Nick Szabo  🔑

Free banking history helped inspire my design of bit gold, but mostly as "what people really wanted at the end of the day was the gold, the bank note [today could be digital cash] was merely an IOU for gold. So how do I make the actual money, the gold, in digital form?

From that POV, the basic problem with free banking is that for various reasons banks convinced people to swap their trust-minimized silver and gold for trust-based gold IOUs. Fractional reserve and modern fiat are both consequences of that misplaced trust.

So I set myself the challenge of using my computer science knowledge to design a trust-minimized form of digital money, and the result was bit gold.

I hoped such money would be convenient enough that economies would return to vulnerability-minimized money. We still see the trust-the-convenient-exchange vs. hold-your-own debate today, but Bitcoin gives us a better chance to minimize the vulnerability of money than gold did.

Nick, what are the reasons why you think BTC is less vulnerable than gold as money?

https://twitter.com/NickSzabo4/status/992056245707128836 …

Thanks. As I understand this, gold's main problem as a money is its physicality/locality?

Physicality itself brings a lot of disadvantages to the table: easier to counterfeit or debase, hard to transact, harder to split, hard to guarantee fungibility.