WHY BITCOIN?

Preface

A quick preface before we dive in

I’m not a financial advisor, I’m not a professional writer, and I don’t even hold a huge stack of Bitcoin (yet). I have zero incentive to “sell” you anything.

ImpactPlate is simply a fun side project I started because I needed the tool myself and couldn’t find anything that actually fit. It worked for me, felt good to actually build something, and so it seems right to try and produce something for the community.

I’ve been a software engineer for over fifteen years. I love the craft, but I can clearly see the writing on the wall: the entire industry, and honestly ALL of the jobs, are heading toward obsolescence as AI evolves and robotics emerge. We’ve already watched the goalposts move at lightning speed. First it was “maybe AI is a nice gimmick chat but it could never touch creative work like us meat-brains,” just to see it kill it first. Then it became "AI will still need overseeing and constant prompting," well, have you seen the latest office AI assistant apps? Currently it’s "blue-collar is safe because robots are still years away” ... we'll see about that.Forethought on preparing now for fast AI-driven change The point is - this will change the world as we know it, and we have very little timeTim Urban on fast-moving AI progress and why it may arrive sooner than expected to prepare.

I turned forty last year. I grew up in Poland and lived through the tail end of the communist system my parents and their generation risked everything to fight. I’ve witnessed our low-trust society transform into a high-trust one, the kind where you could leave your wallet on a gym bench or coat rack and actually find it there later, where merging into traffic is an act of courtesy instead of a fight for survival. Those quiet markers of civilization are visibly eroding in the places that once taught the world how to build them. We should seek to preserve them.

I’ve also watched the West, once the shining example we aspired to, slowly warm to the very same ideas we barely managed to escape from. Universities have become increasingly detached from reality; young people bury themselves in debt for degrees that have no practical use, aside from peddling those toxic ideas to the next generation, a self-propelling idiocracy. The new generation is not prepared.

I survived hyperinflation as a kid. I remember my parents’ life savings evaporating in a currency that became worthless almost overnight, while hard assets like real estate quietly held their value. That lesson never left me.

We all live through it, just slow enough so you don't ever notice. Essentially, if inflation is at 10% and you are able to save $100k in cash in a year, you are hard-capped at $1M of wealth. The year you get to $1M, inflation takes away 10% of it, the $100k that you just saved. Numbers sure go up but in real terms you are getting nowhere. You will never get to that $2M dream house because next year it will be $2.2M, and you can't even retire, because your savings evaporate. Might as well just give up, blame the rich, go out for that $300 dinner and let the government take care of you right?

It takes a while to realize, and few get it, that in the current system - quite counterintuitively - the only way to get ahead is to go the other direction - get in debt. There is a good book about this by Robert Kiyosaki called "Rich Dad Poor Dad"Robert Kiyosaki on assets, liabilities, and making money work for you. It explains how credit makes the inflation work for you and how (as long as you have the balls) to take advantage of it. Well, it did work for a while, but not quite so anymore. House prices reached escape velocity. They rise so fast that for young people just out of college, even saving for that 20% down payment is out of reach. We missed the boat.

The Problem

The inevitable collapse of fiat

It’s a heavy realization to swallow, but what we’re living through isn't a fluke or a temporary run of bad luck. If you look at the long-term data, it starts to look less like a crisis and more like a schedule.

History is a graveyard of global reserve currencies. The Portuguese Real, the Dutch Guilder, the British Pound, and now the US Dollar—they have all followed a remarkably similar lifecycle that spans roughly a century. Not a single one has survived, and the reasons are always the same.

The Seven Stages of Empire and Currency

Stage 1: Military Dominance. It begins with a nation securing critical trade routes through military might. Portugal mastered oceanic navigation; the Dutch East India Company functioned as an armed corporation; Britain "ruled the waves"; and post-WWII America secured global trade lanes with naval power.

Stage 2: Massive Trade Surpluses. Control of these routes leads to the accumulation of global wealth. The controlling nation exports aggressively and imports gold and raw materials. For the US between 1945 and 1970, this meant hoarding a massive portion of the world's gold while selling goods to a rebuilding world.

