Michael Green Is Half Right: Bitcoin Is Not Sound Money. Yet.
An Austro-Maxi Response to Green’s Critique of Bitcoin Maximalism
Recently, Michael W. Green published a serious, nuanced, and rhetorically sharp critique of Bitcoin. Unlike many other simplistic or ill-founded dismissals from the fiat world, his essay “Bitcoin Is Not Sound Money” deals with undeniable tensions: the massive wealth gains by early bitcoiners, the risks of a deflationary money, Bitcoin’s energy consumption, some ill-guided attempts at crony capitalism, and the philosophical problem of designing a just, moral monetary order.
The concerns deserve serious engagement because I think that Green is half right.
He is right that the Bitcoin maxi narrative, as told by most Bitcoin influencers, is inconsistent with sound money. Forever passive ‘hodling’, store-of-value revisionism, and never ending number-go-up fantasies do not describe a generally usable money because proper money foremost must serve as a good medium of exchange. Everything else follows or is secondary.
Green is right that many bitcoiners may be losing the original vision and cypherpunk ethos of Bitcoin captured in the inspiring motto: ‘Fix the money, fix the world’. Green is right that some supposedly innate properties of Bitcoin would make it unsuitable to solve the many problems which fiat money creates in the real economy. And he is right to demand that any candidate for sound money must be judged by its fitness for the real economy and its morality.
Where Green goes wrong is in treating Bitcoin as a finished money, just as the Bitcoin-Maxi narrative does. Figuratively speaking, he is criticising a half-built house, the walls erected but the roof still missing. The house is uninhabitable but this is not because the builder’s plan itself is flawed.
Digital Gold
Bitcoin is often described as digital gold: immutable, verifiable, censorship-resistant. Its maximum stock and programmatic issuance is fixed, thus it can serve as a ‘hard’, sound base money (or M0 when talking in money aggregates). And within weeks after Bitcoin’s launch in 2009, early bitcoiners discussed that there was something missing.
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Sepp: “Satoshi, it is important that there be a limit on the amount of coins.”
Satoshi: “The coins are issued in a limited, predetermined amount by a majority.”
Sepp: “I understand. But it is also important that this limit be adjustable to take account of how many people use the system.”
Satoshi: “There is nobody to act as a central bank to adjust the money supply as the population of users grows.”
Sepp: “Is there a formula to decide what should be the total amount of coins?”
Satoshi: “I don’t know a way for software to know the real value of things. If there was some clever way, the rules could have been programmed for that. In this sense, it’s more typical of a precious metal. As the number of users grows, the value goes up.”
Sepp: “If it’s going to be used for payments, you don’t want to have large changes in the value of the coins. Stability of the coins’ value is desirable for long term use.”
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This lack of an adjustment mechanism and the resulting instability pose a serious problem for broader adoption. Ever since, a small part of the Bitcoin community has remained aware of this issue and thinking about how to complete the Bitcoin system, Hal Finney’s ‘Bitcoin Banks’ prediction is a well-known example.
In Search of Stability
Austro-Maxi bitcoiners are maximal about Bitcoin as base money, while not mistaking it as a complete monetary system. We want to see Bitcoin with ‘stable’ purchasing power, a supreme medium of exchange for the real economy. We believe Bitcoin’s base layer with its final supply of 21 million units is non-negotiable, but also requires an elastic, self-liquidating credit money layer tied to real production. Within Bitcoin Austria, we discussed the first proposal to build the missing layer (M1) on top of Bitcoin already when the Greek Euro Crisis of 2015 showed the severity of the gap.
This essay is not a defense of bitcoin maxis. Starting from Green’s objections, it lays out the position of Austro-Maxi bitcoiners. It is a response from those of us who want a complete Bitcoin system in which his objections no longer apply. Bitcoin, as it currently stands, is not yet sound money for modern digital civilization, but Bitcoin can be and the path to get there is clearer and much more reachable than Green’s essay suggests.
Three Financial Primitives is Too Primitive
Green builds part of his argument on three financial primitives: currency, debt, and equity. Currency cancels obligations. Debt moves resources from the future into the present. Equity is the residual claim after debt is paid. From this he concludes that Bitcoin wants to be currency while behaving like equity.
This framework is incomplete, insufficient for the task at hand. It fails at the first step because it leaves out the very category and mechanism needed to understand monetary systems, and thus to understand Bitcoin.
