Good financial health requires healthy money

D o you know someone who is health-conscious? Maybe they take great care in eating natural foods instead of processed junk. They might keep a routine of exercise rather than remaining sedentary. They might spend time outdoors absorbing sunlight, and perhaps they choose natural clothing over synthetic fibers. They likely drink plenty of water, limit their use of electronics, and get enough sleep.

But are they health-conscious enough to consider the type of money they hold? Is the tool they use for their personal savings a healthy choice? Are they even aware of their options?

Defining a healthy choice

Good health is approximately defined as “a state of well-being, free from illness or injury.” A healthy choice is one that’s beneficial to us or sustains our well-being, while an unhealthy choice causes us harm.

Often, healthy choices consist of things that are simple and pure, direct from nature, that our bodies have been accustomed to handle for millennia. The consumption of water, meat, eggs, fruit, honey, sunlight. Surrounding ourselves with things constructed of wood, stone, wool, cotton, and so forth. Activities of exercise and social interaction.

Meanwhile, unhealthy choices are often marked by various complex mixtures of chemicals and technology from more recent history. High fructose corn syrup, seed oils, dyes, paints, plastics, polyester, drywall, etc. Packaged food and drinks containing long lists of ingredients that can barely be pronounced. Spending hours of the day seated, looking at a screen of rapidly blinking lights.

Not all modern inventions are automatically unhealthy, of course. Many advancements in science and healthcare have contributed to longer life expectancies and reduced dangers from the natural world. But when something complex is invented and introduced in an attempt to reduce costs, or to hack our brains with more stimulation, it’s unsurprising when we eventually uncover toxic long-term consequences.

What does healthy money look like?

Upon examining the characteristics of healthy and unhealthy choices, it follows that the healthiest choice among money would be the one that benefits you the most while inflicting the least amount of harm. Something relatively simple, pure, naturally intuitive, and nontoxic.

If a money succeeds in its task of preserving trade value across time, that would be an indicator of good health. Meanwhile, an obvious sign of an unhealthy money would be if it loses trade value over time. If a money is expected to lose trade value over time, that’s the same thing as expecting it to harm anyone who holds it. It implies decay, comparable to the half-life of a radioactive substance.

The toxin of inflation

A common reason that a money might be expected to lose trade value over time is if it’s tainted by inflation. When the supply of a money increases, each unit becomes less scarce, and less valuable. In this sense, it’s reasonable to compare inflation to a cancerous toxin, slowly (or in some cases rapidly) poisoning the savings of its victims. For someone trying to save the value of their time, energy, and productive skills, inflation creates additional complexity to navigate. It’s a dilutive impurity, and not a feature that a holder of money would naturally ask for.

Government currencies such as the U.S. Dollar are inflationary, and certainly not healthy money. Holders are incentivized to spend such currencies sooner rather than later. Someone who makes the mistake of holding onto money like this long-term, will end up watching the value of their savings evaporate.

In less than a century, a dollar has lost more than 90% of its trade value.

A healthier money would be one that is not infected with the ills of inflation. Such a money would have a supply that is reliably and verifiably limited. A money like this would be far more straightforward to navigate. Its purity would not be diluted over time, and it would feel more natural and intuitive to those who hold it, sustaining their financial well-being.

24K gold is not actually pure

People have been incentivized to search for the healthiest money for thousands of years. Inflation has been a persistent problem. If the ability exists to produce more money, someone will find a way to do it. Holding out hope that everyone will universally restrain themselves from the temptation of money production is an unrealistic approach to human nature.

Yet, it turns out that it’s difficult to find a form of money which possesses clear limitations to its production. If a physical form of money exists in the world, it’s hard to imagine a scenario where more of it can’t be made, discovered, or forged. So instead, civilizations began to choose money that at least offered some resistance to such things, eventually settling upon gold as the best available option.

But even metallically pure gold is impure in the sense that it’s perpetually contaminated by the issue of inflation. It’s believed that the available supply of gold increases at about 1.5% per year on average, by way of discovery and extraction. These numbers are estimated, and self-reported by the extractors, who may not be impartial to the matter. Furthermore, extracting gold from oceans or outer space becomes more feasible as our technology improves. We simply don’t know the quantity of “Atom #79” that will be within our reach at any given point in the future.

