Why not gold?

Do you have any gold? No? Why would you want to use it for money? What value does it have to you other than being pretty and other people who seem to believe the metal is “money.”

The majority of people haven’t used gold in decades in everyday transactions, so it’s no longer viable as money. Governments and central banking systems have slowly accumulated and hoarded it over decades since the end of the Bretton Woods agreement. If the people tried to bootstrap the system again and revert back to gold, governments would find ways to legislate it away and control its use, even seizing it from your possession. If you managed a small local economy based on gold, the value of the money can easily be distorted by external disturbances. Gold in itself is also a very heavy element and inconvenient to carry and subdivide—which is why we started using paper-money to begin with.

Sure, you could resume the use of paper certificates to represent the gold, but then you’re back to the problem of mandating the auditing of the paper certificates vs. the gold stored for safe keeping. Get rid of the gold, keep the paper and use cryptography to validate the money.

With time, your cryptographically secured transaction history is your bank. You can prove you possessed the money via your transaction log, and it cannot be “seized” by organizations. Your local copy can be destroyed, but you can replicate your transaction history from other participants in the economy.

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