The Missing Commodity
The first problem is the missing commodity ‘primitive’, leading to a category error of equating Bitcoin with equity. Bitcoin is decidedly not equity.
Equity is a claim on an enterprise, but Bitcoin is not an enterprise. There is no residual after liabilities. At its current development stage, Bitcoin may appreciate and can be bought as a speculative asset, but appreciation alone does not make something equity. Gold can appreciate, land can appreciate. Any scarce commodity can rise in price because more people demand it, without thereby becoming a share in a business.
Bitcoin is not equity masquerading as currency. It is better understood as a scarce digital commodity, a form of specie. Specie alone does not make a complete monetary system but it can serve as hard base money within a sound monetary architecture.
The Missing Money
The second problem is the missing distinction between base money and credit money, leading to a conflation of functions in a total system.
A monetary system is not just a single primitive, it is a layered structure. At the bottom stands the commodity layer which serves for final settlement. Above it stands an institutional credit layer which enhances and monetises backed credit instruments denominated in that commodity. The lower layer ensures verifiable discipline, the upper layer enables smooth circulation.
Comparisons with just gold do not help understanding. Gold was never the whole monetary system, it was base money. The real economy did not operate by only moving coins from hand to hand, but through bills of exchange for commercial credit. A cargo could be sold, paid, and shipped long before the final settlement in gold coin or bullion. Gold coin was the anchor, it was not the primary medium of exchange.
The Missing Function
The third problem is Green’s chartalist definition of currency, which leaves out its primary economic function.
Currency is not merely an instrument for cancelling legal obligations, this view idolises a problematic legal privilege and leads astray. Currency foremost bridges time inside the structure of production. It enables division of labour, specialisation, technological advances, and productivity gains. Primary goods sell into the production and supply chains before final consumers buy them out of it. Between these two points, production, transport, storage, and trade must be financed. Currency is a prerequisite for this time interval.
This is where the theory of credit money comes into play. There is a fundamental difference between real credit issued against self-liquidating commercial claims backed by real goods versus financial credit issued ex nihilo, out of thin air.
The Missing Backing
A real bill, meaning a bill of exchange drawn against the value of real goods, is not arbitrary money creation. It is a monetary claim arising from a real commercial transaction. Goods have been produced and need to move. These goods’ economic value is the upper limit of real credit issuance. The buyer owes payment, the seller holds a claim. If that claim is accepted, enhanced, and secured, then credit money for circulation has emerged from the real transaction itself. It is elastic because trade is, it is disciplined because real goods are scarce and the real bill matures. At the end point, the goods are sold, the obligation is paid, and the credit extinguishes itself.
That is categorically different from credit expansion not backed by a self-liquidating commercial transaction. Historically, this was called a ‘dry’ bill, a bill drawn for finance rather than against the value of goods received.
Economically, a dry bill bids for existing value but depends on future production. It clandestinely debases honest real money, finances and refinances ever growing deficits, which is the core problem of the fiat experiment.
Green is right that debt can be likened to an economic time machine, but there are two different kinds of it. The first is real and sound commercial credit, the second is credit inflation. Fiat money creates economically illicit purchasing power, in hopes that business income or asset appreciation will suffice to pay the claim in the future.
This economic distinction is missing from Green’s framework. As a result, he treats the Bitcoin question as if the only alternatives were rigid Bitcoin with no elasticity, or a recreation of fiat banking on top of Bitcoin, while the missing third possibility is the economically correct way.
The Missing Theory
I call this the ‘Dual-Layer Theory of Money’, similar to the duality of light which refers to its nature as both a wave and a particle. In this theory, a monetary system is comprised of a stock of base money plus an elastic supply of credit money denominated in that base money. The base money layer gives the system its unit of account, finality, and honest discipline. The credit money layer adds its medium of exchange for circulation and the capacity to finance production. Conflating the two layers is bad theory, collapsing them into state-controlled fiat money is bad currency.
Bitcoin’s fixed supply is not the flaw Green believes it to be. It is exactly what one wants from base money. The real question is whether a sound credit layer can be built on top of Bitcoin without recreating state money, fractional-reserve, or speculative credit expansion. That is the question we must ask, and the monetary system we must build.
Bitcoin alone cannot finance the real economy. Just declaring Bitcoin legal tender as in El Salvador does not enable the economic capability of credit money. No base money can do this in an advanced economy with its elongated supply chains. Bitcoin still needs to build and grow its missing credit superstructure.
