Recently, the French government likened bitcoin to other “unproductive assets” since it’s purely a vehicle for speculation with no intrinsic value…
But do those claims hold any water? With a bit more depth of analysis that the French government cares to allocate, you’ll quickly realize that no, bitcoin is not even close to unproductive. In reality, it may be the key component to unleashing a historic boom in productivity, greater than that of the Industrial Revolution or post-World War economic expansion.
What Are Unproductive Assets?
As defined by traditional terms, unproductive assets are items that don’t produce income for the holder, like collectible art or your personal vehicle. While these things may help you liven up your home decor, or get you where you need to go, nothing about them fundamentally generates you income. Their “value” comes from personal satisfaction rather than delivering tangible capital to spend on future endeavours.
Is Bitcoin An Unproductive Asset?
The French government used the term “unproductive asset” to justify a bill that would enforce taxation of unrealized gains. Specifically, they proposed replacing a real estate wealth tax with an “unproductive wealth tax” on dormant assets like Rolex watches, vacant real estate properties, and the other thing they consider unproductive: bitcoin.
Sticking to the rigid technical definition of “unproductive assets” may concede that bitcoin is not generating direct or indirect income on its own in the same way an Airbnb or a landlord’s apartment complex would, but using that stiff definition to impose taxation on an asset like bitcoin is like shooting yourself in the foot just before the race starts.
If the French government proposes that greater taxation of “unproductive wealth” will lead to greater quality of life, they are either dangerously misinformed or nefariously incentivized.
Unfortunately, the reality is probably a mixture of both.
How Bitcoin Is Productive For The World
It’s actually fair to argue that bitcoin is the most productive asset in the world, and it’s earning that title because it’s designed to address the three most important facets of human life: time, energy, and autonomy.
Bitcoin Saves You Time
When you understand that bitcoin is a perfectly-optimized vessel for personal savings, treating it as such reveals how it’s actually helping people reclaim the time they lose to fiat money’s ever-decreasing purchasing power.
When the average person allocates money to investments, they generally have one goal in mind: for it to grow their wealth.
People want their wealth to grow because they want more time. Time is ultimately the scarcest thing we have, and having more of it gives us freedom to pursue whatever is meaningful to us.
Understanding this, we must consider that bitcoin is actually the quintessential tool for saving time and maximizing the world’s productivity. When we work, we’re investing time in the present to earn more time in the future, for retirement, time spent with family, etc. Prior to bitcoin, the people’s desire for time was fundamentally at odds with the design of our money. Of course, if you allocate your time wisely enough, it still pays off in the end. But with the exponential rate of inflation that all fiat money inevitably experiences, it’s becoming harder and harder for the average person to earn the same amount of time that they once were able to. What that looks like in practice is higher prices, lower quality products, greater reliance on multiple income streams, fewer opportunities for ownership, and all the downstream negative effects to our long-term health, wealth, and time that evaporating money fosters. Our money was working against our incentives, forcing us to focus energy that could have been spent on our personal pursuits instead on money management.
However, bitcoin now aligns our incentives with reality. When you save in bitcoin, you store the time and energy spent at your job in a vehicle that’s perfectly scarce, impossible to coerce, and free from manipulation. No tinkering with interest rates or government debt creation can affect the fundamentals of bitcoin. And as long as the fundamentals remain intact, the demand for such an asset is infinite. In turn, what flows downstream from bitcoin is the inverse of fiat: lower prices, higher quality products, less reliance on multiple income streams, greater opportunities for ownership, and ultimately more time. Bitcoin’s fiat-denominated price volatility may swing violently in the short term, but it’s always trending upwards in the long term as the world’s money printing sends the value of fiat currencies downwards.
Bitcoin Focuses Your Energy
In a fiat-denominated world, we are constantly fighting two financial battles: earning enough money to support our lives, and earning enough to outpace inflation. As the rate of inflation increases, the difficulty of this battle grows.
Think of it like rowing a boat on a river, except the finish line of financial independence is upstream. If you don’t row at all, the river sweeps you further and further away from that finish line. If you only row at one speed, you’ll make better progress. But the thing about this river is that the current is getting faster and faster. Therefore, if you don’t improve your rowing technique, your efforts will still fail in the end and you’ll never reach the finish line. And depending on where you live, your country’s current may be flowing two, three, or even ten times as fast as another nation’s. So the battle isn’t exactly fair for all people either. Some are disproportionately disadvantaged over others.
In a bitcoinized world, however, we eliminate the inflationary battle entirely, leaving us to focus solely on supporting our livelihoods. Since inflation is not a consideration any longer, think about how much energy that frees us to focus on more worthwhile pursuits. You no longer have to be an employee and an investment manager, or a business owner and a hedge fund manager. You can just be an employee or a business owner. You don’t need to worry about diversified baskets of investments and devising portfolio strategies to offset inflation. You can save money effectively, trusting in a vehicle designed to do that heavy lifting for you. Bitcoin helps you focus your energy on what matters, whether that be cultivating a strong family, exploring personal pursuits, or developing greater skills to improve your life even further.
