Do not the same arguments hold true if you replace the word, "Bitcoin" in your essay with the word, "gold" or "silver" or "market basket of selected commodities?" What makes Bitcoin special? Is it the fixed supply, and why does that matter?
They do hold true, that's why grain, goats, gold, etc. is mentioned as options in the text.
But which is best?
I think an ideal monetary system must be strictly separated from all nation states and their political class, i.e. both the base money layer and the credit money layer.
One reason why Bitcoin seems better suited than gold is rooted in events like Executive Order 6102 in the US, the similar Australian gold surrender order of 1959, government gold confiscations in Nazi Germany, to name but a few. A mass confiscation of Bitcoin would be extremely hard to implement in practice. Even if governments attack exposed big holders like CoinBase or MicroStrategy, there are enough decentralised holdings to run a verifiable system on cypherpunk principles.
A few more:
1. Gold must be stored somewhere, governments can physically seize it. Bitcoiners' memory is hard to seize.
2. Gold has a natural centralisation drift for faster physical movement. Bitcoin can remain decentralised and still be moved on main-chain in 10 minutes.
3. Gold verification is impractical, I am mindful of the slander against wildcat banks in the Wild West, not to mention contemporary doubts about what's in Fort Knox. Proof of Bitcoin holdings is trivial.
You say, “They do hold true, that's why grain, goats, gold, etc. is mentioned as options in the text.
But which is best? I think an ideal monetary system must be strictly separated from all nation states and their political class, i.e. both the base money layer and the credit money layer.”
So, here we get to the crux of the matter.
Yes, I agree that the ideal monetary system must be strictly separated from all nation states and their political class, but what you call the “base monetary layer” I call the standard of value, and it does not need to be a circulating commodity. Since the (market) value of anything can only be measured in relation to other things, a value standard is merely a “benchmark,” that serves as a value to which all other values can be compared. As I’ve argued for decades, the reasonable criteria that I have enumerated in this excerpt, An Objective Composite Standard Measure of Value (https://beyondmoney.net/wp-content/uploads/2025/02/appendix-b.pdf) for making a choice are:
The chosen commodities should be
1. traded in one or more relatively free markets (freely exchanged),
2. important in world trade (high volume),
3. important in satisfying basic human needs (necessity),
4. relatively stable in price (in real terms) over time (stability), and
5. uniform in quality, or standardized quality (uniformity).
I have never favored a gold standard for the reasons you mention. If a single commodity were to be chosen as the standard, I would, and do, argue for a silver unit (See my essay, States Asserting Their Money Power).
But here’s the main point of a single commodity standard and unit of account: no coins need to be minted nor circulated. It is necessary only to define the weight and fineness of the standard and monitor its minute-to-minute price in actual market trading.
That provides a way of quantifying credit which is the basis for an elastic supply of exchange media and allows the real value of any other currency or exchange medium to be determined, e.g., dollars measure the value of silver, and silver measures the value of dollars.
But overall, I think a composite value standard is the best choice because it averages out the value fluctuations in the various commodities in the “basket.” In fact the computing power and information access available today makes it possible to use a basket that contains 50 or 100 or any number of commodities that the specified criteria.
Thank you for debating this openly, much appreciated.
You say: "What you call the base monetary layer I call the standard of value, and it does not need to be a circulating commodity." and "A value standard is merely a “benchmark,” that serves as a value to which all other values can be compared."
I think this is partly a joint position. As I wrote in Ch 2, circulation of base money in the real economy is possible but not a necessary condition: "Note that there need not be a single goat in our hamlet, not to speak of gold or bitcoin." So yes, base monies do not need to be circulating.
This should not mislead us into thinking that base money is just a "standard of value". I find that term problematic for two reasons:
1. The value of the base money commodity is rooted in its utility as a money (the construct) but at the same time co-dependent on the supply/demand balance of the credit money issuance. So it cannot just be a "standard of value" but certainly a simple "unit of account" which is a better term rooted in the objective reality.
2. Base money is indispensable as a source of truth (on the Bitcoin main-chain or in a gold vault), it serves to verify the rule-abiding issuance and redemption of credit money.
