*Digital Gold*

The author is Nathaniel Popper and the subtitle is Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

This excellent work is the book on Bitcoin you’ve been waiting for, most importantly it doesn’t require that you are the kind of person who wants to read a book on Bitcoin.  I devoured my copy right away, it is full of information, explanation, and good humor, definitely recommended and entertaining throughout.

Here is Popper’s piece on Bitcoin and Argentina, here is Popper on Twitter.


Too soon for conclusions? I'd buy the very same book by the very same author in 2030.

US money was reinvented in 1933 and has been evolving since. The misfits/millionaires may be trying to resurrect money as a store of value which is disconnected from the (wrong) people that want to run everything.

Actually, American money has been 're-invented' several times - such as during the Civil War.

'During 1861, the opening year of the American Civil War, the expenses incurred by the Union Government far outstripped its limited revenues from taxation, and borrowing was the main vehicle for financing the war. The Act of July 17, 1861[2] authorized Secretary of the Treasury Salmon P. Chase to raise money via the issuance of $50,000,000 in Treasury Notes payable on demand.[3] These Demand Notes were paid out to creditors directly and used to meet the payroll of soldiers in the field. While issued within the legal framework of Treasury Note Debt, the Demand Notes were intended to circulate as currency and were of the same size as banknotes and closely resembled them in appearance.[4] In December 1861, economic conditions deteriorated and a suspension of specie payment led the government to cease redeeming the Demand Notes in coin.

The Legal Tender Acts

The beginning of 1862 found the Union's expenses mounting, and the government was having trouble funding the escalating war. U.S. Demand Notes—which were used, among other things, to pay Union soldiers—were unredeemable, and the value of the notes began to deteriorate. Congressman and Buffalo banker Elbridge G. Spaulding prepared a bill, based on the Free Banking Law of New York, that eventually became the National Banking Act of 1863.[5] Recognizing, however, that his proposal would take many months to pass Congress, in early February Spaulding introduced another bill to permit the U.S. Treasury to issue $150 million in notes as legal tender.[6] This caused tremendous controversy in Congress, as hitherto the Constitution had been interpreted as not granting the government the power to issue a paper currency. ' http://en.wikipedia.org/wiki/United_States_Note

Good point. Wasn't that actually debt issuance, demand notes, and later "Greenbacks" to finance the war?

Before the Civil War, the U.S. didn't issue paper currency. The money supply was coins and paper notes issued by private banks. The government first issued paper currency in 1861. Lincoln issued $60 million in demand notes, a sort of Treasury note redeemable "on demand" for gold coins.

The first significant inflation came with the Civil War, via $500 million in paper "greenbacks" -- the Constitution being silent on Congress's power to issue paper money.

The greenback was as good as gold by 1879. Inflationary experience led lenders to insert "gold clauses" in contracts specifying repayment in gold coin (provisions that were effective until Congress canceled them in 1934, a move upheld by the Supreme Court the following year).

In 1862, Lincoln issued $150 million in fiat currency: United States Notes a.k.a. “greenbacks.” By 1865, nearly $450 million greenbacks were circulating. These were redeemable for in US Treasury debt, not gold.

Greenbacks were first to make the statement: legal-tender notes which referred to the text on the back, which began, "This note is legal tender for all debts, public and private." This made the currency a valid form of payment on par with gold and silver. It made the United States note a fiat currency -- meaning its value was established by law alone and wasn't based on some other unit of value, such as gold, silver or land.

Anyhow, FDR’s Executive Order 6102 banned the “hoarding of gold coin, gold bullion, and gold certificates.” It was known as the Gold Confiscation of 1933. That effectively forced citizens to sell gold to the Federal Reserve at $20 an ounce. Shortly afterwards the price of gold was raised to $35.

So, US money was reinvented in 1933 (when by executive order all gold coinage/money was confiscated) and since has been evolving (central planning but not natural selection).

Regarding 1933 (and forward) reinvented “money”: The Series D of 1934, US Twenty Dollar Federal Reserve Note was the last US paper wherein was imprinted under Pres. Jackson’s visage: “WILL PAY TO THE BEARER ON DEMAND TWENTY DOLLARS.” After 1934, the US Federal Reserve Note merely states, “TWENTY DOLLARS.” The Federal Reserve Note is backed by nothing except the full faith and credit ($17 trillion and counting) of the US government.

Well, though more a minor note than a major concerto, leaving the silver standard would also count -

'By acts of Congress in 1933, including the Gold Reserve Act and the Silver Purchase Act of 1934, the domestic economy was taken off the gold standard and placed on the silver standard for the first time. The Treasury Department was reempowered to issue paper currency redeemable in silver dollars and bullion, thereby divorcing the domestic economy from bimetallism and leaving it on the silver standard, although international settlements were still in gold.[6]

This meant that for every ounce of silver in the U.S. Treasury's vaults, the U.S. government could continue to issue money against it. These silver certificates were shredded upon redemption since the redeemed silver was no longer in the Treasury. With the world market price of silver having been in excess of $1.29 per troy ounce since 1960, silver began to flow out of the Treasury at an increasing rate. To slow the drain, President Kennedy ordered a halt to issuing $5 and $10 silver certificates in 1962. That left the $1 silver certificate as the only denomination being issued.

On June 4, 1963, Kennedy signed Public Law 88-36, which marked the beginning of the end for even the $1 silver certificate. The law authorized the Federal Reserve to issue $1 and $2 bills, and revoked the Silver Purchase Act of 1934, which authorized the Secretary of the Treasury to issue silver certificates (by now limited to the $1 denomination). Because it would be several months before the new $1 Federal Reserve Notes could enter circulation in quantity, there was a need to issue silver certificates in the interim. Because the Agricultural Adjustment Act of 1933 granted the right to issue silver certificates to the president, Kennedy issued Executive Order 11110 to delegate that authority to the Treasury Secretary during the transition

Silver certificates continued to be issued until late 1963, when the $1 Federal Reserve Note was released into circulation. For several years, existing silver certificates could be redeemed for silver, but this practice was halted on June 24, 1968

Finally, President Richard Nixon announced[7] that the United States would no longer redeem currency for gold or any other precious metal, forming the final step in abandoning the gold and silver standards. This announcement was part of the economic measures now known as the "Nixon Shock".' http://en.wikipedia.org/wiki/Silver_standard#United_States

The argentina example is a story of Bitcoin as an alternative to something that has utterly failed. So the future prospects for Bitcoin hinge on the failure of other means of exchange to be inexpensive and frictionless.

At what point does inflation or other measures become irrelevant when a currency or system simply stops being used?

When a government is forced to start paying its police/military in something other than the inflating currency.

Are options on Bitcoins available?

I wouldn't trust Glenn Danzig to reinvent money.

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