solve is as old as human society itself: transferring value across time and space. Ammous takes the reader on an engaging journey through the history of technologies performing the functions of money, from primitive systems of trading limestones and seashells, to metals, coins, the gold standard, and modern government debt. Exploring what gave these technologies their monetary role, and how most lost it, provides the reader with a good idea of what makes for sound money, and sets the stage for an economic discussion of its consequence for individual and societal future-orientation, capital accumulation, trade, peace, culture and art. Compellingly, Ammous shows that it is no coincidence that the loftiest achievements of humanity have come into societies enjoying the benefits of sound monetary regimes, nor is it coincidental that monetary collapse has usually accompanied civilisational collapse.
With this background in place, the book moves on to explain the operation of Bitcoin in a function and intuitive way. Bitcoin is a decentralised, distributed piece of software that converts electricity and processing power into indisputably accurate records, thus allowing its users to utilise the Internet to perform the traditional functions of money without having to rely on, or trust, any authorities or infrastructure in the physical world. Bitcoin is thus best understood as the first successfully implemented form of digital cash and digital hard money. With an automated and perfectly predictable monetary policy, and the ability to perform final settlement of large sums across the world in a matter of minutes, Bitcoin’s real competitive edge might just be as a store of value and network for final settlement of large payments - a digital form of gold with a built-in settlement infrastructure.
Ammous’ firm grasp of the technological possibilities as well as the historical realities of monetary evolution provides for a fascinating exploration of the ramifications of voluntary free market money. As it challenges the most sacred of government monopolies. Bitcoin shifts the pendulum of sovereignty away from governments in favour of individuals, offering us the tantalising possibility of a world where money is fully extricated from politics and unrestrained by borders.
The final chapters of the book explores some of the most common questions surrounding Bitcoin: Is Bitcoin mining a waste of energy? Is Bitcoin for criminals? Who controls Bitcoin, and can they change it if they please? How can Bitcoin be killed? And what to make of all the thousands of Bitcoin knock-offs, and the many supposed applications of Bitcoin’s ‘blockchain technology’? The Bitcoin Standard is the essential resource for a clear understanding of the rise of the Internet’s decentralised, apolitical, free-market alternative to national central banks.
Saifedean Ammous is Professor of Economics at the Lebanese American University. This book has useful summaries of the history of money and the development of Bitcoin but his arguments as to how Bitcoin meets the definition of money are unconvincing - no matter how many times he repeats his points - and his Austrian school economic arguments about Bitcoin’s superiority for settlement smacks of wishful thinking over the real world practicalities.
I’m going to preface this review by saying that I am a cryptocurrency skeptic and I came at this book as someone who has a limited grasp of economics and finance (having studied it as part of regulatory theory and financial markets regulation during my Masters). However, I am interested in learning more about cryptocurrency and I think that I am open to having my mind changed. The other thing to say from the outset is that this book was published in 2018 and I am reviewing it in 2025 so I read this knowing about the subsequent tumult in Bitcoin pricing, which definitely affected how I read this book.
Bitcoin is actually the end point of this book. Ammous is a big fan of Austrian School Economics and Hayek in particular and what this book is really about is his opposition to so-called Government interference in monetary policy and how everything went wrong when the world moved off the gold standard.
The first seven chapters of this book set out the history of money and - for me - were probably the most interesting in the book as they set out the particular elements of what goes to make money important and what money should do. Ammous described how societies moved to using gold as the basis of money together with the benefits and disadvantages of the same (including the impact of clipping) and how this gradually sought to control the gold supply until the decision was taken to move away from the gold standard to fiat money. The big problems come when Ammous moves onto looking at the consequences of fiat money, including inflation and the influence of Keynes and move to Keynesian economics.
I do not have a dog in the fight when it comes to Keynesian economics and if Ammous was making arguments purely about the theory and its impact on society then I would not have an issue. The problem is that Ammous decides to keep playing the man. He attacks him for his background, for the fact that he did not study economics (which is laughable as economics was not really a university degree at that time and Keynes did study maths) and at one point accuses him of being pedophile (citing a love rival of Keynes and citing only one “source”, which does not take into account context). The more he decides to make an attack, the more nasty, personal and childish it all reads - certainly not something that you would expect from a serious academic who wants to be seen as a credible source.
At the same time (and as someone who has some knowledge of central banking and financial regulation) Ammous clearly sees central banks as being subject to control by western governments when certainly recent history demonstrates that this is not the case, most recently the refusal of the Bank of England and the US Federal Bank to lower interest rates even when doing so would be political expedient.
It’s only in the final three chapters that Ammous moves onto Bitcoin. Again, there is interesting material here. He sets out how Bitcoin was created and how it works (including what the blockchain is) in a way that is easy to follow. Ammous clearly sees Bitcoin as a method of money that meets what - for him - the key requirement that it be beyond the control of Government. In this, I cannot disagree with him. Whatever the critiques of Bitcoin it’s a genie that’s out of the bottle and is so disseminated that it cannot be brought under central control of regulation.
I also cannot deny his argument that Bitcoin is something that stores value, although I think that this value is highly volatile and susceptible to market forces. However, Ammous doesn’t reconcile how the value of Bitcoin is dependent on users faith in it and I think this is a critical point. In his historical chapters he looks at how some forms of money (shells, stones and beads) lost value when people were able to copy it more cheaply, and Ammous thinks that it’s the replication that’s important when actually it’s the faith that people put in it. Yes, a flood of additional money undervalues it, but it’s undervalued because no one has faith in the intrinsic value of the original. Even gold - which is Ammous’s go-to as perfect money - is only valuable because people have faith that it remains valuable and in part that’s because it’s difficult to mine and has uses outside money (e.g. for jewellery).
Ammous does not ever set out what Bitcoin’s value is. Personally, I think it’s only valuable because it’s a means of exchange for other currencies - notably US dollars or Euros - and people only hold it because they think that it’s going to be worth more US dollars and Euros. That’s kind of ironic given how disparaging Ammous is about US dollars and the volatility of the same. It’s also why financial institutions tend to view it as an asset class more than a form of money in its own right because much as Ammous may claim that Bitcoin can be used to buy things (citing the fact that it was once used to buy a pizza in its early days) in practice very few places seem to take it.
I also wasn’t convinced by Ammous’s take on criticisms about Bitcoin. For example, his argument against the fact that mining Bitcoin uses huge amounts of electricity, he says that it's not wasted because the miners find it's worth paying for. This completely ignores the draining effect it has on the grid, demonstrated by the fact that one of the reasons China banned it was because of the effect it had on its grid and when miners moved to Uzbekistan and Kazakstan, the effect on their grids in turn sparked protests, not to mention the fact that here in Britain we have gone through massive increases in costs in electricity which means that any energy used by British Bitcoin miners has a detrimental effect on the prices paid by other electricity consumers, which is damaging. His argument that Bitcoin isn’t used by criminals is also unconvincing because although the ledger should make it easy to identify users, you still have to track those users down and verify who they are, which is not easy given that they can be located anywhere.
Ultimately there are some interesting elements in this book but I don’t think Ammou makes his case and frankly he undermined some of his own credibility with his attack on Keynes.
The Verdict:
Saifedean Ammous is Professor of Economics at the Lebanese American University. This book has useful summaries of the history of money and the development of Bitcoin but his arguments as to how Bitcoin meets the definition of money are unconvincing - no matter how many times he repeats his points - and his Austrian school economic arguments about Bitcoin’s superiority for settlement smacks of wishful thinking over the real world practicalities.
Thanks to the Amazon Vine Programme for the review copy of this book.