An asteroid in our solar system named “16 Psyche” is expected to contain millions of times more gold than the entire supply on Earth. NASA plans to visit this asteroid during the Psyche Mission in 2029.

21M bitcoin is pure

The invention of bitcoin ended humanity’s search for a money offering reliable protection from inflationary decay. We know the supply limit of bitcoin is 21 million (more accurately, 2.1 quadrillion satoshis, the smallest unit. This number is arbitrary, outside of needing to be large enough to service a populated economy). And we know it will be 21 million forever.

Anyone who uses the bitcoin network must agree to this rule, otherwise they are on a different network by definition, and no longer able to interact with others in the bitcoin economy. Therefore, the only way that the supply limit could be increased is if users collectively agreed to migrate to a different network, with different rules and a higher supply. This would cause everyone’s bitcoin savings to become less valuable, so it would essentially be asking bitcoin users to do something that is against their own best interest.

Doesn’t bitcoin have an inflation rate?

Satoshi Nakamoto invented bitcoin but didn’t issue all 21 million coins immediately. After all, if he did, who would he have given it to? Himself? How then would coins be distributed, allowing others to use the network? Instead, he made the bitcoin supply open to the public from the beginning—anyone could (and still can) devote energy toward working on the blockchain, and be rewarded by coins being released in each new block (called bitcoin “mining”). This open and transparent approach was a reasonable attempt at fairness. Although it gave an advantage to people who learned about bitcoin earlier than others, this is also true of any investment, and practically unavoidable.

The next question Satoshi faced was how quickly the supply would be released to mining participants. Releasing coins too quickly would cause a distribution problem, similar to giving himself the entire supply. Releasing coins too slowly (e.g., 1 million per decade) would stall bitcoin’s adoption, because there would be less supply shocks to drive up the value of bitcoin and attract new users. He compromised by introducing bitcoin with a diminishing release schedule—the opportunity to earn newly released bitcoin would continue for more than a century, but the bulk of the released bitcoin would be front-loaded in the earlier years.

Approximately every 4 years (precisely every 210k blocks added to the blockchain, with each block taking an average of 10 minutes) the issuance of bitcoin earned by miners is cut in half. The original issuance was 50 bitcoin per block, meaning 10.5M bitcoin or 50% of the total supply was mined in the first 4 years.

Currently at the time of writing (February 2025) there has already been 94.4% of the total supply mined, and bitcoin’s annual “inflation rate” is about 0.8%, superior to gold. But perhaps the even more significant superiority is that bitcoin holders know, with certainty, that this “inflation rate” will continue to decline and the supply will never pass 21 million. This being the case, holders of bitcoin can already “price in” the future bitcoin issuance, and consider the bitcoin they own to be a percentage of 21 million, rather than a percentage of the 19.8 million bitcoin that have been released up to this point.

Viewed this way, it can reasonably be argued that all 21 million bitcoin already exist, and bitcoin has no inflation rate at all. In contrast, the uncertain and never-ending inflation rates of gold and government currencies can never be fully “priced in.”

The most honest measure

If someone owns 1 bitcoin, they own a fixed percentage (0.000005% upon rounding) of all the bitcoin that can ever exist, and this will never change. This is straightforward, transparent, and true for everyone. What better way to measure wealth and value with people across the world?

After all, if someone owns 1 dollar, they own an unknown percentage of an estimated supply, which is constantly subject to change. If someone owns 1 ounce of gold, what they actually own relative to the world is a similar mystery. These are clearly not the best tools for the job of saving wealth or facilitating a fair economy. Neither are independently verifiable, thus both can be redefined and manipulated.

“Varying weights, varying measures, are both an abomination to the Lord.

False scales are an abomination to the Lord, but an honest weight, his delight.”

— Proverbs 20:10, 11:1 (NABRE)

Take care of yourself. Make healthy choices. Don’t choose flawed tools that harm your goals and punish your effort, when there is a better alternative available. Show yourself love and respect by saving in bitcoin.