The Real Bitcoin Dilemma
Green calls Bitcoin a temporal wealth transfer machine. The emotionalising power of this labeling is obvious. On the surface, it refers to a fact: early holders gained enormously, while later entrants must buy into an already appreciated asset, but a large gain by early adopters is not in itself a defect, it is a normal result of price discovery under uncertainty and with ongoing progress.
Alice recognises a new technology early, Bob buys land before a city prospers and grows around it, Charlie funds a company before the market understands the true importance of its product. In each case, later demand revalues the earlier position. This can look unfair after the fact because the winning bet becomes obvious to everyone only once it has already won, but before that time, it was doubtful and risky. Many inventors and their early supporters were mocked and ridiculed.
On Speculation
Also, speculation is emphatically not a societal negative just because it succeeds and produces winners. Speculation on rising prices keeps real goods stored in warehouses which preserves them for times of scarcity. Also, speculation can turn out well, and it can turn out badly. Most early business ideas are highly risky, most fail and disappear, at a total loss to investors. Those who allocate their money, time, and reputation before an idea succeeds do not take from those who arrive later. The opposite is true: technical progress and productivity gains usually benefit the economy and the whole society.
However, benefiting from a voluntary discovery process and asking for a level playing field is different from lobbying politicians for tax privileges and special protections. The former belongs to a free economy, the second is rent-seeking incompatible with honest capitalism.
A bitcoiner who bought early has no moral right to demand that governments stock up on bitcoin, that pension funds be forced by law to subsidise his exit, or that tax law benefit his Bitcoin position. Here, Green’s critique is justified. However, this is not a critique of Bitcoin’s monetary nature, it is a justified rejection of political opportunism pushed by certain influencers and lobbyists. The real dilemma of Bitcoin lies elsewhere.
At this phase of Bitcoin’s development, its volatility weakens its use as a medium of exchange. If people believe that Bitcoin will appreciate, they will prefer just to hold it. If they prefer to hold it, they will not spend it. If they do not spend it, Bitcoin will remain primarily a savings technology rather than a circulating money. The very property that makes Bitcoin attractive as protection against fiat debasement makes it difficult for Bitcoin to become money in the full economic sense.
Money at Work
Money in the proper sense cannot just be kept in a vault. It must transmit value through time and carry goods through the supply chain. A functioning monetary system must allow the farmer to be paid some time before the final consumer buys the food. The exporter must finance goods in transit, the manufacturer must pay suppliers until the goods are finally sold to a consumer. Each business needs to turn future sales into present purchasing power. If money is reduced to holding, the real economy becomes starved of currency in circulation.
The slogan “store of value first, medium of exchange later” is only half true. It may describe a path for Bitcoin as a digital commodity, but not the birth of a complete monetary system. A money proper must mediate the exchange of goods, finance production, and extinguish real credit. If Bitcoin appreciates in cold storage while commerce remains denominated, financed, and settled in fiat credit, then Bitcoin has not fixed the money. It has been reduced to a savings asset inside the fiat order.
At the end of Green’s essay, his burning-house metaphor touches the real dilemma. The fiat system is burning, Bitcoin is presented as the exit, but those who saw the smoke first are already outside and everyone else must squeeze through later at a higher price. That is a valid criticism of passive hodling and the naive number-go-up narrative, but not a criticism of Bitcoin itself.
The Real Bitcoin Dilemma is whether Bitcoin shall remain a savings technology for the few, while the real economy continues to run on fiat money, or whether Bitcoin shall get the missing layer that allows businesses to use it in trade and pay workers. Should it become an ideal money that serves the many?
Hodling was Bitcoin’s necessary first phase, it is not its true potential.
Where Green Hits, and Where He Misses
Green’s remaining objections touch on privilege, taxation, energy, credit crises, state enforcement, and morality. Some hit their mark, particularly against the immature, store-of-value Bitcoin-maxi story, others miss the potential of a complete Bitcoin monetary system.
Bitcoin Cronyism
Green rightly calls out those bitcoin maxis who lobby for strategic reserves, pension mandates, tax carve-outs, and legal tender laws, designed to increase the value of their own holdings. Moral Bitcoin must remain a bottom-up, voluntary, opt-in proposition, and not seek top-down nation state enforcement, which would be fiat politics painted orange.
