Good Morning Everyone,
The history of money is a deep and fascinating rabbit hole. In order to understand the primary dimension of bitcoin, this knowledge is fundamental and helps to provide much insight as to why many of us believe bitcoin is the most pristine iteration of money ever invented and why, when referring to money, bitcoin truly “fixes this”,
This morning I stumbled upon an incredible resource (shout out to Marty Bent!) that has been created by a guy named Matthew Mežinskis at Porkopolis.io which tracks the global monetary base. To quote from his website:
“The Monetary Base is a Basic money, High-powered money, Outside money, and Reserve money, among other names. The Monetary Base is the ultimate asset of settlement, the most irreducible form of ‘Money’ in the financial system.”
Matthew’s research is incredible. It compares the global base money on a quarterly basis which includes the top 50 fiat currencies (sourced directly from their central banks) as well as looking at historical money stocks like gold and silver. He also includes bitcoin in his analysis given it’s potential of being future base money and frames their intention as follows:
I highly recommend you take a look for yourself in detail at the thread, i’ve linked it below.
Here are some of the major takeaways from the data:
The USD, Yen, Euro and Yuan are the four dominant currencies.
Gold no longer acts as base money, with central bank holdings on the whole being reduced dramatically since the early 1980’s.
Central Bank gold reserves-to-issued base money today is less than 7%.
Bitcoin is ranked #7 for Global Base money. Ahead of the Hong Kong, Canada, Australia, India, and trailing Switzerland, UK, China, Japan, US and The Eurozone nations. (see chart below)
Inferred bitcoin prices needed to rival the dominant base monies is shown on the chart above, and is compelling! At just over $70k bitcoin would exceed the UK. At just over $360k it would exceed them all.
Bitcoin’s issuance currently comparable to that of gold. Following 2024 halving this will obviously be much lower.
Graph below shows current value of all basic monies. The block on the right includes gold, silver and bitcoin with the fiats. Bitcoin is in Orange @ $0.6T
Bitcoin’s predictable programatic issuance is unlike any base money in history. Of all the base monies it is the only one that is known into the future and can be counted on at a protocol level. (Yes, we know!)
The graph below also shows 80% of fiat currencies have been printed since 2008 !! That is a stunning number.
The inflation data included is absolutely fascinating and shows that basically all fiat currencies are growing at atleast 1% per month or MORE. They are very clear to distinguish inflation as inflation of money supply - not pricing inflation which follows the inflation of money supply. Given the growth rates of most fiat monies and given they are on average doubling at a rate of every 6 years - which is a mindblowing statistic - and considering bitcoin will continue to become more scarce, the current trend feels more like a steam-train and one that is highly unlikely to stop.
As i said the analysis is incredible. The fact that it is shared completely free and open sourced on twitter is incredible. There is so much data in there, i highly recommend you take a look for yourself.
While it’s still early days for bitcoin, to see that it has already surpassed the Aussie Dollar shitcoin as well as that of Canada, Hong Kong and India as a base money is pretty incredible, with the rest of the dominos in clear sight. It will be really interesting to continue to track this data over time, and see how things evolve.
No one can predict the future. But bitcoins issuance is the only base money we can know - no need for predictions. This lays the foundation for the most transformational base money and monetary substrate that will enable human flourishing into the future.
I’m here for this.
Hope you all have a great day. I’ll talk to everyone tomorrow.
Global Monetary Base