Money is a technology humans invented to solve the limitations of barter (the "coincidence of wants").
Core Functions of Money
1. The Fundamental Nature of Money
Purpose:
It is a tool designed to PRESERVE VALUE ACROSS TIME AND SPACE, allowing individuals to save the value of their labor today to exchange it for goods tomorrow.
The Consumption Rule:
True money is something you acquire specifically not to consume. If a "money" can be eaten (oranges) or used in manufacturing (silver in electronics), it is a poor store of value because industrial or biological consumption constantly depletes the stockpile.
Explanatory Note:
This view is applying the Austrian School view of money. By defining money as a "technology," Austrian Economists implie it can be disrupted by better versions (like the internet disrupted mail).
The "Consumption Rule" highlights a paradox: while some argue that utility gives gold value, Austrian Economists argues that same utility creates "monetary leakage" because you can't save a coin that has been melted into a circuit board.
2. Why Commodities Fail as Money
Austrian economic theory argues that gold and silver are fundamentally flawed because they are "consumable" and only "relatively" scarce. Both gold and silver are used for making other things and thus are consumable as gold etching or silver etching on an electronic circuit board. Both are only relatively scarce because demand incentivises mining of gold or sulver increasing the supply. This supply gut over supplies the market resuklting in a price crash. Niether can be relied on to preserve the value of your labor for later use. This is further explained by the Bounty Effect.
The "Bounty" Effect: When the price of a commodity rises, it creates an economic incentive to produce more. This surge in new supply (the flow) eventually floods the market and crashes the price back down.
Industrial Utility is a Flaw:
Contrary to critics like Peter Schiff, Austrian Economists claim that needing a metal for jewelry or jets makes it worse money. Using the asset for industrial purposes "demonetizes" it, reducing the stockpile and hammering its stock-to-flow ratio.
Relative Scarcity:
Commodities are only scarce based on the cost of extraction. If the price of gold goes high enough, it becomes economically viable to mine it from the ocean floor or even from space (asteroids/Mars), potentially causing a massive price collapse.
3. Why Bitcoin is Superior Money
Bitcoin was engineered specifically to solve the problems that have plagued every other monetary medium in history.
Absolute Scarcity:
Bitcoin is the only asset with a fixed supply cap of 21 million. A higher price cannot result in more Bitcoin being "found" or "dug up."
The Time Barrier:
Bitcoin’s issuance is tethered to 10-minute intervals. Mallers notes that Satoshi Nakamoto denominated Bitcoin in time—the only true scarcity in the universe. To hyper-inflate the supply, you would literally have to solve for time travel.
Perfect Stock-to-Flow:
While gold takes ~66 years to recreate its stockpile, Bitcoin’s issuance halves every four years. It is on a path toward an infinite stock-to-flow ratio. As of December 2025, Bitcoin’s stock-to-flow ratio is roughly 120 (following the 2024 halving), nearly double that of gold (~66). This makes Bitcoin mathematically the scarcest liquid asset on Earth. The "Time Barrier" refers to Difficulty Adjustment—a feature gold lacks. If more miners join gold, more gold is found; if more miners join Bitcoin, the network simply gets more secure, but the 10-minute "heartbeat" remains constant.
It Cannot Be Consumed:
100% of Bitcoin’s supply remains dedicated to its role as a monetary store of value. It cannot be used to make silverware; its only utility is being money.
Portability & Security:
Gold is hard to physically carry and move due to it's weight and bulk. Bitcoin is "safe in your brain." You can carry your entire net worth via a memorized seed phrase.
4. Summary of Ideal Monetary Traits
If you look at these important traits for "Good Money", Bitcoin has them all.
Bitcoin wins in every category required for "Good Money":
Scarcity Absolute limit of 21 million; 19.8M+ already in circulation.
Durability Digital code; exists as long as the internet and one node survive.
Divisibility 1 BTC = 100,000,000 Satoshis (perfect for a high-price environment).
Portability Instant global transfer via Lightning Network; memorizable.
Neutrality No "CEO" or central bank; decentralized across 50,000+ nodes.
Note: With Bitcoin prices fluctuating between $85,000 and $125,000 in late 2025, "Divisibility" has become critical. Most people now save in Satoshis (Sats) rather than full Bitcoins.
Note" Neutrality"** is also vital in 2025's climate of "wartime financing" and tariff wars, as Bitcoin remains the only global asset that cannot be sanctioned or "turned off" by a central authority.
Last words:
These are the reasons Bitcoin is Good Money, and commodities like gold and silver are not.
What do you think?
✍️ About the Author
This post was written by @Shortsegments, an author with seven years of experience covering cryptocurrency, the blockchain, digital ledgers, Bitcoin, Ethereum, and Decentralized Finance (DeFi).
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