Bitcoin’s inventor and first miner, the obscure Satoshi Nakamoto encoded a message into the blockchain’s genesis block. It was the headline of The Times from January 3, 2009: “Chancellor on brink of second bailout for banks.”
A frequently asked question about the enormous rescue packages for banks is this: Why should states save mismanaged private companies with taxpayer money? Satoshi’s message drew attention to this, and, more generally, to the contradictions and risks of the global financial system. With bitcoin, he created an asset independent of all that — one where we can rescue our savings from the systemic risks of the credit money system.
It is timely to revive Satoshi’s message now because a new one appeared in the bitcoin blockchain recently. And it appeared on a day none other than May 11, when the rate of new bitcoins being created was halved. This happens about every four years, so it is rather infrequent. That is why the community was watching the events during the halving like a hawk. One of the mining pools managed to mine the last block before the halving (#629,999). They encoded the headline of another relevant newspaper into it, The New York Times from April 9, 2020. It reads: “With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue.”
Indeed, this time the Fed answered the new crisis with infinite quantitative easing, and began asset purchases riskier than ever before. The message from the halving nicely highlights the parallels between the credit money system and bitcoin. While central bank balance sheets are growing increasingly faster with ever-riskier assets, there is less and less new bitcoin created. And I would guess this trend will not reverse anytime soon.