The Hardest Money

I spent five years building startups and came out the other side with a strange education: I learned how to lose money before I understood what money actually is.

Between 2015 and 2019, I cycled through the founder gauntlet - Bits into Atoms, Trunk, moonlighting at Revel Social. Some ventures made a little. Most cost a lot. By the time I landed at SAP with a stable salary, I'd developed what I thought was a healthy respect for money. Save more. Spend carefully. Max out the 401k.

But watching my Boeing 401k sit nearly flat since 2015 while former startup colleagues who'd held Bitcoin through multiple crashes were suddenly talking about life-changing gains - that made me realize something uncomfortable. I understood how to earn money. I had no idea what money actually was.

The Question Nobody Asks

What makes money valuable?

The standard answer - "because everyone agrees it's valuable" - is circular. It explains nothing about why some money holds value over decades while other money collapses. Why the dollar buys less every year. Why your grandparents could buy a house for what you'd spend on a used car.

I started pulling on this thread in early 2021, partly out of FOMO watching the crypto bull run, partly out of genuine confusion about how my supposedly smart 401k investments had been outperformed by a digital asset most financial advisors dismissed as a scam.

The rabbit hole led me to a concept I'd never encountered in any finance class: hardness.

What "Hard" Actually Means

In monetary theory, "hard money" doesn't mean difficult or complicated. It means resistant to supply increase.

Think about gold. You can't print more gold. To add new gold to the global supply, you have to dig it out of the ground - an expensive, slow, geologically constrained process. The amount of new gold mined each year is roughly 1.5-2% of existing supply. This ratio - new supply divided by existing supply - is called the stock-to-flow ratio, and it's the key metric for hardness.

Gold's stock-to-flow has made it humanity's preferred store of value for millennia. Not because it's pretty or useful (though it is), but because kings and governments couldn't just create more of it when they wanted to fund a war or bail out a bank.

Now consider the dollar. In 2020, the US money supply expanded by roughly 22% - the fastest increase in modern history. That's not a stock-to-flow ratio; that's a printing press with no off switch. The money in your savings account didn't change, but its purchasing power got diluted by every new dollar conjured into existence.

This is what monetary debasement looks like. It's not theft in the traditional sense. Nobody takes your dollars. They just make each dollar worth less by flooding the market with more of them.

Bitcoin's Radical Proposition

The Bitcoin whitepaper proposed something that sounds simple but is actually revolutionary: money with a supply cap.

Twenty-one million. Ever. No exceptions, no emergency measures, no central authority that can decide to print more when politically convenient.

Bitcoin achieves this through code that everyone can verify. New Bitcoin enters circulation through mining rewards, but those rewards halve approximately every four years. In 2009, miners received 50 BTC per block. By 2024, that drops to 3.125 BTC. The emission schedule is predictable, transparent, and unchangeable without consensus from the entire network.

Run the math forward: Bitcoin's stock-to-flow will eventually exceed gold's. It will become, by the only metric that matters for hardness, the hardest money humans have ever created.

This is what caught my attention scrolling through Crypto Casey videos and Bankless podcast episodes. Not the price speculation. Not the get-rich-quick narratives. The fundamental insight that for the first time in history, we have money whose supply schedule is determined by mathematics rather than politics.

The Blockchain Trilemma

Understanding Bitcoin's hardness is step one. The harder question is why other cryptocurrencies exist at all.

Vitalik Buterin articulated the blockchain trilemma: you can optimize for security, decentralization, or scalability - but improving any two tends to compromise the third.

Bitcoin chose security and decentralization. The network processes roughly seven transactions per second. That's not a bug; it's the cost of having thousands of independent nodes verify every transaction without trusting a central authority. Bitcoin is slow precisely because it refuses to take shortcuts that would concentrate power.

Ethereum made a different tradeoff. By adding programmability - smart contracts that can execute arbitrary logic - it sacrificed some of Bitcoin's simplicity for capability. You can build financial applications on Ethereum that Bitcoin can't support. But the complexity creates attack surface, and the network's monetary policy has historically been more flexible than Bitcoin's rigid cap.

This is where the term "ultra sound money" enters the conversation. Ethereum's upcoming upgrades aim to make ETH not just scarce but potentially deflationary - burning more tokens in transaction fees than new ones created through validation. If Bitcoin is "sound money" (fixed supply), the argument goes, Ethereum could become "ultra sound" (decreasing supply).

Whether that thesis plays out remains to be seen. But understanding the distinction matters: Bitcoin wins on hardness. Ethereum competes on programmability. They're answering different questions about what money can do.

What This Means for the Dollar

Here's where the rumination gets uncomfortable.

The US dollar isn't hard. It's explicitly soft - designed to be expandable at the discretion of the Federal Reserve. This isn't conspiracy theory; it's monetary policy. The Fed targets roughly 2% inflation, which means they're deliberately making your dollars worth less every year.

For decades, this felt invisible. Wages rose roughly with inflation. Asset prices climbed. The system worked, more or less, because most people never held large cash balances long enough to feel the erosion.

But 2020 exposed the machine. Trillions created overnight. Stimulus checks appearing from nowhere. The money supply expanding faster than any point in modern history.

I watched my stable Boeing 401k - a responsible, diversified portfolio that any financial advisor would approve - barely keep pace with the currency debasement happening around it. Meanwhile, an asset with a hard cap and transparent issuance schedule outperformed everything.

The lesson wasn't that Bitcoin is a guaranteed winner. It was that I'd been playing a game without understanding the rules. Every dollar saved is a bet on the Federal Reserve's restraint. Every asset denominated in dollars is subject to dilution by printing.

Understanding hardness doesn't tell you what to buy. But it reframes the question entirely: you're not just choosing investments. You're choosing which monetary system to trust.

The Escape Velocity Question

Central banks aren't going away. The dollar isn't collapsing tomorrow. But for the first time in history, individuals can opt out of monetary systems they didn't choose.

This is the philosophical weight underneath the "number go up" memes. Not just speculation on price, but a genuine question about human sovereignty: should governments have monopoly power over money? Should a small committee's decisions determine whether your savings hold value?

I don't have definitive answers. The crypto space is full of grifters, scams, and speculation masquerading as revolution. The technology is young. The regulatory landscape is hostile. Most people who buy Bitcoin couldn't explain what a hash function does.

But the concept of hardness - the idea that money should resist arbitrary expansion - feels like something that can't be unlearned once you've seen it.

Where This Leaves Me

I'm still early in this rabbit hole. The Bitcoin whitepaper sits open in a browser tab. Moralis Academy courses fill my evenings. I'm trying to understand not just what to buy but why any of this matters beyond speculation.

What I know so far: money isn't neutral. It's not just a medium of exchange. It's a technology with properties, tradeoffs, and political implications. Soft money transfers wealth from savers to borrowers, from the patient to the connected. Hard money does the opposite.

Whether Bitcoin fulfills its promise or crashes to zero, the framework remains valuable. Every financial decision I make now filters through a question I never thought to ask before: how hard is this money?

The startup years taught me to value what I earn. This year is teaching me to question what I hold.

Hard questions lead to harder money.