A crypto prophecy fulfilled!

Thu 07 Mar 2024 ▪ 9 min reading ▪ by Luc Jose A.

Bitcoin (BTC) needs no introduction. It particularly attracts attention because it is the most popular crypto on the market. But bitcoin is also a revolutionary asset that has changed our perception, but also our relationship with money. Today, if it is increasingly accepted that the latter can not be fiduciary and material, but also digital and virtual, it is thanks to the emergence of bitcoin in 2008. However, this almost miraculous appearance of bitcoin is no accident. Three visionaries, namely Milton Friedman, Friedrich A. Hayek and Henry Ford, predicted it. Return to this article on these prophets who announced what some like to call “digital gold”.

A bitcoin coin

Milton Friedman and his revolutionary monetary ideas

A paradoxical thing about prophecies is that when they are issued, they are taken as madness by the prophet's contemporaries. We imagine that the famous economist Milton Friedman suffered such setbacks for his revolutionary ideas, particularly regarding the flagship crypto, bitcoin. If he is absolutely not cited among the architects of this digital currency, he is undoubtedly one of the thinkers who discussed its appearance. Years before the revolutionary emergence of bitcoin, Milton Friedman had already envisioned the rise of digital currencies.

The expert's foresight was expressed in a 1999 interview. In this interview, Milton Friedman prophesied a future where the Internet would play a vital role in reducing state intervention. The economist predicted the advent of electronic currencies facilitating anonymous transactions. A revolutionary concept at the time which foreshadowed the impact of cryptos like bitcoin.

The Milton Friedman prediction highlighted on the one hand the potential of digital currencies to improve the confidentiality and efficiency of financial transactions. But above all it highlighted their broader implications for economic freedom. Coincidentally, the expert's prophecy encapsulates the very essence of a reliable electronic money system, enabling transparent fund transfers without revealing the identity of the stakeholders.

To say the least, Friedman's contributions to economic theory have resonated deeply in the crypto and blockchain spheres. He recognized that the Internet would disrupt traditional government revenue streams, particularly tax collection, paving the way for decentralized financial systems. Intuitions, confirmed with the advent of bitcoin, orchestrated by the mysterious Satoshi Nakamoto.

The appearance of the flagship crypto signaled a paradigm shift in the financial landscape, embodying the principles of decentralization and electronic money envisioned by Friedman. It is this transformative innovation that has catalyzed the development of new financial technologies, supporting economic freedom and innovation. Transcending his time, Milton Friedman's foresight offered a prescient glimpse into the future of digital finance. His vision of decentralized currencies and electronic money today serves as a cornerstone for understanding the profound impact of cryptos on the modern economy. Another seasoned economist also predicted the emergence of bitcoin. This is Friedrich A. Hayek.

FA Hayek's pioneering vision paving the way for bitcoin

Hayek's ideas, particularly his allusion to a concept reminiscent of flagship crypto, illuminate the trajectory of monetary innovation. Indeed, they suggest a future monetary landscape characterized by decentralized currencies. In a notable 1984 video, Hayek explained the evolution of money by deploring the state interventions that stifled its development. He expresses skepticism towards traditional monetary policies, advocating instead “denationalization of currency”.

The idea was revolutionary for its time given that it was accepted that currency constituted one of the attributes of a country's sovereignty. The Nobel Prize-winning economist, like Milton Friedman, envisioned a future where the free market dictated the creation, allocation and monitoring of money. An evolution thus promoting innovation and efficiency that has now become a reality.

Hayek notably presented a project to privatize the issuance of money, advocating a laissez-faire approach to monetary governance. A plea following which initiatives like the Liberty Dollar and E-gold emerged before encountering regulatory obstacles and finally being abandoned.

Hayek did not live to see his ideas come to fruition. However, the fact is there. Bitcoin appears in many ways to be a manifestation of his vision. As proof, it operates without centralized authority and has introduced a decentralized system of accounts, echoing Hayek's call for monetary denationalization. Bitcoin is the embodiment of Hayek's idea of ​​driving innovation through indirect means, bypassing established regulatory frameworks.

Fundamentally, FA Hayek's foresight paved the way for the unprecedented rise of bitcoin. Which illustrates the profound impact of visionary economic thinking on modern monetary development. His advocacy for decentralized currencies continues to resonate and shape the discourse on the future of finance and monetary governance.

Harry Ford, the pioneer of the concept of energy-based money

More than a hundred years ago, Henry Ford, known as the industrialist and founder of the famous automobile brand that bears his name, had a premonition. He imagined a “energy currency” capable of transcending geopolitical conflicts and redefining global finance. “Ford would replace gold with an energy currency and end wars”headlined a New York Tribune article published on December 4, 1921.

Subsequently, Henry Ford presented his revolutionary concept of energy currency. Its central idea, leveraging energy, measured in kilowatt hours, as a tangible and rare asset, to support the value of a digital currency. This is pretty much what Satoshi Nakamoto did to make bitcoin a reality.

It must be said that Henry Ford's idea was not just the fantasy of an idle wealthy man. Indeed, Ford went beyond mere theoretical speculation by identifying Muscle Shoals Dam as potentially relevant to implementing his ambitious initiative. For the record, Muscle Shoals Dam, located along the Tennessee River, with its abundant energy production, embodied Ford's vision. The latter wanted to exploit its natural potential to drive a new era of financial innovation.

The energy currency Ford wanted never materialized in the form expected. Yet his visionary ideas resonate deeply in the context of the current evolution of digital currencies. Decentralized cryptos like bitcoin, championed by luminaries such as Friedrich Hayek and Milton Friedman, have a very specific characteristic. They embody the principles of scarcity, autonomy and resilience supported by Ford.

Currently, these digital currencies offer a compelling alternative to traditional monetary systems. This, by calling into question the supremacy of gold and fiat currencies. The rise of bitcoin as a store of value and medium of exchange highlights a certain “increasing desirability of moving gold” among investors and the general population.

What signals a paradigm shift towards decentralized financial systems. As the world witnesses the growing adoption of crypto and blockchain technology, Ford's premonition serves as a reminder of the transformational potential inherent in bold ideas. Certainly, his vision may have been ahead of its time, but its enduring relevance underscores the timeless pursuit of innovation and progress, particularly in the field of finance.

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Luc Jose A. avatarLuc Jose A. avatar
Luc Jose A.

A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal issues of this ongoing revolution.

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