The Bitcoin Standard

Chapter 8Digital Money

The global telecommunication revolution, starting with the production of the first fully programmable computer in the 1950s, has encroached on an increasing number of material aspects of life, providing engineering solutions to hitherto age‐old problems. While banks and startup firms increasingly utilized computer and network technology for payments and recordkeeping, the innovations that succeeded did not provide a new form of money, and the innovations that tried to provide a new form of money all failed. Bitcoin represents the first truly digital solution to the problem of money, and in it we find a potential solution to the problems of salability, soundness, and sovereignty. Bitcoin has operated with practically no failure for the past 9 years, and if it continues to operate like this for the next 90, it will be a compelling solution to the problem of money, offering individuals sovereignty over money that is resistant to unexpected inflation while also being highly salable across space, scale, and time. Should Bitcoin continue to operate as it already has, all the previous technologies humans have employed as money—shells, salt, cattle, precious metals, and government paper—may appear quaint anachronisms in our modern world—abacuses next to our modern computers.

We saw how the introduction of metallurgy produced solutions to the problem of money that were superior to beads, shellfish, and other artifacts, and how the emergence of regular coinage ...