For the Record #2: Regarding sound money

What is Money?

We start by declaring that we agree with the consensual definition that money is that which can fulfill the following three functions:
1. means of exchange;
2. unit of account;
3. store of wealth.

There is no reason to believe that there should only be one money at any point in time. In fact this has probably never been the case in any refined society. Yet it is also true that we can define as best money that which meets the greatest consensus for its usefulness towards fulfilling the three functions listed above. Historically, gold and silver have prevailed and a consensus was formed supporting them as being legitimate, virtually universally accepted forms of money.

Today, the international monetary system, based as it is on national currencies, SDRs and bank money, offers a much more fragmented picture. it is also worth remembering that gold and silver are by law prohibited as money in most countries, something that should not fail to hurt the feeling of any man upholding freedom.

With the emergence of the digitization of the economy, and the subsequent rise of native digital assets such as Bitcoin and Ethereum, the debate around money, its nature and what should be used as sound money, has come back to the fore. A development we must thank Satoshi Nakomoto for.

Cash as a Natural Right to Man

Of the three functions of money, the means of exchange is that which is most prevalent is our day-to-day lives. We say so because the store of wealth implies the possession of wealth in the first place, something that is denied to wide portions of the world population in the current state of affairs. As for the unit of account, it is today largely determined by the two others. By this we mean that one uses as unit of account what one is most familiar with, based on what he uses for day to day transactions or to protect his wealth, the former usually being prominent.

For example, as a citizen of France I will likely use the Euro as a medium of exchange, and I naturally measure wealth in Euro. It is the basis on which I understand the dollar or gold to be cheap or expensive. If I move to Malaysia, pay on a day to day basis and receive my income in Ringgit, than I might reach a point where I stop systematically mentally converting all prices in Euro to measure, and start adopting the Ringgit as my unit of account, at least partially.

We raise this point to insist upon the central importance of money as a means of exchange, and because we wish to introduce the following point: in its most basic and essential form, a means of exchange allows for a transaction to be settled between two parties, hand to hand, and anonymously, that is without any third party having to know about it. This is what cash is. Effectivo in spanish. Espèce in french.

The issue of cash is essential. It is that which reminds us of the natural right of man to transact freely, upon mutual consent, without dependence from any authority. And although the hand to hand element can be constructed as a digital operation in our day-and-age, the physical possibility should nevertheless be preserved.

We say so because a natural right cannot depend on the existence of a technological infrastructure as a prerequisite. Should a world conflict happen tomorrow and bring down the entire communications infrastructure, men should still be able to transact without recourse to it.


Digitization is a bonus. But physical cash is the real deal.

The Case for Gold

As stated above, we have the Bitcoin -and more largely crypto- community to thank for the reopening of the debate around the nature of money. Yet it seems to us that their vision is somewhat veiled by what we would like to call a technologist bias.

This bias consists in believing that technology is in itself the purveyor of all solutions for the problems of today and tomorrow. It entails a more deeply rooted adherence to the belief in evolution and progress as the metaphysical horizon. This horizon relies upon a linear view of human history, inevitably leading one to look down on the past, and often belittle both the wisdom of previous generations and the merits of their traditions. Indeed the very word tradition has now a negative connotation, or worse, is reduced to folklore.

Linguistically, it has its roots in the deterministic programming languages of computer science, rather then the open existential languages inherent to man as a specie. The difference is fundamental and far-reaching. It entails a shift from word to number as the basic bloc of knowledge.

Seen from this biased perspective, gold and its long tradition of being money is seen as a thing of the past, something too natural to fit the deterministic and programmatic ethos of the new age. After all, Bitcoin is the new gold.

We believe this position to be misguided.

In fact, new gold is in itself an oxymoron. Gold is precisely gold because we have at least 6,000 years of data backing its immutable value as money. To this day, despite its prohibition as means of exchange, and the inevitable fading as unit of account that it produced, it is still the most trusted, consensual store of wealth.

Bitcoin is wonderful, so is Ether. But they were born yesterday.

What is true though, is that digitization and open decentralized protocols are offering tremendous new possibilities for the management money and the conduct of finance. But it is our contention that rather than heralding the end of physical gold, they are in fact providing it with the means to once again prevail over all other forms of money.

We can now digitize and fractionalize gold (or any other physical asset for that matter), allowing for the payment of a coffee with gold, something practically impossible without these technologies. We can bring greater accountability and trust in custodial solution, as well as provide transparent, near instantaneous settlement layers ensuring fair and open governance over these assets.

More importantly, it is also our contention that the promoters of crypto-as-money our failing to see the inherent misalignment between the nature of crypto and the requisite of the natural human right to cash.

A crypto asset such as Bitcoin is never in the hand of its owner. It never leaves the protocol giving it existence. The keys to it can be stored off-chain, the Bitcoin itself ,by essence, cannot. And so when we speak of non-custodial solution, we actually misrepresent the truth: that the Bitcoin protocol is in itself the custodian. The same is true for Ethereum and Ether.

As a result, there can be strictly speaking no hand to hand transaction in an asset by essence digital. This is the cause for our preference for physical assets as money: they can be digitized, the opposite is not true.

The Case for Ether

Now, do we believe that, because Ether does not meet the necessary requirement to be preferred option for money, it necessarily means it is of no value? Of course not. But its true value can only be grasped once the fantasy mantra of “Ether-is-money” is overcome.

The intricacy of the matter is largely due -aside for the overwhelming noise surrounding the question, preventing any clear and organised discourse to emerge- to the very nature of Bitcoin and Ether (we limit our analysis to those two, as all other existing assets are derived, under one form or another, of either one of those two).

Indeed, if we have showed that, ultimately, they do not satisfy the fundamental need of man for cash, they are nonetheless units of account for their respective protocols.

Our contention is that the value of Ethereum and Bitcoin is the protocol itself, and as such is by nature non-fungible!

Bitcoin, Ethereum, like all other immaterial universal goods, are simply not fungible. What is fungible though, is the computing unit of account they use to measure specific tasks performed to ensure consensus governing the protocol: mining and staking.

We urge the Ethereum community to see the truth laid bare here, and leave the sterile debate regarding whether Ether is or isn’t money, to focus on increasing the invaluable service that Ethereum as a universal good is providing to humanity.

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