100 years ago, Henry Ford proposed ‘energy currency’ to replace gold. Bitcoin seems to fit the concept of energy-backed money given by a famous American inventor during the interbellum period.
In 1921, American entrepreneur Henry Ford suggested the construction of an “energy currency” that might serve as the foundation for a new monetary system, with remarkable parallels to Satoshi Nakamoto’s 2008 Bitcoin (BTC) whitepaper’s peer-to-peer electronic cash system.
Bitcoin as an energy currency
The New York Tribune published an article on Dec. 4, 1921, describing Ford’s idea of replacing gold with an energy currency. That would stop wars and shatter the banking elites’ grip on world riches. He planned to do this by constructing “the world’s biggest power plant” and establishing a new monetary system based on “power units”.
According to Henry Ford, who started Ford Motor Company in 1903:
“Under the energy currency system, the standard would be a certain amount of energy exerted for one hour that would be equal to one dollar. It’s simply a case of thinking and calculating in terms different from those laid down to us by the international banking group. To which we have grown so accustomed that we think there is no other desirable standard.”
He added the intricacies of currency values will be sorted out “when Congress shows interest in hearing about it”.
Despite the fact that Ford’s goal of fully supported money never realized, Bitcoin appears to have validated the concept a century later. Since 2009, energy-intensive mining has produced more than 18.8 million BTC, which needs computers to solve increasingly hard arithmetic problems. The claimed environmental effect of this proof-of-work mining mechanism has sparked outrage. But this is a short-sighted argument that ignores Bitcoin’s capacity to hasten the transition to renewable energy.
Replacing gold, ending wars
Ford elaborated on the link between gold and war:
“The essential evil of gold in its relation to war is the fact that it can be under control. Break the control and you stop the war.”
Some of Bitcoin’s most fervent supporters think that the cryptocurrency’s sound money principles might prevent war by limiting the government’s ability to fund wars through inflation. While a gold standard made it more difficult for governments to inflate their currencies, the bulk of the bullion supply was under the control of “international bankers,” as Ford noted. Financial elites were able to develop an active money market through this process of controlling and amassing valuable goods, which thrived during the war.
President Richard Nixon of the United States declared his government would temporarily stop convertibility between dollars and gold in 1971. Thus ending the gold standard. By 1976, all definitions tying the dollar to bullion had been eliminated. And the so-called quasi-gold standard came to an end. However, the British government effectively abolished the gold standard system in 1931. And the United States followed suit two years later.
On Saturday, the New York Tribune piece went viral on Reddit’s r/CryptoCurrency page, where it garnered a lot of love. Actually, Satoshi Nakamoto never referenced Henry Ford in any of his online forum posts. However, several Reddit users claimed that the late industrialist influenced Bitcoin’s founder. Given Ford’s evident belief in reincarnation, some joked that Satoshi was actually Ford’s reincarnate.