Bitcoin as a Basis for Warren Coats Real SDR Proposal

The Missing Piece

I’ve long wondered why Nash’s argument can’t get any traction in the discussions about bitcoin and I believe that I have found the slight error in my argument (or at least what wasn’t perfectly clear to me) we can start to understand this with Coats explanation:

Barriers

With proper academic form Coats states the possible barriers:

In Correspondence With Coats

I found an email for Coats and to my delight he responded to a few inquiries. I told him of Nash and he said he met him at an economic conference some years ago. He didn’t know of Nash’s work Ideal Money. I suggested that bitcoin fits as a perfect basis to their arguments and Coats responded (I won’t quote for privacy) that bitcoin can’t qualify because its not a “real” commodity nor a major currency.

Re-turning to Selgin’s Concept of a “Synthetic” Commodity Money

Under Selgin’s free banking theory a commodity money is the name he gives for the base money of the system. It is meant to mirror the conventionally held definition but also with the implication that it plays the role of the base layer currency of the system.

In Regard to Stable Supply and Demand

Eric Voskuil explains there is a dampening relationship between the supply and demand of (commodity) money:

Putting It All Together

Here we can think of the problem a large value player has in regard to using bitcoin as a settlement system today and why a central banking minded person might say bitcoin is a not a money (I certainly use it myself for purchases that traditional payment systems cannot facilitate!).

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store