Over the past two centuries, two main types of money have dominated: first gold, and then fiat.
Gold has been the best way for people to transfer value across time. Measured in oil, for example, the value of gold hasn’t fallen in half a century. Gold maintains its monetary value in large part because of its reliably low inflation rate: even with today’s technology, it still takes many decades to double the amount of gold in existence. Gold is still a monetary asset – central banks around the world hold trillions of dollars’ worth of it. But because it no longer has a role in most commercial transactions, most people today don’t see gold as money.
Gold’s Achilles heel is its inability to transfer value across space. It’s never been very practical to send gold over long distances, and as technology advanced and commerce sped up, gold was gradually replaced by paper money. Initially the paper was backed by promises of gold, but this link was gradually severed.
In turn, paper money has increasingly been replaced by ledger money, in large part because it is better at transferring value across space. But for social and political reasons, both paper and ledger fiat money such as dollars, pounds and pesos have proved themselves terrible at transferring value across time. Between 1970 and 2020, the price of gold in British pounds increased more than one hundredfold. Or put another way, the pound lost 99% of its value.
Over that half century, the amount of gold in existence almost doubled. But Bitcoin cannot even double: from today, the number of Bitcoins will only ever increase by less than 10%, and that will take more than a century. Bitcoin’s issuance schedule is fixed by its code, and the probability of this being changed is almost nil. Even harder a money, over decades Bitcoin is potentially even better than gold in transferring value across time.
As well as being superior to ledger or paper fiat money across time, Bitcoin is also better at transferring value across space. Instead of typically being measured in days and subject to the caprices, competence and business hours of intermediaries, final settlement of any amount of Bitcoin transferred between two parties anywhere in the world takes minutes on the base layer or milliseconds on Lightning, requiring nobody's permission.
Bitcoin is the best money across space and time.