Stage 3: Formalizing Reserve Status. The world officially adopts the currency. For the US, this was the Bretton Woods agreement in 1944. But this is the peak. For a modern fiat system, it creates the "Triffin Dilemma": to provide the world with enough liquidity (dollars), the reserve nation must systematically run trade deficits, sending its currency abroad.

Stage 4: Deficit Spending and Reversal. The nation shifts from producing to consumingU.S. break from the gold standard in 1971 and it's consequences. The privilege of printing money to buy real goods is intoxicating. Manufacturing shifts overseas, and the nation begins living beyond its means, financed by liquidating past wealth and taking on debt.

Stage 5: Currency Debasement. When deficits become unsustainable and borrowing is too expensive, governments reach for the "Big Red Button"—money printing. Whether it's the Roman Empire clipping coins, Portugal reducing the silver content in theirs, or the US expanding the money supply exponentially (QE, pandemic stimulus), the mechanism is the same. This is where the US dollar sits today.

Stage 6: Loss of Confidence. As the currency debases, trust cracks. The world begins looking for alternatives. We see this now as central banks hoard gold at record rates, and nations discuss settling trade in non-dollar currencies.

Stage 7: Replacement and Collapse. A new standard emerges. The transition is never smooth; it is chaotic and destructive to existing wealth. Unlike previous regional collapses, the dollar is deeply embedded globally, meaning its decline carries unprecedented systemic risk.

What are the consequences of the seven-stage cycle?

The most insidious effect of this decline is that it forces a society to move from a low-time-preference mindset to a high-time-preference one.

When money is sound, people save for the future and build things that last. But as the currency melts in your pocket, you are forced to become a speculator just to survive. You can’t simply be a good engineer or a dedicated teacher and expect to retire; you are forced to gamble on assets just to keep pace with the theft.

This economic pressure eventually bleeds into our culture. When the system itself feels like a scam, people stop playing by the rules. We stop looking thirty years ahead and start looking only at the next thirty days. We go from saving for our children to living on credit we know they can never repay. Saifedean Ammous touches on it in his excellent book "The Bitcoin Standard"Saifedean Ammous on sound money, monetary history, and Bitcoin.

The Big Red Button and the Destruction of Purchasing Power

When a government presses the "Big Red Button" to print money, it is not a consequence-free action. It acts as a hidden tax—an industrialized theft from the population. It distorts price signals and causes asset inflation, benefiting the wealthy who own stocks and real estate while punishing the working class whose wages can’t keep up.

As life becomes unaffordable, both parents are forced to work just to cover a mortgage, birth rates decline, and the nuclear family strains. The government, attempting to fix these secondary issues, prints more money, creating a doom loop. On a fiat standard, your money is actively stealing from youMedieval price and wage references to tickle your imagination.

The Four Pillars of the Bitcoin Protocol

It’s easy to look at the wild crypto market and assume Bitcoin is just a digital Ponzi scheme cooked up overnight by some guy in a basement. But the truth is actually much less dramatic. Bitcoin wasn't invented out of thin air in 2008; it’s a piece of systems engineering built on decades of prior work.

Satoshi Nakamoto’s breakthrough wasn't inventing a magical new technology from scratch. Instead, he took four distinct, battle-tested pieces of computer science and finally figured out how to snap them together to solve that double-spend problem without a central boss.

