Getting Things Done

Money is agency. It is the ability to get things done.

Money is a strong motivator. We know that it has agency, and we are willing to work hard in order to get it.

This central point seems to be lost on crypto enthusiasts who now believe that central banks will start buying Bitcoin.

Despite its astronomic price, there is very little agency in Bitcoin. Apart from a small group of enthusiasts, no-one is much impressed by it. A computer is needed in order to access Bitcoin. People have to register at exchanges or go through some technical set up. Very few people are prepared to do this when there are simpler and more intuitive alternatives.

Contrast this to gold which can be minted into coins. Who wouldn't work for a gold coin? No registration is needed, no electronic wallet, no computer. Go anywhere in the world with a bag of gold coins, and people will work for you.

Gold coins have the power to move people all over the world. Bitcoin has created enthusiasm among a handful of nerds. There's really no comparison. Money is gold, and nothing else.

But let us for argument's sake explore the idea that central banks would want to buy Bitcoin. What would happen is that a very small group of crypto enthusiasts would be enriched at the expense of everybody else.

Unlike gold, which is widely held by ordinary people all over the world, Bitcoin is held by a few thousand individuals, plus a few million marginal investors. Central banks investing in Bitcoin would simply make a few thousand people immensely rich at the expense of others. Nothing else would be achieved.

The tiny group of super rich Bitcoin holders would subsequently invest their newfound wealth in the stock market. There would be a transfer of wealth from the current super rich to the new group of super rich.

By buying Bitcoin, central banks would facilitate a wealth transfer between two very small groups of people, with no gain to the general public.

By tying currency to gold, on the other hand, a much wider group of people would benefit.

None of these two alternatives are desired by central banks, though. But of the two, buying Bitcoin would be completely insane, and in direct violation of the central banks' self interest, which is to preserve the status quo.

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