There is a lot of criticism levied against cryptocurrencies, and the most common is that they are a fraud. However, if the critics were to take a time machine trip back to the 1700s, they would find equal skeptics of paper currency. They would find founders who vehemently opposed paper money. Lawyer and crypto enthusiast Jake Chervinsky in this tweet, suggests America’s founding fathers would have loved Bitcoin. They would be Holders too. Jake bases his hypothesis on the American Founders’ view on paper money.
They would love Bitcoin because governments cannot manipulate it. It is a public open ledger, which works by proof rather than pure trust. The digital currency is fungible and as durable as gold. Bitcoin is also rare. There will only be 21 million of these coins while paper money is infinite in supply. All a government needs to do is press “print”. Bitcoin is also divisible into Satoshis and can, therefore, facilitate micro trades.
American Founder’s Distaste for Paper Money
The lack of money was a very persistent problem in colonial America. With the colonies under British control, the legal tender was silver and gold. The bimetallic system, however, had a huge flaw; circulation. The precious metal coins were hard to come by in the colonies.
Meanwhile, domestic gold and silver
mining was nonexistent. The colonists
eventually adapted other commodities for money. Top amongst them was the use of
Spanish coins as legal tender.
However, soon came the civil war, and
paper money backed by loans was printed to cover rising costs. Soon, the paper
bills surpassed their backing in loans, and inflation hit the States. The
government debt skyrocketed. Soon, Congress and every other state were
experimenting with its own paper currency.
The founding fathers were outraged. In
his letter to Thomas Jefferson, George Washington wrote:
“Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”
Writing to Colonel Edward Carrington,
Jefferson said “Paper is poverty … it is only the ghost of money, and not money
itself.” Thomas Jefferson in reference to banks said that they “are more
dangerous than standing armies; and that the principle of spending money to be
paid by posterity, under the name of funding, is but swindling futurity on a
If they had had the choice of paper money and Bitcoin, they would probably debate over it a whole lot. However, it is highly probable that they would go for the currency that reflected gold’s store of value features. Bitcoin is the answer to the failures of the current monetary system as cited by the founding father’s skepticism of fiat.
On releasing Bitcoin, Satoshi Nakamoto said that conventional currency only run by the trust people had given to the central bank and governments. However, banks and many world governments have repeatedly walked all over that trust. They lend cash in out in bubbles, leaving no fractions in reserve.
The Framers, for instance, knew that
no government would ever refrain itself from uncontrolled spending. They,
therefore, opposed a national central bank.
They went on further to strike out part of the Constitutional Convention
draft on the powers of Congress that allowed it to “emit bills of
credit.” Bills of credit back then were synonymous with paper money.
The Framers, consequently, had no intention that paper would be legal tender, but gold and silver. President Richard Nixon changed this statute when he in 1971 asked the Treasury to drop the gold standard. Henceforth, the M3 money-supply measure rose to unimaginable highs. In 2007, for instance, it stood at $10.3 trillion in 2007 in contrast to 1971’s $688.4 billion.
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