Broken Money:

Lyn Alden’s Broken Money isn't just another economics book; it’s a deep dive into monetary history framed through the lens of technology. Alden argues that our current financial system isn't just suffering from political or moral failures—it's fundamentally broken because it's technologically obsolete. It’s a "duct tape-like" system barely holding itself together.

Here are the key pillars that explain why money is broken and what Alden sees as the potential technological cure:

Pillar 1: The Great Speed Mismatch (A Technological Flaw)

For millennia, information and physical goods (like gold) moved at roughly the same pace—the speed of a horse or ship. Banking layered credit on top of physical assets, improving efficiency, but everything changed with the telegraph in the mid-19th century.

Suddenly, transactions and claims could move globally at the speed of light, while the physical settlement of hard assets (gold) remained at the speed of matter. This massive gap between transaction speed (milliseconds) and final settlement speed (slow) forced the system to rely on increasing layers of debt, abstraction, and centralization. This was the first time a "weaker money" (abstracted claims) won globally over a "harder money" (gold) purely because of speed.

Pillar 2: The Broken Fiat System (Centralization and Entropy)

When governments eventually cut the tie to gold completely (globally consolidated after 1971), the system became entirely dependent on trust, leading to centralization and monetary entropy.

1. Centralization and Dilution: In the fiat standard, governments and banks monopolized the ledger, giving them immense power. This power is used to persistently and invisibly dilute people's savings and wages, often channeling value toward corporate interests or corrupt officials—a process more subtle than taxation. Alden critiques the existence of over 160 different fiat currencies worldwide, many of which lose value rapidly, trapping billions of people in "currency bubbles" with financial firewalls.

2. Monetary Entropy (The Cantillon Effect): Because fiat is based on promises, the system is addicted to constant monetary expansion and inflation to survive. This expansion favors those closest to the source of new money (governments, banks, connected elites) by allowing them to use the money before inflation impacts prices. The integrity of money's purchasing power melts away over time, making saving a losing game.

Pillar 3: Bitcoin as the Technological Solution

Alden presents Bitcoin as a viable alternative because it combines the scarcity of gold with the speed of digital transactions.

1. Solving the Speed Gap: Bitcoin is the first form of money that can unite the speed of information with the veracity of final settlement on the same layer, correcting the 150-year-old error caused by the telegraph. It enables peer-to-peer asset final settlements instantly over long distances.

2. Decentralization and Scarcity: Bitcoin is an open and incorruptible ledger that relies on mathematical verification, not trust. Its supply is rigidly limited to 21 million units. This decentralization offers individuals sovereignty over their money, protecting them from political dilution or financial censorship, especially vital for the billions living under authoritarian or highly inflationary regimes.

Pilar 4: The Digital Crossroads (CBDCs vs. Open Source)

The emergence of digital currency presents a fork in the road.

• CBDCs (Central Bank Digital Currencies): These continue the trend of centralization and control, offering governments potentially precise authority and surveillance over citizens' finances.

• Stablecoins: These are centralized assets (like dollar tokens) that help pierce currency bubbles, offering people in inflationary countries access to stronger currencies (like the USD). However, they are still controlled by a central entity and jurisdiction.

• Bitcoin (Open Source Money): This is the path toward true decentralization and permissionless finance. Unlike centralized assets, Bitcoin has shown remarkable resilience against large-scale state attacks (e.g., China banning miners) because there is no single entity that can censor it without controlling over half the network hash rate.