100 years ago, Henry Ford proposed ‘energy currency’ to replace gold

Bitcoin appears to meet the definition of an energy-backed currency proposed by the famed American inventor during the interbellum period.

In 1921, American industrialist Henry Ford proposed the creation of an “energy currency” that could form the basis of a new monetary system — offering striking similarities to the peer-to-peer electronic cash system outlined in Satoshi Nakamoto’s 2008 Bitcoin (BTC) whitepaper. 

Bitcoin as an energy currency

On Dec. 4, 1921, the New York Tribune published an article outlining Ford’s vision of replacing gold with an energy currency that he believed could break the banking elites’ grip on global wealth and put an end to wars. He intended to do this by building “the world’s greatest power plant” and creating a new currency system based on “units of power.”

Ford, who founded Ford Motor Company in 1903, told the publication:

“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.”

The specifics around currency values “will be worked out when Congress cares to hear about it,” he said.

Although Ford was never able to advance his vision of a fully-backed currency, Bitcoin has seemingly vindicated the idea a century later. Since 2009, more than 18.8 million BTC have been created through energy-intensive mining that requires computers to solve increasingly complex math problems. This proof-of-work mining process has drawn heavy criticism over its alleged environmental impact — a short-sighted claim that ignores Bitcoin’s abilily to accelerate the shift to renewable energy.

Related: Satoshi Nakamoto statue goes up in Budapest

Replacing gold, ending wars

On the relation between gold and war, Ford explained:

“The essential evil of gold in its relation to war is the fact that it can be controlled. Break the control and you stop war.”

Some of Bitcoin’s most ardent supports believe the cryptocurrency’s sound money principles could eliminate war by reducing the state’s ability to fund conflict through inflation. While a gold standard makes it harder for governments to inflate their currency, “international bankers,” as Ford explained, controlled the bulk of the bullion supply. This process of controlling and accumulating precious commodities allowed financial elites to create an active market for money, which thrived during wartime.

The remnants of the gold standard were abandoned in 1971 by U.S. President Richard Nixon, who said his government would temporarily suspend convertibility between dollars and bullion. The so-called quasi-gold standard would last until 1973, with all definitions linking the dollar to bullion removed by 1976. However, in effect, the gold standard system was eliminated by the British government in 1931, with the U.S. following suit two years later.

Related: Bitcoin set to replace gold, says Bloomberg strategist on Bretton Woods’ 50th anniversary

The New York Tribune article circulated on Reddit’s r/CryptoCurrency page on Saturday, where it received considerable upvotes. While Satoshi Nakamoto never mentioned Henry Ford in online forum posts, some Reddit users speculated that Bitcoin’s creator may have been influenced by the late industrialist. Others jokingly said Satoshi was actually Ford’s reincarnate, given the latter’s apparent belief in reincarnation.

Source: cointelegraph.com