1. The Digital Fingerprint: Hash Functions (1953 / 1978)
   • The Origin: The concept of "hashing" was first described by Hans Peter Luhn at IBM in 1953 to organize computer memory.
   • The Cryptographic Shift: In 1978, Michael Rabin and Ralph Merkle formalized how these could be used for security.
   • The Use Case: It acts as a one-way "shredder." You can turn a 500-page book into a tiny, unique string of characters. If you change a single comma in that book, the "fingerprint" changes completely. It’s the glue that makes the ledger tamper-proof.
2. The Digital Signature: Public-Key Cryptography (1976/1977)
   • The Breakthrough: Whitfield Diffie and Martin Hellman published "New Directions in Cryptography" in 1976, proposing a system where you could have a "public" address and a "private" key. A year later, Ron Rivest, Adi Shamir, and Leonard Adleman (the "RSA" team) created the first practical algorithm.
   • The Use Case: This is your digital vault. It allows you to prove you "own" a specific amount of Bitcoin and authorize moving it without ever revealing your secret password to the network.
3. The Unforgeable Cost: Proof of Work (1993/1997)
   • The Concept: First proposed by Cynthia Dwork and Moni Naor in 1993 as a way to stop email spam (by making the sender’s computer do a tiny bit of "work" first).
   • The Implementation: In 1997, Adam Back created Hashcash, which is the direct ancestor of Bitcoin's mining system.
   • The Use Case: This is the bridge to the physical world. It forces computers to burn real-world electricity to update the ledger. It makes cheating so expensive that it’s mathematically smarter to just play by the rules and earn the rewards.
4. The Gossip Protocol: Peer-to-Peer Networking (1979/1999)
   • The Early Days: The Usenet system in 1979 was one of the first decentralized messaging networks.
   • The Pop Culture Peak: In 1999, Shawn Fanning launched Napster, proving to the world that you could share files directly between millions of home computers without a central server.
   • The Use Case: This is Bitcoin’s "anti-fragility." There is no central office to raid or CEO to subpoena. The network lives everywhere and nowhere, with thousands of independent nodes "gossiping" to keep the ledger in sync.

Proof of Work and the Arrow of Time

The true genius of the protocol was not in the digital technology itself, but in tethering this digital "gossip" to the physical laws of the universe—specifically to time and energy.

The digital world has no inherent concept of physics; it’s an abstraction where you can rewind, copy, or delete without consequence. Satoshi realized that to create true digital scarcity, he had to enforce a cost that couldn't be "coded" away.

Proof of Work requires miners to expend massive amounts of physical electricity to find a specific mathematical output. It is a brute-force guessing game that cannot be faked. This energy represents "unforgeable costliness."

By requiring this energy, Bitcoin establishes an Arrow of Time in cyberspace. The past is cemented in place because altering an old transaction would require re-doing all that computational work—burning all that electricity—all over again. The future is unknown because the next "puzzle" hasn't been solved yet. Bitcoin effectively bottles physical time and energy into a digital protocol, acting as a decentralized clock that ticks roughly every ten minutes.

There Is No Second Best

Why altcoins fail

Why Not Gold?

For five thousand years, gold was the best money humanity had. It was scarce, beautiful, and almost indestructible. Civilizations rose and fell, but gold endured. It earned its throne.

But gold had a fatal flaw: it was physical. In 1933, Franklin Roosevelt signed Executive Order 6102 and confiscated gold from every American citizen overnight. By the late 1960s, the US was printing far more dollars than it held gold to back them — effectively cheating its trading partners. When France and others started demanding actual gold for their dollars, the bluff was called. In 1971Charts showing what broke when the dollar left the gold standard, Nixon had no choice but to slam the gold window shut. Gold didn't fail because it was bad money — it failed because it was a sitting target. Too heavy to flee with, too easy for a state to seize, and impossible to audit or send across the world in seconds.

Bitcoin inherits and improves on everything that made gold great — absolute scarcity, durability, fungibility — while eliminating every weakness. It cannot be confiscated with a presidential signature, it weighs nothing, and it moves at the speed of light. The comparison table above proves the point: Bitcoin matches or exceeds gold on every axis except current acceptance, and that is a matter of time, not design.

I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop.

— Friedrich Hayek, Nobel Prize-winning economist, 1984

If you look at the wider cryptocurrency market, almost every other token—Ethereum, Solana, Cardano—has abandoned Proof of Work for "Proof of Stake" or other consensus mechanisms. They view physical energy expenditure as a bug, a waste of electricity. They are fundamentally mistaken; it is the core feature.

Abstract Power vs. Physical Power

To understand why altcoins fail as true money, you must understand the difference between abstract power and physical power.