Legitimate demands ask for equal treatment under the law, an end of discriminatory regulation, debanking, punitive taxation, legal uncertainty or obstruction designed to protect the fiat monopoly.
Personally, I expect Bitcoin to prevail because it is technically robust, credibly scarce, globally recognised, and already the Schelling point for digital base money. But my subjective prediction of the probable future is different to asking for state favouritism. Austro-Maxi bitcoiners want the market, not the state, to pick the winner.
Bitcoin ETFs
Green’s critique of Wall Street’s “institutional toll booths” is valid. Bitcoin ETFs are not peer-to-peer cash, not self-custody, and they offer no escape from nation-state captured financial intermediaries.
These ETFs make Bitcoin exposure easier and acceptable for many traditional investors, but they do not advance a Bitcoin-native economy. They do not enable paying wages in Bitcoin, financing goods in transit, or settling real trade on Bitcoin rails. They are not monetary progress. Instead, they repackage Bitcoin inside the same trusted third-party architecture it was meant to escape.
Even if Wall Street is turning Bitcoin into another fee earner, this does not weaken Bitcoin’s candidacy for a sound money. It proves the Austro-Maxi point: as long as Bitcoin remains only an appreciating asset in fiat units, it has not yet fixed the money.
Tax Privileges
Green rightly criticises maximalist demands for Bitcoin-specific tax carve-outs that allow equity-like gains with currency-like spending treatment. That would be a privilege dressed as neutrality.
But he is wrong when he implies that the existing tax treatment is neutral. Most current tax systems are hostile to monetary competition to a state’s fiat currency, excessive and bureaucratic. Nobody should need an accountant, tax software, and capital-gains calculations to buy coffee, or suffer intrusive surveillance of their spending.
Governments ought to remove artificial friction from payments in any currency used as a medium of exchange, whether Bitcoin, gold, or stablecoins.
Monetary Deflation vs. Productivity Growth
Another of Green’s objections is that a Bitcoin standard would be deflationary and choke the economy which collides with the mainstream Bitcoin narrative which emphasises the increased purchasing power of early holders.
However, falling prices do not necessarily stem from harmful deflation. Only true monetary deflation is destructive. A contraction or shortage of circulating credit hurts commerce, spoils goods, and makes debts harder to pay. Productivity-driven price declines are a very different matter. If goods become cheaper because production becomes more efficient, ordinary people will be richer, not poorer.
An economy on sound money distributes technological progress first to workers, savers, and consumers. With fiat inflation, wage earners are disadvantaged by the lag between price increases and later wage adjustments. With sound money, the time lag from productivity growth works to the favour of workers because wages stay the same while goods become cheaper. Savers also benefit when real productivity rises, because their past savings then buy more.
The late nineteenth century offers historical evidence of this: relatively sound gold money coincided with rapid productivity growth, and many goods became cheaper as industrial output expanded dramatically.
Bitcoin-Collateralised vs. Bitcoin-Native Credit
Green criticises fiat credit against Bitcoin collateral, especially long-term debt secured by a supposedly ever appreciating asset. While it may initially reward passive holders and defer taxation, this path risks turning into a dispossession machine over time.
The model may appear useful during Bitcoin’s monetisation phase, but it cannot be the foundation of a sound Bitcoin economy. If the development of a credit layer is too slow, monetisation drags out, and further price rises of Bitcoin do not materialise, then the continuing interest burden will eventually force sales, trigger taxes, and break the financial flywheel.
Bitcoin-collateralised fiat credit is fundamentally the opposite of the Bitcoin-native, self-liquidating commercial credit: instruments issued against real goods already sold into the supply chain, denominated in Bitcoin, maturing upon their final sale, and extinguishing themselves upon settlement on the Bitcoin mainchain. That model never requires a sale of Bitcoin.
This distinction is crucial. The right kind of credit finances actual production and trade. The wrong kind inflates asset prices and creates fragile bubbles. Green’s critique is valid against Bitcoin-collateralised fiat debt, but it does not refute the possibility of a properly designed real-bill credit layer denominated in Bitcoin. The next chapter will expand on this solution.
Energy Consumption vs. Grid Stability
Bitcoin consumes real energy. This cannot and should not be denied. Sound money does not come free, whether Bitcoin or gold. Final settlement, censorship resistance, and monetary independence require a real-world cost. In Bitcoin, that cost is proof of work.