The river’s current remains at a steady pace on a Bitcoin standard. As long as you’re rowing properly, you’ll eventually reach your destination. You have the option to improve your rowing technique and get there faster, but it’s no longer a requirement that redirects your focus on what matters to you.
This river analogy isn’t to say that you can just coast on a Bitcoin standard either. If you’re lazy and don’t work at all, the river will sweep you away just as it always has. Competition still exists, and improving your skills is always important to remain valuable in the marketplace. But what this river analogy demonstrates is that bitcoin levels the playing field to be more equitable for everyone to compete in.
Bitcoin Offers You Autonomy
When you have more time saved, and less energy fragmented, you have greater autonomy to move forward freely in the world. Bitcoin helps people get up out of the inflationary ditch and gets them back on the open road. No matter what it is you do for a living, bitcoin provides an environment for greater productivity on all fronts. You no longer have to allocate your productivity to combatting the reality of fiat money – you can use bitcoin as money to propel you forward in your pursuits. On a Bitcoin standard, productivity skyrockets, competition sharpens, costs fall, and quality of life rises for everyone. Even without direct access to bitcoin of your own, you still benefit from its downstream effect on society at large. By removing the drain of inflation from the world, we get to enjoy higher quality companies, safer living environments, cleaner facilities, stronger communities, and all the fruits that come with greater autonomy. We get to where we want to go faster, and free up our mindspace to grow our ambitions further and achieve more than we possibly could have otherwise.
The Productivity Boom Will Be Unprecedented
If we take a look back through history, there is one major period of time that stands alone in its impact on modern day life.
As highlighted by none other than Neel Kashkari’s Minneapolis Fed, the world reached an inflection point in productivity following the 19th century Industrial Revolution and back-to-back world wars. It was the point at which our productive capacity began to exceed the world’s population. With new innovation under our belts, humanity created the tools necessary for explosive growth, making our processes more efficient than ever before.
For example, the engine revolutionized our modes of transportation, which as a result made international trade more efficient, thus improving our economies of scale. One “small” innovation led to an outpouring of economic advancement for the world. Put multiple of those “small” innovations together, and you get a world that looks mythical to the societies that came before it.
Today, a new concoction of innovation is ushering in another productive leap forward. But the world that it creates will come with drastically more advancement than what an industrial revolution could ever offer.
“You have less in common with an average person from the year 2123 than with a Roman citizen from the year 23, even though the future person is 20x closer to you in time.”
– Luke Broyles
Bitcoin and artificial intelligence. Both are innovations that go beyond merely isolated advancements in one niche. What these technologies represent is essentially the emergence of digital organisms. Not only do these innovations come with major productive capacity – they have the ability to carry out that productivity without any human application. An engine is great and all, but if no person decided to attach it to four wheels, nothing would have changed for the world. The same can’t be said for things like bitcoin or AI. As previously described, the mere existence of bitcoin instills the action within humanity. It’s a technology that works on us rather than having us work for it. Artificial intelligence takes human actions into its own “hands” (whether robotic or software-based), so that instead of a person screwing bolts together in an assembly line, or filling out an Excel spreadsheet, they can devote that saved productivity elsewhere in the economy.
The end result of both is people having more time, energy, and autonomy to focus on greater heights of achievement. The impacts of digital organisms on the world’s productive capacity are so profound that if anyone living today were suddenly placed 100 years into the future, they probably wouldn’t even recognize that it’s planet Earth they are still standing on.
If only the legislators of today’s world took the time to understand the assets they are trying to regulate, then they too could see how absurdly counter-productive the notion of taxing long-term Bitcoin holders is. But hey, cavemen quite enjoyed their caves too.
Final Thoughts
Bitcoin is not a Rolex watch or a fine piece of art whose beauty only lies with the beholder. It’s a technology and a force that’s alleviating the world from the inflationary pressures of a monetary system that works against the interests of everyone. Even the state actors who uphold this system have sacrificed their own fulfillment for personal enrichment, enslaving themselves just as they do their citizens.
Bitcoin is not just a monetary reform; it is equally an intellectual, philosophical, and spiritual reform that shifts our incentives away from humanity’s worst desires – greed, power, and control – towards abundance, liberty, and humility. Bitcoin has no bias. By taking the humanity out of our money, and allowing the confines of mathematics, physics – truth – to govern us, the vessel we use to store our time and energy now works for the benefit of all people.
Your non-productive luxury watches, cars, and art collections can’t do the same. And they certainly can’t save the French government from its own destruction. Trying to impose taxation on the citizens’ bitcoin only ensures that destruction comes sooner. After all, how can anyone expect that money that’s designed to self implode wouldn’t naturally incentivize the same thing for its owners?
Think about what’s truly productive for your life, and opt out of the destruction with bitcoin.
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