bles with barely a fraction in reserve. We must have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Satoshi Nakamoto 2009 Money is entirely a sociological phenomenon, a form of human interaction. George Simmel 1907
As can be gleaned from the quote from the mysterious Satoshi Nakamoto’s statement, Bitcoin was conceived as a coup d’etat against the crony capitalism of the banking system. However, it was a misdiagnosed attempt. Banks were not without blame, especially in the run-up to the recent global banking crisis, but Nakamoto’s arguments represent conventional wisdom rather than facts. Contrary to Nakamoto’s statement, it is difficult to imagine central banks propensity to debase money after they became independent from governments in the 1980s. Judging by the date publication of his manifesto, Nakamoto believed that central banks’ quantitative easing (QE) programs involved money printing on a massive scale (Nakamoto 2009), which was not true. The QE programs were not about increasing money supply, but about increasing bank liquid reserves. As regards Nakamoto’s comments on commercial banks, the credit bubbles indeed resulted from their irresponsible lending policy, yet their root cause was not the fractional reserve system, but excessive deregulation of banking before the outbreak of the crisis. Therefore, if the goal behind launching Bitcoin was to provide the foundations for a new monetary system, the whole initiative was misdiagnosed and therefore doomed to fail. To illustrate the conceptual flaws of the Bitcoin project, let us briefly recap the factors that make up a trusted and efficient monetary system. For a start, let us remember that money supply is made up by the funds at the disposal of individual people and companies – in the form of cash or bank deposits – intended to cover their current spending on goods and services. If money is used to cover household and firm current spending, it has to be both stable and universally accepted.
Values in finance: The perspective of the Open Eyes Economy
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