The Pleb Economist #4: I orange pilled my class today1
So for those of you who know me on Stacker News, you know that I teach economics at a non-elite, non-prestigious state university. (I say this so that you have some context on the type of environment and students that I teach.)
I've been a Bitcoiner for a long time, but despite this I've never really had the opportunity to talk about Bitcoin in the classroom. That's because I primarily teach microeconomic, so discussions of monetary economics don't usually come up. The extent to which I've talked about Bitcoin is that I've used Coinbase's depth chart (a visual reprsentation of the order book) to visually illustrate supply and demand.
But this year I decided to incorporate some more high level, conceptual discussions in the classroom. I use a lot of material put out by the Austrians for this (the Mises Institute in particular) because they are great at communicating economic ideas verbally, without using mathematical models. I still teach mathematical models in class, but I also want to train my students to think about economics using verbal logic and deductive reasoning. For 90% of them, that will probably serve them better in life than being able to solve models.
The Lesson Plan
I based my class around two videos. The first is a short, layperson's introduction to the history of money and the technology of money. Special thanks to @Bell_curve for pointing the video out (#883777).
^This video's main points are:
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Money is really just a record keeping device of how much value someone has stored up. Therefore, imaginary numbers on an imaginary ledger can serve as money, as long as people trust the ledger.
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Monetary technologies have constantly developed throughout history, and Bitcoin is the latest development in monetary technology.
After a discussion of the video, I would then proceed to show them a Radio Rothbard interview between Ryan McMaken and Per Bylund, on "Bitcoin and Gold: Are They Money?"
The focus of this video is on whether Bitcoin can currently be called money; and if not, whether it can one day be called money.
The Actual Lesson
So, that was my plan. But the students were so interested to talk about money and Bitcoin, and had so many questions even after the first video, that I never really got around to showing much of the second video. Instead, the discussion after the first video turned into a big orange pilling session.
I managed to get through all the following points about Bitcoin:
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Critics of Bitcoin say it's not backed by anything, but fiat money is not backed by anything either except maybe the government's guns. And why would we want to use a currency that's backed by the threat of violence?
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The word "blockchain" really just means a ledger book of transactions, and each block is just a page in the ledger book.
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Bitcoin is a decentralized ledger book that no single institution or entity controls, yet somehow everyone trusts it. It's been operating for 17 years and there is not a single serious dispute about the accuracy of the current ledger.
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What is Proof of Work and how does it solve the problem of determing which ledger is the accurate ledger?
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What is bitcoin mining and how is it related to proof of work? What is a block reward? What are transaction fees?
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How do you get bitcoin? What's a private key? How is it related to addresses?
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Risks of centralized exchanges. Difference between P2P exchange and centralized exchange. What is a wallet software?
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Visualization of the blockchain with mempool.space. Looking at actual transactions worth millions of US dollars, transacted for a fee of just a few dollars, that clears in 10 minutes. Such a thing is not possible in the traditional financial system.
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There's no CEO of bitcoin, no board of directors. Comparison to shitcoins (which I called memecoins and altcoins in class). I called them scams and that the only one I trust as legitimate is Bitcoin. We even talked about Javier Milei and Libra and how shitcoin scams happen.
Aftermath
Most of the class was very attentive and interested. Of course, there were a few that weren't paying attention, but that always happens. A number of them stayed after class to ask me more deep questions. Some seemed interested in learning how to acquire Bitcoin. One guy asked me about Quantum FUD (LOL)... I told him that the most likely scenario is that Bitcoin would migrate to quantum resistant encryption before that happened, as would most other things relying on traditional encryption. No one brought up the global warming / energy use criticism... I don't know if it's because they didn't think of it or if it's because students were afraid to criticize Bitcoin in front of me, who was obviously very pro Bitcoin.
Ultimately, I think it was a very successful class. It went even better than I expected. Much more successful (and probably useful) than my many technical mathy lectures.
If anything, I hope most of them walked away with a better appreciation of what money actually is, and why so many people believe that Bitcoin can/will be money, and that Bitcoin is an actual technological innovation, not just some fake token for gambling degens (that's what shitcoins are.)
Previous Pleb Economists
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Pleb Economist #3: On the political economy of blocksize #875560
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Pleb Economist #2: Politics is Provably Hard #849906
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Pleb Economist #1: The Art of Economic Communication #839278
Footnotes
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The Pleb Economist is a
weekly(not quite) weeklywhenever I feel like it column where I share my thoughts as a mainstream economist who is slightly jaded by mainstream economics. I also have a somewhat libertarian and rebellious bent, as well as a deep conviction in the utility of Bitcoin. ↩