Fiat money is not free either. It carries enormous costs: expensive monopolistic institutions, constant inflation, economic distortions, and catastrophic consequences in times of hyperinflation, fiat currency crises, or upon loss of interbank trust.
Green’s critique treats Bitcoin mining as ordinary industrial consumption or pure waste. This misses the unique characteristics of mining. Bitcoin mining is location-flexible and interruption-tolerant. It can monetise energy that would otherwise be stranded or curtailed, power available at the wrong time, in the wrong place, or in excess of local demand. This flexibility makes it especially valuable for renewable energy projects.
Bitcoin mining can already improve the economics of solar, wind, hydro, and geothermal by acting as a flexible buyer of last resort. It can make new renewable capacity more financeable in challenging regions. The picture is far more nuanced than Green suggests:
In Texas, Bitcoin miners serve as a flexible load on the ERCOT grid. They can curtail during peak demand, thereby helping to prevent costly blackouts such as the $26.5 billion incident of 2021.
In Australia, mining absorbs power during periods of negative electricity prices when excess solar and wind drive wholesale prices below zero. Miners consume this surplus, improving project economics and reducing wasted energy.
In Africa, the impact is particularly beneficial. Mining monetises stranded renewable energy in areas with weak or non-existent grids. It can serve as the anchor customer for mini-grids, enabling electricity access for communities that previously had none.
While non-renewable mining still exists, the trend is positive. Bitcoin increasingly buys intermittent and stranded energy. The energy intensity per unit of newly mined Bitcoin falls with every halving. As the block reward trends toward zero, miners will rely more on transaction fees. The environmental critique, though understandable, increasingly reflects an overly static view of the industry.
Ultimately, a valid comparison must weigh Bitcoin’s visible energy use minus its grid-stabilisation and renewable-enabling benefits against fiat’s hidden costs: inflation, financial fragility, bureaucracy, surveillance, sanctions, bailouts, and financial crises.
Anarcho Capitalism vs. Minimal Government
Green criticises bitcoiners who demand courts, sheriffs, and contract enforcement while simultaneously claiming Bitcoin is voluntary and politically neutral. This is indeed often heard in the bitcoin maxi narrative where some embrace the uncompromising Rothbardian anarcho-capitalist idea which ignores the limits posed by physical reality, the nature of man, and the need to adapt to present conditions before trying to transcend them.
The Austro-Maxi position is aligns with the limited government teachings of Mises and Hayek in Austrian Economics: minarchism. The rule of law, the protection of private property, and the ex-post enforcement of ex-ante voluntary contracts are hallmarks of civilisation, not betrayals of freedom.
A Bitcoin monetary system makes use of commercial bills of exchange. The bill mechanisms are easier and arguably more civilised when formalised by international law, with legal recourse, and enforcement of general, neutral rules. States need not help Bitcoin win, but they should stop suppressing monetary competition. They should apply the same laws to everyone and every money.
Bitcoin Volatility
Green criticises that Bitcoin’s high volatility is far above that of major fiat currencies which limits its use as a general medium of exchange. Most businesses cannot easily denominate wages, debts, or everyday obligations in an asset whose purchasing power can swing so violently.
This objection carries weight in developed markets where fiat currencies are relatively stable over 30, 60, or 90 days, which are typical periods for trade finance. In countries with bad currencies and weak banking institutions, the situation is very different. A growing $2.5 trillion trade finance gap practically blocks a significant part of international trade of the poorest countries.
Most importantly, today’s Bitcoin volatility is a symptom of its incomplete development. A pure savings asset without a functioning credit money layer cannot be stable. The reverse is also true; after gold was demonetised, its price became volatile despite millennia of relative stability when it functioned as money.
Like gold before its demonetisation, Bitcoin can be expected to capture the monetary premium. Its purchasing power should rise towards its fundamental monetary value and stabilise against the major fiat currencies. Historically, after the end of wartime suspensions of gold redeemability, the purchasing power of gold usually returned to its prior level within just a few years.
The Moral Test
Green’s most interesting critique is his moral evaluation of Bitcoin through John Rawls’ veil of ignorance. He asks whether a rational person, unaware of their position in society, would accept a system that creates a privileged caste: early holders who extract ongoing wealth from all later participants.