We agree on some, not all of the requirements. The chosen commodities should be
1. YES - traded in free markets (freely exchanged),
2. NO - "important in world trade (high volume)" because a special asset is best as a base money i.e. Bitcoin as I explain below,
3. NO - "important in satisfying basic human needs (necessity)" because 2,
4. NO - "relatively stable in price (in real terms) over time (stability)" because it is the credit money issuance which stabilises the money construct's price,
5. YES - uniform in quality, or standardized quality (uniformity).
Further:
6. Have a reasonably fixed, or predictable quantity
7. Must be immune to the meddling interventionism of nation states government, as a systemically corrupt political class is running it.
For the same reason as 2, a composite standard is problematic, as is a singular silver standard. Silver has its uses in the real economy, using it as money makes it dearer and distorts agents' production decisions.
I misspoke in saying, " but what you call the “base monetary layer” I call the standard of value, and it does not need to be a circulating commodity.
What I meant to say was that "it does not need to be a circulating "CURRENCY." The standard commodity however does need to be actively traded to provide the value "benchmark."
1. The (base money) commodity needs not be circulating in the production and supply chain. That function is primarily that of the (credit money) currency.
2. The (base money) commodity needs to be traded, yes.
I slightly restate the reason:
It objectively establishes the exchange value of the total money supply, as the sum of base money (commodity) and credit money (currency) in circulation (not hoarded).
3. I do not use 'standard of value' because value cannot be measured, we can only observe prices. I use 'unit of account' because units can be clearly counted whereas their objective exchange value changes all the time.
I am happy to clarify differences, noting that my main interest in our conversation is Chapter 14 of your "End of Money" where you talk about practicalities: "How complementary currencies succeed or fail".
Drawing on your life-long practical experience:
1. Jointly establish the (full set of) reasons why prior projects failed, including some not mentioned in Ch.14.
2. Together, think how can we succeed this time with Bitcoin.
The larger, decentralised Bitcoin effort currently does not address all of the reasons in Ch.14 of your book, in particular the credit angle, although – on the positive side – it does address some which are not listed there.
Do not the same arguments hold true if you replace the word, "Bitcoin" in your essay with the word, "gold" or "silver" or "market basket of selected commodities?" What makes Bitcoin special? Is it the fixed supply, and why does that matter?
They do hold true, that's why grain, goats, gold, etc. is mentioned as options in the text.
But which is best?
I think an ideal monetary system must be strictly separated from all nation states and their political class, i.e. both the base money layer and the credit money layer.
One reason why Bitcoin seems better suited than gold is rooted in events like Executive Order 6102 in the US, the similar Australian gold surrender order of 1959, government gold confiscations in Nazi Germany, to name but a few. A mass confiscation of Bitcoin would be extremely hard to implement in practice. Even if governments attack exposed big holders like CoinBase or MicroStrategy, there are enough decentralised holdings to run a verifiable system on cypherpunk principles.
A few more:
1. Gold must be stored somewhere, governments can physically seize it. Bitcoiners' memory is hard to seize.
2. Gold has a natural centralisation drift for faster physical movement. Bitcoin can remain decentralised and still be moved on main-chain in 10 minutes.
3. Gold verification is impractical, I am mindful of the slander against wildcat banks in the Wild West, not to mention contemporary doubts about what's in Fort Knox. Proof of Bitcoin holdings is trivial.
Does that answer your question?
You say, “They do hold true, that's why grain, goats, gold, etc. is mentioned as options in the text.
But which is best? I think an ideal monetary system must be strictly separated from all nation states and their political class, i.e. both the base money layer and the credit money layer.”
So, here we get to the crux of the matter.
Yes, I agree that the ideal monetary system must be strictly separated from all nation states and their political class, but what you call the “base monetary layer” I call the standard of value, and it does not need to be a circulating commodity. Since the (market) value of anything can only be measured in relation to other things, a value standard is merely a “benchmark,” that serves as a value to which all other values can be compared. As I’ve argued for decades, the reasonable criteria that I have enumerated in this excerpt, An Objective Composite Standard Measure of Value (https://beyondmoney.net/wp-content/uploads/2025/02/appendix-b.pdf) for making a choice are:
The chosen commodities should be
1. traded in one or more relatively free markets (freely exchanged),
2. important in world trade (high volume),
3. important in satisfying basic human needs (necessity),
4. relatively stable in price (in real terms) over time (stability), and
5. uniform in quality, or standardized quality (uniformity).
