The deferral of immediate consumption in exchange for a more secure future is a widely discussed concept in the bitcoin and broader economic communities.

This sacrifice of the present allows us to invest our current energy into the future, leading to exponential gains that would be impossible to achieve under a shorter time horizon.

Unfortunately, this theory also works in the opposite direction. What happens when we choose to live beyond our current means and defer the costs to our future selves?

We don't need to look far back to see an example.

As governments shut down the economy we rely on for our food, shelter and transportation, they printed money as a band-aid solution to any potential consequences. While these shutdowns seemed like a questionable idea at the time, the aftermath only proves the economic outcomes to be far worse.

Governments lived beyond their means, and we are now paying the costs.

As it turns out, wealth isn’t produced by adding more zeroes to account ledgers. Real wealth, the kind required for sustaining human life and prosperity, comes in the production and delivery of actual goods and services.

News

📉 Markets bleed, Fed responds

Markets plunged on the heels of crumbling consumer sentiment and yet another disappointing inflation report (more on this below). Bitcoin plummeted to the $20k range, a level not seen since December 2020. The S&P and Nasdaq remained in official bear market territory, down 22% and 33% respectively from previous highs.

The Federal Reserve responded with a 75bps interest rate hike Wednesday, the highest rate hike in nearly 30 years. Markets inched slightly back up on the announcement, signaling that the hike was likely priced in earlier this week. The story remains the same, just uglier with time: equities, bonds, and bitcoin are all down with no real safe haven besides cash. Even then, when priced in gas or groceries, cash quickly becomes an unattractive asset.

The Fed remains committed to its only tool in confronting inflation: increasing borrowing costs in an effort to reduce demand and hopefully bring prices down. As a result, predictions that we are headed into a recession have only grown louder.

📚 Jack Dorsey and Jay-Z team up to launch "the Bitcoin Academy"

The founder of Twitter and Block (formerly Square) and legendary rapper have collaborated to start an academy that will focus on bitcoin and financial literacy. The first classes will be available for residents of the Marcy Houses complex in Brooklyn, the now-famous neighborhood where Jay-Z grew up. The Bitcoin Academy plans to expand its offering to other locations in the near future.

Dorsey noted "Bitcoin is becoming a critical tool for many in Africa and Central and South America. We believe the same potential exists within communities in the US," Dorsey tweeted along with a link to the academy's official website. "Our goal is to prove that making powerful tools more available to people enables them to build greater independence."

⛽️ Inflation's not transitory and consumers know it

The CPI rose to 8.6% in May, which is its highest level since 1981.

Correspondingly, consumer sentiment fell far below economists' expectations of a reading of 59, registering a lowly 50.2. 46% of those surveyed blamed inflation for the negative assessment. The June reading is a record low since the metric began being tracked in 1952.

Despite the low sentiment, spending has remained high as inflation has surged particularly with respect to necessities such as gas and food. As the Federal Reserve continues to try to curb inflation, the supply side is proving to play a larger role than diminishing demand, at least at the moment.

BITCOIN ADOPTION CONTINUES

American Express launches its first bitcoin rewards card. The payment services giant announced its first bitcoin and crypto rewards card in a partnership with digital asset company Abra.

Fort Worth city council upgrades their bitcoin miner. After beginning their own bitcoin mining operation in April, city officials announced they've upgraded their hardware to a Bitmain Antminer S19, which they say will mine more bitcoin while using less energy.

NYC Mayor wants BTC mining moratorium bill vetoed. Mayor Eric Adams has called upon NY State Governor Kathy Hochul to reject the bill that places a 2-year moratorium on new bitcoin mining operations. The mayor cited the incredible economic benefits that have come to New York as a result of bitcoin mining, saying "we can't continue to put barriers in place."

Bitcoin "payment" bill in Brazil. A proposal to recognize bitcoin and other digital assets as payment methods has been introduced to Brazil's National Congress. The bill would play a major role in bitcoin becoming an official currency in the crypto-friendly country and could be a huge development if approved.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week: Bitcoin is a constant.

All across the world, people take on difficult jobs, working long hours, sacrificing their time, energy, and sometimes health in order to earn a living.

Earning a living can be more simply defined as "making money."

What about money makes it so valuable? Why are we prepared to sacrifice so much of our lives in exchange for money?

Money is the glue that holds commercial society together. It allows us to exchange the fruits of our labor for the fruits of others. Money allows us to benefit from the unique skills and output we as humans collectively possess. In a way, money is the great unifier.

Stability in money is paramount as it 1) enables price discovery in markets by providing an accurate metric to value necessary goods and services and 2) ensures the integrity of our share and contribution by protecting against its dilution.

Dollar inflation continues to rear its ugly head and has proven to be anything but transitory. When you hold dollars your counter-party is the Federal Reserve, which can dilute your holdings whenever they deem necessary.

Some macro inflation highlights include:
US: 8.6%
UK: 9%
Mexico: 7.7%
Turkey: 73.5%

Some micro inflation highlights include:
Meat, fish and eggs: 14.2%,
Used cars and trucks: 16.1%
Gasoline: 48.7%

The money supply increased 40% since February 2020.

Alternatively, bitcoin's current inflation rate is 1.74%. In two years, it will drop to .84%. It will continue to gradually decline until it eventually hits 0.

Which monetary network appears more stable to you?

Ready to get started with bitcoin? Coinbits is the best option. It's fast, safe, and free to create your account.

COIN CHECK

What's the difference between the monetary policy of the Bitcoin Network (BTC) and the Federal Reserve (USD)?

1. Bitcoin's monetary policy is fixed and predictable, the Fed's is not fixed and not predictable.

2. Bitcoin's monetary policy is not fixed but is predictable, the Fed's is fixed but not predictable.

3. Bitcoin's monetary policy is fixed and not predictable, the Fed's is not fixed but is predictable.

4. They're similar, but dollars are physical and bitcoin is digital.

Check your answer at the end of the page.

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ANSWER

1. Bitcoin's monetary policy is fixed and predictable, the Fed's is not fixed and not predictable.

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