This premise only holds if Bitcoin remains an incomplete store of value. It does not hold in a completed Bitcoin monetary system. If a self-liquidating credit layer can be built on top of Bitcoin’s fixed base, the dynamic changes fundamentally.
New participants would no longer be limited to buying existing coins from early holders. They could get access to Bitcoin by producing real goods, selling them into the supply chain, and obtaining Bitcoin-denominated credit money backed by those real goods.
The real question is how. We will answer this in the next chapter.
On an institutional moral test, the comparison is even clearer. A monetary system should be judged by whether it secretly debases its unit of account, harms workers and savers, privileges insiders and politicians, censors outsiders, socialises losses, and creates purchasing power without corresponding real production.
On every one of these dimensions, fiat is vastly inferior to a complete Bitcoin system. Green himself acknowledges these moral failures of the fiat system and admits he knows no viable alternative.
The Missing Layer
The power of Green’s critique rests on an incomplete Bitcoin: Bitcoin as hoarded asset, as collateral for fiat borrowing, ETF inventory, national reserve. A volatile, risky Bitcoin. Against that intermediate version, his objections bite hard.
The best response to Michael Green is not to defend Bitcoin as it currently stands, but to finish building a complete system. That is what the Bitcredit Protocol project sets out to achieve: an elastic credit money layer built on top of Bitcoin without changing Bitcoin Core.
The Dual-Layer Theory of Money
Bitcredit Protocol embodies what I call the dual-layer theory of money: sound money requires a fixed-supply monetary base, expanded with an elastic, self-liquidating credit layer denominated in that base money. In Bitcredit, Bitcoin serves as the fixed base; e-bills split into e-cash provide the elastic credit layer.
The wholesale-money mechanism of Bitcredit is the classical real bill, now electronic, Bitcoin-denominated, and updated for the digital age. The retail-money mechanism is the ‘minibill’: a novel, non-custodial form of Chaumian e-cash with privacy by default.
Bitcredit is a free and open-source software protocol built on the Bitcoin technology stack, with Nostr used for communication and coordination.
This is how it works:
A producer sells goods into the supply chain and draws a commercial bill on the buyer using the eBill reference app. The e-bill is not arbitrary credit, it is backed by real goods already produced and moving toward consumption.
The beneficial holder can then present the e-bill to a credit mint, a Bitcredit full node operating through the ‘Wildcat’ dashboard. The mint splits the e-bill into e-cash. E-cash circulates freely through the Bitcredit eCash reference app, enabling instant, private, low-cost, and scalable payments for everyone.
The bill self-liquidates when the buyer on-sells the goods or otherwise pays the bill. Upon the obligatory final settlement on the Bitcoin mainchain, the bill is extinguished. Each bill has a re-minting agreement as a continual liquidity option. A dishonoured e-bill triggers a recourse chain of prior holders.
On top of this safeguard, Bitcredit adds two network-level security layers. Each mint is supervised by a sub-network of other mints called ‘clowder’. If a bill is dishonoured, the mint can draw on a specialised guarantee asset to pay the e-bill. If a whole mint defaults, becomes “rabid”, the supervising mints trigger remedy transactions and assume its liabilities.
Crucially, Bitcredit does not require a change to Bitcoin’s base protocol, to its consensus rules, or block size, or its astoundingly effective game theory. Bitcredit Protocol works entirely as an overlay on top of Bitcoin as it exists today.
Why This Addresses Green’s Argument
Green’s temporal caste argument depends on the hidden assumption that new participants can access Bitcoin only by buying existing coins from current holders. That is true for Bitcoin as a standalone commodity, it is not for a completed Bitcoin monetary system.
Deflation and Credit Crises: Self-liquidating bills fully backed by real goods provide natural elasticity that expands and contracts with the needs of trade and industry, which prevents the increasing base money scarcity Green assumes.
Wealth Transfer: New participants can gain access to Bitcoin-denominated liquidity through production and trade, not only through buying coins from early holders. The temporal advantage is nullified by genuine economic activity.
Rentier Critique: Holding base-layer Bitcoin remains possible, but comes at an opportunity cost. The credit layer channels savings, the value of goods in the supply chain, as capital into productive circulation.
With a real-bill layer available, a new participant need not begin by purchasing scarce base coins, he can enter through production. The farmer sells crops, the exporter sells shipped goods, the manufacturer sells merchandise, the merchant accepts payment from consumers.
