You might be familiar with Goethe’s “Faust,” where he expresses exhaustion from endless scholarly pursuits without satisfying his understanding of the world. Similarly, the central force driving the world, money, seems transient, continually vanishing and reappearing over centuries. In my life, born in the former GDR, I’ve adapted to four different currencies without moving countries: Ostmark, Deutsche Mark, Euro, and now Bitcoin, each fundamentally different.
The Ostmark was flawed by socialist policies, the Deutsche Mark was economically sound but geographically limited, the Euro brought continental reach yet financial instability, and Bitcoin offers global reach but lacks local saturation. This historical pattern of monetary evolution raises the question: will there ever be a “last money”?
Unlike Faust, who turned to alchemy, we no longer need to make deals with the devil for answers. Modern disciplines, especially praxeology from Austrian economics, offer insights into the potential of a lasting form of money. Praxeology views all market interactions as fundamentally informational.
Consider this: everything traded in the market, even a simple nail, is mere information. Atoms, made up of neutrons and protons, reduce further to elementary particles representing pure mathematical probabilities. These particles flit in and out of our perceivable three-dimensional space, quantifiable through quantum physics into minuscule Planck areas, each storing a unit of entropy, essentially another form of information.
When Faust questioned what holds the world together, today’s answer might be the quantum field and its informational bits within Planck areas. Our universe, resembling a vast quantum computer, is rife with uncertainties— islands of stability in an ocean of chaos, discovered through scientific inquiry and represented in market trades as prices.
This leads to the idea that perhaps future societies won’t need traditional money or markets. Imagine a Star Trek-like reality where a powerful computer calculates and creates matter from information. Yet, such a utopian vision overlooks the inherent limitations of our universe, such as the Bekenstein bound and Premaman’s limit, which dictate that information can’t travel faster than light and computational speeds are capped, thereby ensuring that information remains decentralized and knowledge fragmented.
Thus, markets and money are necessary for discovering and valuing stable forms of matter and concepts, allowing complex societal functions and innovations that a centralized system could never match. Money, as a stable measure of value, is essential for economic calculations that underpin a sophisticated economy. Therefore, a stable, reliable measure—gold has traditionally played this role—is crucial. However, gold’s utility diminishes in an era where information can be exchanged at the speed of light across great distances, making it less practical and more vulnerable to centralization and control.
Enter Bitcoin, proposed as a new standard. Its creation and the underlying blockchain technology solve the Byzantine Generals Problem, allowing ownership and transactions to be verified universally without centralized control. Bitcoin, and similar innovations it may inspire, represent potentially the last money—immutable, global, and as real in its energy requirements and cryptographic proof as any physical element.
Thus, while Bitcoin might not suit every economic policy or personal preference, for those valuing liberty, decentralization, and stability, it offers a promising alternative to traditional currency systems, perhaps becoming the foundational money of the future.