Bitcoin’s $100,000 Milestone

A letter to my students on the night Bitcoin passed $100,000.

Dear Students,

I write to you on the evening of December 4, 2024, when Bitcoin hit its most significant milestone yet, a price of $100,000 per Bitcoin. This is a big moment for Bitcoin. It marks a turning point in the adoption of the world's most secure digital money, and it validates all the principles we discussed in class that lie underneath Bitcoin: incentives over mandates, decentralization over authority, and verification over trust. These principles may have seemed quaint and academic when we discussed them in class, but as I hope to have convinced you, they are existential to Bitcoin’s success and a core component of its value proposition.

Bitcoin represents the scarcest asset that has ever existed. There really is nothing else like it; not gold, fiat currency, stocks, bonds, or real estate. This scarcity—made possible by a declining issuance schedule, an immutable ledger of transactions, and a distributed network of nodes and hash power—will attract vast amounts of capital in the future, and hopefully rebuild the financial system from the ground up.

Personally, I remember the winter of 2008, in the depths of the financial crisis, when I sat at a small conference table in the west wing of the White House. Our team on the Council of Economic Advisers was critiquing a plan from the Treasury Department to bail out the banks. As much as we fought to keep the government out of the financial system, by that time the political momentum was against us. The Fed had already launched its Quantitative Easing program, injecting money into the financial system without restraint, as it cannot help itself from doing. I knew then that the financial system was broken at a deep level, but didn't see a clear solution.

Bitcoin is that solution. It is the most radical idea of our time, and cuts at the core of value in our economy. Bitcoin aims for the root cause, central banking, a problem that most people don't even realize is a problem. But central banking is exactly what prevents us from living in a world of scarcity, as the Fed can print its way into oblivion. That one power to print money affects everything: the edifice of Wall Street was built around it, the military-industrial complex, the mountain of credit and borrowing on which our society stands, and the erosion of purchasing power that decimates the value of your labor over time.

It may be hard to see how elliptic curves, finite fields, and hash functions can overturn our entire system. But all that technology is what creates the digital scarcity underneath bitcoin, which no other asset has. The world has never truly understood scarcity, and that time is now. Bitcoin will continue to attract capital, and once everyone owns some, directly or indirectly, the journey towards a medium of exchange will be afoot.

That is the enduring challenge of Bitcoin: To fathom its vast reach and impact. The class I taught you is the beginning, and not the end, of understanding the full depth of Bitcoin. The world is now paying attention to Bitcoin’s new price tag. So renew your interest in Bitcoin. I learn from Bitcoin every day, and you can as well.

This is just the beginning.

Korok