The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous

Britain was the first to adopt a modern gold standard in 1717, under the direction of physicist Isaac Newton, who was the warden of the Royal Mint, and the gold standard would play a great role in it advancing its trade across its empire worldwide. Britain would remain under a gold standard until 1914, although it would suspend it during the Napoleonic wars from 1797 to 1821. The economic supremacy of Britain was intricately linked to its being on a superior monetary standard, and other European countries began to follow it. The end of the Napoleonic wars heralded the beginning of the golden age of Europe, as, one by one, the major European nations began adopting the gold standard. The more nations officially adopted the gold standard, the more marketable gold became and the larger the incentive became for other nations to join. Further, instead of individuals having to carry gold and silver coins for large and small transactions, respectively, they could now store their wealth in gold in banks while using paper receipts, bills, and checks to make payments of any size. The holders of paper receipts could just use them to make payment themselves; bills were discounted by banks and used for clearance and checks could be cashed from the banks that issued them. This solved the problem of gold's salability across scales, making gold the best monetary medium—for as long as the banks hoarding people's gold would not increase the supply of papers they issued as receipts.

Gold Standard