Abstract power is the power wielded by CEOs of tech platforms or central bankers. Mark Zuckerberg has immense abstract power; he can change algorithms, censor voices, or alter reality on his platform with a keystroke. He expends no physical energy to do this, and there are no physical constraints to his power within that system. Similarly, central banks use abstract power to print trillions of dollars, diluting wealth instantly without physical effort. Abstract power relies entirely on trust, and history proves that this trust is inevitably broken.

Physical power is bound by the laws of thermodynamics. It is tangible, verifiable, and constrained. When you defend something with physical power, there are real-world costs.

Proof of Stake systems operate entirely in the realm of abstract power. They are effectively "Proof of Rank," where those who hold the most tokens dictate the rules, validate transactions, and earn the most rewards. There is nothing physically preventing a massive entity (like Wall Street or a sovereign state) from buying up a majority of the tokens and seizing control of the network. They operate in a simulated universe with no tether to physical reality.

Bitcoin uses electric physical power to defend its network. You cannot hack a law of thermodynamics. You cannot print more hash rate out of thin air. Even if BlackRock buys up massive amounts of Bitcoin, they buy exactly zero control over the network. They cannot alter the consensus rules or rewrite history, because the ledger is protected by an impenetrable wall of encrypted energy, not shareholder voting rights. Bitcoin replaces the need to defend wealth with human lives and military force"Softwar" by Jason Lowery — Bitcoin as a national strategic asset and projection of power (the traditional protectors of gold and property) with the peaceful expenditure of electricity. There is no second best because Bitcoin is the only digital asset anchored to objective, physical truth.

Digital Capital

The likely successor

Let's face it, there are no guarantees in life. Even the best, purest, and most promising things can die. There is a pretty famous 2,000-year-old book that touches on this topic, if you know what I mean. But good ideas grow. They gain traction and are adopted by more and more people every day. You may not need it right now, living a pretty cozy life in the West in the current system. You have no rockets flying above your sky, no clan wars to fight, no need to prepare for the apocalypse. But every crisis in the world pushes those affected towards it; it becomes their only line of hope, their escape vent. Institutions catch on to the trend and build upon it, and things evolve.

Most of the planet's population doesn't need to know how all of this works, much like you don't need to know the exact proportions of ingredients in your glass of Coke to enjoy it, or how memory in your phone is allocated to send a text.

We are transitioning from the digital transformation of information (books, music, media) to the digital transformation of capital. Currently, roughly $900 trillion of the world's wealth is stored in analog assets—real estate, gold, bonds, equities, and fiat currency.

If you take the time to look at it closely, you might realize that most of this cake is for the taking. Gold has its value in technology, industrial applications, and jewelry. Art is history and culture. Cars and collectibles are cool. Equities represent corporate performance, and we need real estate to live in. But all of these assets are currently being used as temporary, imperfect stores of value.

There is no fundamental reason for a Pokémon card to be worth $1 million, right? Similarly, there is no reason for a plumber to own Nvidia stock—it’s not like he’s going to be involved in board votes—or for a mega-fund like BlackRock to own a million single-family homes. Their value is wildly inflated because there is simply nothing better to replace them with.

These analog assets are fragile. Physical property degrades, requires maintenance, gets taxed endlessly, or can be expropriated. Equities carry corporate execution risk. Bonds and fiat currencies are actively debased by governments. Gold, while historic, is clumsy to transport, difficult to verify, and fundamentally inflationary (as the price rises, miners find it profitable to extract more gold from the ground).

Here's the kicker though: it's not only Bitcoin that is gaining ground on these, the cake is growing too.

Pure Economic Energy

And I don't just mean it’s growing because governments are printing more paper to inflate the numbers. The cake is growing because of us. Human ingenuity is accelerating at a breakneck pace. We are building artificial intelligence, automating labor, advancing energy production, and plugging billions of people in developing nations into the global economy, pulling them out of poverty. We are generating entirely new paradigms of real value at a speed history has never seen.

Bitcoin represents a quantum leap: pure economic energy. It strips the "store of value" premium out of those analog assets and places it into an immortal, immutable, and indestructible digital vault.

