Why gold never was and Bitcoin never will be money
Let’s begin with a classical account of how gold became representative money and then fiat money. The simplified version goes something like this: First, money was something that had intrinsic value -- say, a precious metal. Then we started using pieces of paper that acted as tickets which could be exchanged for this precious metal, metal which was held safe at the bank (representative / fiduciary / convertible money). And finally we were left with just the (inconvertible) pieces of paper. Economists have concluded that these pieces of paper — fiat money — are a "bubble": they trade above their intrinsic value only because people trust that the next person will also accept them at this inflated value, ad infinitum.
"People accept money as such because they know that others will," said Milton Friedman — a greater-fool theory of sorts, or "funny money," as it’s also known.
Crypto theorists latch on to this story by a) blaming supposed shortcomings of modern money on having departed from commodity money and b) claiming that crypto can solve this by offering a digital alternative to gold.
We would like to offer a different account of events by running them through the Accounting View (AV).
