When Satoshi Nakamoto published the Bitcoin white paper on October 31, 2008, the individual ideas in it were not new. The building blocks had existed for years, some for more than a decade: Merkle trees, cryptographic timestamping, Adam Back's Hashcash proof-of-work, and Wei Dai's b-money and Nick Szabo's bit gold concepts.

What was new was how Satoshi combined them. Even the feature most closely associated with Bitcoin today, the fixed cap of 21 million coins, was not the founding idea. The white paper refers only to "a predetermined number of coins" and never gives a figure or a halving schedule. Both appeared for the first time in January 2009, when Satoshi released the software.

When Satoshi mined the first block on January 3, 2009, he embedded a headline from that day's Times of London: "Chancellor on brink of second bailout for banks." Technically, the headline proved the block could not have been created before that date, because it tied a digital record to a physical, dated event. The headline choice also said something. It pointed straight at the 2008 financial crisis and at governments creating money to rescue reckless private institutions. It serves as Bitcoin's implicit mission statement: a peer-to-peer currency independent of central banks and government bailouts.

In this report, we set out the true return hurdle investors face. US debt has compounded steadily since long before 2008, while inflation broke out of its post-2008 slump in 2020. We think this new regime of high debt growth with higher inflation is here to stay, particularly with a Fed that remains accommodative and reluctant to tighten. We also map the relationship between bitcoin and GDP, and show how to identify when bitcoin trades below fair value, and by how much.

US CPI Index (LHS) vs. US Debt outstanding (RHS, $ trillion)

Bitcoin cleared the debt hurdle, but it wasn't the only asset that did, and one group of equities beat gold by a wide margin. In the latest 10x What Matters, we rank more than 30 assets against all three hurdles and identify what to own and what to avoid for the rest of this regime.