Unlike a physical building that you cannot transport if you flee a regime, Bitcoin can be teleported globally at the speed of light. It can be held safely in your mind via a seed phrase. It is the ultimate treasury asset for corporations (transforming corporate finance by providing an accretive asset rather than a dilutive one like fiat cash), and the ultimate savings vehicle for billions of individuals who lack access to stable property rights.

Imagine a city in cyberspace - a "Cyber Manhattan" consisting of exactly 21 million blocks. When you acquire Bitcoin, you are acquiring prime digital real estate that will never decay, never require a roof repair, and can never be arbitrarily taxed out of existence by a local mayor. It is a city that will last 10,000 years.

— Paraphrasing Michael Saylor’s “Cyber Manhattan” analogy, 2024

So, what are the flaws?

No honest case for Bitcoin can ignore its genuine trade-offs. The base layer is deliberately slow, processing roughly seven transactions per second—a fraction of what Visa handles. But this is a design choice, not an accident: maximum decentralization and security demand strict limits on data throughput. Layer 2 solutions, like the Lightning Network, builds on top of Bitcoin protocol and exist to make transactions instant and practically free, though the user experience for these layers is still maturing.

Volatility remains brutal. Bitcoin can lose 50-80% of its fiat value in a matter of months before recovering over a period of years. For anyone with a short time horizon, this is a real and serious risk. As the Power Law model in the next section suggests, this volatility is compressing as the asset matures, but it has not disappeared.

Self-custody is unforgiving. Lose your seed phrase and your wealth is gone forever. There is no customer service hotline, no password reset. This is the price of sovereignty: absolute ownership requires absolute responsibility. For billions of people accustomed to centralized safety nets, this learning curve is incredibly steep. However, for those willing to trade a degree of sovereignty for convenience, the rise of Bitcoin ETFs and modern custodians now allows people to hold it safely through traditional financial rails.

The energy footprint is massive. Bitcoin mining uses roughly as much electricity as a mid-sized country. Whether this is wasteful depends entirely on what you believe it secures. If Bitcoin is a global, neutral settlement network protecting trillions in value, the energy cost is justified—after all, the traditional banking system and the military apparatus required to back fiat currencies consume staggering amounts of resources. But the reality of Bitcoin mining is actually far more nuanced: miners are location-agnostic energy buyers of last resort. They act as load-balancers for power grids, absorbing excess capacity when demand is low and shutting off instantly when residential demand spikes. They incentivize the construction of power plants in remote parts of the world where it wouldn't otherwise be financially viable, and their exhaust heat is increasingly being captured to warm buildings and greenhouses.

Regulation is a lingering headwind. Governments cannot kill the underlying protocol, but they can make it incredibly painful to use. They can ban exchanges, tax it aggressively, or choke off the fiat on-ramps. While the decentralized network easily survives these attacks, everyday user experience and localized adoption suffer heavily in hostile jurisdictions.

Finally, there is the Quantum Computing threat. Critics argue that future quantum computers could break Bitcoin's cryptography. However, Bitcoin is not a static rock; it is a living software protocol. When quantum threats become viable, the network will upgrade to quantum-resistant algorithms. The genuine risks here are logistical: can the decentralized network reach consensus on the upgrade before the danger arrives? And more importantly, what happens to the millions of "abandoned" early coins (including Satoshi's original stash) that are sitting in old, vulnerable addresses and cannot be manually migrated by their owners?

None of these flaws are fatal. But pretending they don't exist would be intellectually dishonest.

The Power Law

The mathematics of nature

I first discovered Bitcoin around 2011. Back then, the idea of using a home PC to make a few bucks while I slept was compelling. However, my PCs were always overclocked for gaming; they would randomly crash overnight, they were loud, and every time I tried to mine, something would stop me. I never took the time to properly study the protocol—a very costly mistake.

Still, Bitcoin stayed on my radar. When Covid-era inflation swept the globe, I started looking for ways to preserve whatever purchasing power I had left. That’s when I saw something that hooked me immediately. If you have any background in physics or biology, this will make your jaw drop.

