- June 5, 2023
- Posted by: admin
- Category: BitCoin, Blockchain, Cryptocurrency, Investments
Ninety years ago today, a seismic shift occurred in the global financial landscape as President Franklin Delano Roosevelt took the United States off the gold standard. This move, part of the New Deal program, was designed to tackle the economic turmoil of the Great Depression.
On this anniversary, and economic turmoil on the horizon once again, we speculate how Bitcoin could theoretically make for an ideal monetary standard.
The Gold Standard
The gold standard, for all its flaws and strengths, tied the value of most currencies (including the dollar) to a tangible, finite asset. This provided economic stability, but also limited growth and the flexibility of monetary policy.
FDR’s audacious move aimed to unshackle the economy, allowing for greater monetary control to combat deflation and encourage economic growth. It was a departure from convention that invited criticism but ultimately signaled progress.
Looking forward, we find ourselves on the precipice of another, much-needed and significant monetary shift, from fiat currency to digital currency. Just as FDR faced the Great Depression, today we face financial instability, growing inequality, and the dilution of money through inflation.
Against this backdrop, Bitcoin, although highly improbable as a universally accepted monetary standard, presents several compelling attributes.
The Bitcoin Standard
Bitcoin as a decentralized cryptocurrency, evens the playing field. This means no central bank controls it, and hence it’s immune to politically motivated monetary policy. It’s a global currency that transcends national boundaries, offering the promise of financial inclusivity for unbanked populations across the globe.
In addition, like gold, Bitcoin has a finite supply, capped at 21 million coins. This scarcity imbues it with an innate resistance to inflation – a quality that strikes a chord with the original intentions of the gold standard.
Finally, Bitcoin provides a level of transparency and security unmatched by traditional financial systems. Blockchain technology ensures that every transaction is recorded in an immutable ledger, reducing fraud and enhancing trust.
The dollar has lost 99% of its value against Bitcoin | BTCUSD on TradingView.com
Setting The Next Standard
While the transition to Bitcoin as a monetary standard is highly unlikely, contemplating such a scenario serves as a catalyst for conversations about our current financial systems. Just as the suspension of the gold standard prompted a reconsideration of monetary policy in the 1930s, so too can Bitcoin inspire us to question and improve upon the existing order.
It’s crucial to remember that the gold standard wasn’t abandoned overnight. It took a dramatic economic crisis, political will, and a visionary leader to change the course of monetary history. Adopting Bitcoin as a new monetary standard would demand a similar confluence of factors.
However improbable, the prospect of Bitcoin as a monetary standard underscores the need for continuous innovation in our financial systems. After all, it was FDR himself who said, “We cannot always build the future for our youth, but we can build our youth for the future.”
Just as FDR ushered in a new era of monetary policy by stepping off the gold standard, perhaps we need to prepare for a future where digital currencies like Bitcoin play a more significant role. Whether we see Bitcoin as the next monetary standard or simply as an impetus for financial innovation, it’s clear that the spirit of FDR’s decision lives on: the willingness to challenge, change, and evolve.
90 years ago today, US President Franklin Delano Roosevelt took the country off the gold standard – a monetary system backed by gold. pic.twitter.com/yaM9xFoOtR
— CoinChartist (@coinchartist_io) June 5, 2023