From these transactions arise Bitcoin-denominated claims that can circulate as money substitutes when enhanced by the mechanics of the Bitcredit Network. Access to medium of exchange is earned through real work, not inherited from proximity to the genesis block.
The temporal Cantillon effect therefore disappears. The early holder may have benefited from adopting Bitcoin before monetisation, but holders no longer control access. An honest producer can obtain liquidity for the next link in the supply chain by selling real goods and minting an e-bill drawn against that value.
Bitcredit establishes this equality of monetary access under straightforward global commercial law. Credit history, prudence, solvency, and judgment still matter, as they should. Some businesses will have easier access to credit than others. That said, mints will specialise and compete for profitable business, so chances are better than under centrally imposed access regulations.
Volatility is an Initial Phase
Bitcoin’s present volatility is real. But volatility before monetisation is not a refutation of monetary potential. It is the price discovery process of an asset moving from obscurity toward monetary premium.
Like gold before its demonetisation, Bitcoin can be expected to capture the monetary premium. Its purchasing power should rise towards its fundamental monetary value and stabilise against the major fiat currencies.
Supply chain bsúsinesses need not wait until Bitcoin has reached perfect purchasing-power stillness. Fiat liquidity is enormously expensive in certain regions of the world where access to credit has almost dried up. The Asian Development Bank estimates this trade finance gap at $2.5 trillion.
A Bitcoin-denominated real-bill layer allows trade to be financed and bridge the time horizon required for production or a commercial transaction. Stability then comes not from a central bank striving for a CPI target, but from the structure of production itself: real goods moving on real credit, denominated in hard Bitcoin and extinguished by final settlement on mainchain.
Beyond Stablecoins
Stablecoins solve a narrower problem. They accelerate fiat. They make dollars more portable, even programmable, and usable despite broken banking systems. In many countries, that is genuinely useful.
But a stablecoin is still a fiat claim. It depends on an issuer, banking access, reserves, redemption, compliance, and the political perimeter of the dollar system. It may improve the plumbing of fiat, but it does not escape fiat.
Bitcredit aims at a different monetary object: not tokenised fiat, but Bitcoin-denominated commercial credit. The unit is Bitcoin, the backing is real goods, the settlement asset is Bitcoin. It is not just about payments, but financing without artificially imposed gatekeepers.
No Longer Merely Theoretical
We are still early. A monetary institution is not declared into existence by a whitepaper, not even by available free open-source software. It must prove itself through everyday usage and repeated settlement.
Since the initial discussions in Bitcoin Austria following the Greek debt crisis in 2015, the Bitcredit concept has moved from theory toward implementation. The protocol is deliberately lightweight and focuses on verifiable commercial claims that settle verifiably on Bitcoin. Early experiments have shown high interest from merchants and producers who want to transact and finance in Bitcoin without relying on fiat rails. Testnet transactions already simulated various multi-stage supply chains, such as coffee, cacao, grain, soy, meat, and timber.
This is the missing roof on the half-built house Green criticises. With it, many of his strongest objections no longer apply. Bitcoin can transition from digital gold to the foundation of a complete, sound monetary system for the digital age.
Widening the Door
We agree with Green’s burning-house metaphor. Passive hodling of Bitcoin makes no sound money. He is right that ETFs do not complete Bitcoin. He is right that tax privileges and collateralised fiat borrowing can become rent-seeking. He is right that a Bitcoin standard without a sound credit layer would be dangerous.
But Green is wrong to treat those failures as Bitcoin’s final destiny.
The door is only narrow if Bitcoin remains an asset hoarded by the few. Our task is not to criticise the exit from the failed fiat experiment, but to widen it, and tear it down. Like people tore down the iron curtain and the Berlin Wall which blocked the exit from the socialist experiment.
Bitcredit Protocol is the Austro-Maxi initiative to breach the fiat wall. We do not ask for permission or for changes to Bitcoin Core. We do not lobby the state to impose Bitcoin, we do not need Wall Street to custody Bitcoin or wrap it in fiat. We are not waiting for number-go-up. We are completing Bitcoin with the monetary layer it still lacks.
Bitcoin is not sound money yet. But it can be, if we apply sound economics, put in the hard work, and bring the grit required to finish what began with Bitcoin. Then “Fix the Money, Fix the World” can become more than a slogan: it can become reality.