It draws a straight line on a log-log scale. For over fifteen years, through market crashes, exchange collapses, government crackdowns, and global lockdowns, the price has followed this trajectory with startling precision.
This is the Bitcoin Power LawThe Bitcoin Power Law Theory by Giovanni Santostasi, discovered by physicist Giovanni Santostasi.”

Scaling Laws in Biology, Cities, and Bitcoin

In physics and biology, power laws describe how complex systems scale efficiently. Evolution has selected power-law scaling over billions of years because it is the most sustainable way to grow.

• Kepler's Laws dictate a strict power-law relationship between a planet's distance from the sun and its orbital period, driven by gravity.
• Kleiber's Law in biology shows that an animal's metabolic rate scales to the 3/4 power of its mass. An elephant's tusks, snail shells, and tree branches all grow following power-law distributions.
• Urban Scaling demonstrates that as a city's population grows, its infrastructure (roads, cables) scales sub-linearly (efficiency), while its wealth, innovation, and crime scale super-linearly (increasing returns).

Bitcoin is not a traditional company or a static asset; it is a living, complex network. Its adoption and value scale exactly like these natural phenomena.

Through the lens of network theory (specifically Metcalfe's Law, which states the value of a network is proportional to the square of its connected users), we can map Bitcoin's trajectory. Bitcoin's network adoption follows a remarkably strict power law, scaling predictably over time on a log-log scale. As more nodes, miners, and users interact, the network's value compounds.

Unlike a traditional corporate "S-curve" that rapidly peaks and then stagnates or dies, power laws dictate continuous, albeit decelerating, geometric growth. This scaling invariance means Bitcoin is incredibly resilient—like a biological organism maintaining homeostasis, it can endure massive shocks (exchange collapses, bans) and naturally return to its underlying trend line. The volatility we see is simply noise around a very precise, mathematical signal of adoption. It is a naturally occurring human phenomenon of organized economic energy.

Sovereignty and the Future

The Path Forward

There are great things ahead. Despite the systemic fragility we’ve discussed, it is crucial that we stay optimistic. History is a long record of humans adapting to and overcoming the hurdles in their path. Most of us today live with comforts that even the kings of a few centuries ago couldn't imagine, and our grandchildren will likely live lives that make today’s millionaires look underprivileged. We will cure more diseases, live longer, travel more freely, and harness more energy to feed more people.

The transition, however, is the painful part. We are living through a "Phase Shift," and we might not live long enough to see the quiet, high-trust stability of the outcome.

We have only brushed the surface of these topics here. There are infinite nuances to consider and even more questions to ask. This is why it is crucial that you take your time and evaluate what actually makes sense to you. In this space, we have a saying: Don’t Trust, Verify. Voice your opinions, let them be challenged, and contest the ideas of others. That is how we find the truth.

Skin in the Game

I don’t want to preach or tell you what to do with your life. Instead, I’ll just tell you what I’m doing for mine.

I have studied Bitcoin enough to convince myself to take the plunge. I am liquidating the majority of my analog assets and moving into Bitcoin and a few selected company stocks that I fundamentally believe in. Is it a certainty? No. There are no guarantees in life, and I am fully prepared to face the consequences of my own failure if I am wrong.

But I look at my kids—they are smart and healthy. I look at myself—I am still capable and ready to work. I can live with the consequences of a mistake. What I cannot live with is the consequence of standing still while the floor melts beneath me.

Looking back at the history I’ve lived through, I should have done this many years ago. But I don’t believe I’ve missed the train. In the grand scheme of the Power Law, the train hasn't even started moving.

I’ll show you the exact mechanics of what I’m doing—and how I’m using the tools available on Decentralized Finance to do it—in the next journal, but I first have to get this site off the ground :o.

For the record: Today is March 26, 2026. Bitcoin is at $69,000 (and I expect it to go lower still this year). TSLA is at $380, NVDA at $175, AAPL at $250, and MSTR at $135.

Let’s see where we are in a few years.