I have never favored a gold standard for the reasons you mention. If a single commodity were to be chosen as the standard, I would, and do, argue for a silver unit (See my essay, States Asserting Their Money Power).
But here’s the main point of a single commodity standard and unit of account: no coins need to be minted nor circulated. It is necessary only to define the weight and fineness of the standard and monitor its minute-to-minute price in actual market trading.
This is not unprecedented; such a “gold-less gold currency” called the Rentenmark played a major role in ending the German inflation of 1919-1923. See my new Chapter 7 (https://beyondmoney.net/wp-content/uploads/2024/04/eom-rev_ch7_finalrev.pdf) for that story.
That provides a way of quantifying credit which is the basis for an elastic supply of exchange media and allows the real value of any other currency or exchange medium to be determined, e.g., dollars measure the value of silver, and silver measures the value of dollars.
But overall, I think a composite value standard is the best choice because it averages out the value fluctuations in the various commodities in the “basket.” In fact the computing power and information access available today makes it possible to use a basket that contains 50 or 100 or any number of commodities that the specified criteria.
Thank you for debating this openly, much appreciated.
You say: "What you call the base monetary layer I call the standard of value, and it does not need to be a circulating commodity." and "A value standard is merely a “benchmark,” that serves as a value to which all other values can be compared."
I think this is partly a joint position. As I wrote in Ch 2, circulation of base money in the real economy is possible but not a necessary condition: "Note that there need not be a single goat in our hamlet, not to speak of gold or bitcoin." So yes, base monies do not need to be circulating.
This should not mislead us into thinking that base money is just a "standard of value". I find that term problematic for two reasons:
1. The value of the base money commodity is rooted in its utility as a money (the construct) but at the same time co-dependent on the supply/demand balance of the credit money issuance. So it cannot just be a "standard of value" but certainly a simple "unit of account" which is a better term rooted in the objective reality.
2. Base money is indispensable as a source of truth (on the Bitcoin main-chain or in a gold vault), it serves to verify the rule-abiding issuance and redemption of credit money.
We agree on some, not all of the requirements. The chosen commodities should be
1. YES - traded in free markets (freely exchanged),
2. NO - "important in world trade (high volume)" because a special asset is best as a base money i.e. Bitcoin as I explain below,
3. NO - "important in satisfying basic human needs (necessity)" because 2,
4. NO - "relatively stable in price (in real terms) over time (stability)" because it is the credit money issuance which stabilises the money construct's price,
5. YES - uniform in quality, or standardized quality (uniformity).
Further:
6. Have a reasonably fixed, or predictable quantity
7. Must be immune to the meddling interventionism of nation states government, as a systemically corrupt political class is running it.
For the same reason as 2, a composite standard is problematic, as is a singular silver standard. Silver has its uses in the real economy, using it as money makes it dearer and distorts agents' production decisions.
I misspoke in saying, " but what you call the “base monetary layer” I call the standard of value, and it does not need to be a circulating commodity.
What I meant to say was that "it does not need to be a circulating "CURRENCY." The standard commodity however does need to be actively traded to provide the value "benchmark."
I believe we agree on most of the substance here.
1. The (base money) commodity needs not be circulating in the production and supply chain. That function is primarily that of the (credit money) currency.
2. The (base money) commodity needs to be traded, yes.
I slightly restate the reason:
It objectively establishes the exchange value of the total money supply, as the sum of base money (commodity) and credit money (currency) in circulation (not hoarded).
3. I do not use 'standard of value' because value cannot be measured, we can only observe prices. I use 'unit of account' because units can be clearly counted whereas their objective exchange value changes all the time.
I am happy to clarify differences, noting that my main interest in our conversation is Chapter 14 of your "End of Money" where you talk about practicalities: "How complementary currencies succeed or fail".
Drawing on your life-long practical experience:
1. Jointly establish the (full set of) reasons why prior projects failed, including some not mentioned in Ch.14.
2. Together, think how can we succeed this time with Bitcoin.
The larger, decentralised Bitcoin effort currently does not address all of the reasons in Ch.14 of your book, in particular the credit angle, although – on the positive side – it does address some which are not listed there.