First Light

With all the discussions about our monetary system, traditional money vs. digital currencies, cryptocurrencies, and how things are going to change, I’d like to take a step back and look at my personal requirements towards a currency.

And maybe – just maybe – that helps you to consider your own requirements. Helps you to find out what is important to you. And makes you actively think about what kind of system you’d be willing to trust, use, and rely on.

Spoiler alert:
We might find out that we have different requirements. Or we might find out that we have the same requirements, but put a different priority on each of them. And that’s just fine – that’s why we’re talking about it.

But before we head into those requirements – let’s pin down some basic definitions. Because clarity matters, especially when talking about something as foundational as money.

• Currency: A currency is a system of money in common use, especially within a nation or economic region. It refers to the form of money – whether it’s coins, paper notes, or digital tokens. It’s the vehicle that carries value and allows us to transfer it. Dollars, Euros, Bitcoin – these are currencies.

• Money: Money is a broader concept. It refers to anything that is generally accepted as a medium of exchange, a store of value, and a unit of account. Historically, that included gold, silver, shells – and today, it includes fiat currencies, central bank reserves, and even some digital assets.

Not all money is a currency, and not all currencies fulfill the full function of money. But the distinction is important: Currency is the form. Money is the function.

To be clear: that’s a simplification – but a deliberate one. A functioning monetary system typically requires both: the form (“currency”) and the function (“money”). Occasionally, we encounter one without the other:

• There are currencies that fail to store value – for example, during hyperinflation.
• And there are “things” that fulfill the functional definition of money but are not considered a currency in a legal or institutional sense. Bitcoin is a prominent example of that second case.

My Top 3 Requirements towards a Currency

When it comes to requirements, fewer is usually better – it helps you focus on what’s essential and ignore the “nice to haves.” So here are my Top 3 requirements for my (ideal) currency:

1. Store of Value: This is a fundamental requirement – a true showstopper if not fulfilled. I don’t want my personal assets, my safety bag, my future to be stored in something that can’t maintain its value. If something is worth 100 today, I don’t want it to be worth 10 a decade from now.
2. Independence from Arbitrary Control: Again – this one is non-negotiable. I want my belongings to be safe from manipulation by others. I don’t want anyone to control my assets. I don’t want anyone to dilute or deflate their value. And I certainly don’t want anyone to take them from me – without my consent.
3. Acceptance and Usability: The third essential requirement. Whatever currency I store my value in, it needs to be widely accepted. I need to be able to pay with it, invest with it, account with it. The “perfect” currency is utterly useless – if no one’s willing to trade with me.

There might be more requirements, sure – but honestly: these three are the essential ones. I’m not asking much, right?

Well, I might not be asking much – yet, many currencies have failed on these three simple requirements. Let’s take a closer look at them – they can be translated into “Stability”, “Resilience”, and “Portability”.

Why Stability Matters

The base for every (good) currency is trust. The moment people start losing trust, a currency is already dead. Whoever can, will take their value out – and everyone else will lose everything they had in that currency. A loss of trust instantly breaks all three core requirements: It no longer stores value. There are no belongings left to protect or control. Acceptance and usability drop to zero.

Nobody accepts money in a currency that’s already dead. If you don’t believe me – look at the image below.

But what makes a currency “stable”? Or when does it become “unstable”? Well – history has taught us a few key parameters:

• Predictable Supply Mechanism: A currency needs a predictable, slow, and transparent mechanism for supply growth. This can be managed by a governing authority – or (in the modern world) by an algorithm. But uncontrolled or erratic growth is deadly – it leads to inflation, and inflation (or deflation) directly threatens the currency’s ability to store and maintain value.
• Trustworthy Governance: Whoever controls the currency must be absolutely trustworthy. That can be an institution, a government – or again, an algorithm. But it must demonstrate transparency, accountability, and independence.
• Security & Forgery Resistance: A good currency cannot be tampered with and is hard to forge. If something is easily subject to fraud, acceptance will vanish, and with it the third core requirement: usability.
• Widespread Acceptance: A stable currency has a strong network behind it – a large user community that accepts and trusts it. That, in turn, creates a positive feedback loop: broad acceptance strengthens trust, which enhances stability.

Why Resilience Matters

Resilience is the ability of a currency to withstand internal and external forces that threaten its core values. Here are a few critical challenges a resilient currency must be able to endure:

• Uncontrolled Inflation: Inflation isn’t inherently evil – but it must be low and predictable. At the end of the day, any inflation means your assets are losing value.
  The European Central Bank, for example, targets a 2% inflation rate for the Euro. That’s modest – and more importantly: predictable.
• Manipulation: A good currency is resilient against manipulation – even (and especially) by its own government. In fact, the most common source of currency manipulation is the state itself. History provides plenty of examples. This is why resilient systems separate currency governance from political power – enter the central bank. Much to the dismay of some… even current world leaders.
• Censorship: A good currency is, in principle, free. That’s a bold statement – and a complex one. But generally speaking: it shouldn’t matter who I transact with, or how. Yes, I fully acknowledge that this level of freedom can be misused – but I firmly believe it is wrong to sacrifice the freedom of the many to control the few.
• Confiscation: Another hot topic. I’m not talking about asset seizure due to criminal conduct – I’m talking about governmental actions like: broad-based asset freezes, forced expiry of digital money, negative interest policies, or even retroactive restrictions on asset use. A resilient currency protects individuals from these system-level confiscations.
• Control: Closely tied to censorship, but broader in scope: A resilient currency should not allow centralized control or surveillance of every transaction, every wallet, every account. Whether it’s individuals or corporations – systemic overreach must be prevented.

Why Portability & Usability Matter

Even the most stable and most resilient currency is worthless if you can’t use it. This requirement is often overlooked – but in practical terms, it decides whether a currency is alive or dead.

• Portability: A currency must be easy to carry, transfer, and access – both in physical and digital form. In today’s world, this means: I can use it globally, not just locally. I can send and receive it across borders and platforms. I can store it securely without relying on physical proximity or fragile infrastructure
• Usability: Beyond moving it – I must also be able to spend it. Everywhere. Easily. Without friction. This means: A functioning payment infrastructure. Merchant acceptance – whether local shops, online platforms, or international services. Legal clarity – it must not be illegal or punished to use that currency. Speed and cost-efficiency – nobody wants to wait 10 minutes or pay $20 in fees to buy a coffee

Usability is the real-world test for any currency – it is where theory meets practice. A currency that cannot be used is not a currency – it is an idea.

Conclusion

So here they are – my Top 3 Requirements for an ideal currency, and the reasons behind them.
If you’ve followed my Monetary Journey through History (Part I | II | III), you’ll know that some currencies come close – but none of them met all the requirements and was able to maintain that status.
Most fail sooner or later, and usually in at least one of these key dimensions. Why?

Because history has never seen a perfect currency. But that doesn’t mean we shouldn’t aim for one.

1900–1914: Optimism and the Gold Standard

When the year 1900 arrived, the world stood at the edge of a new era. The atmosphere was optimistic. Science and society were advancing, and the future looked bright. The Second Industrial Revolution was in full swing — electricity lit up cities, the telegraph and telephone connected continents, and the first automobiles hinted at a new kind of mobility. Anything seemed possible.

In the United States, the recent Spanish-American War (1898) had elevated the still young nation to global significance. The “American Dream” was alive and well — a belief that anyone could find prosperity through effort and ambition. The country was expanding rapidly, both economically and territorially, and the spirit of progress was palpable.

Europe, by contrast, was more complex. On the surface, it was an age of elegance: art, literature, architecture, and music flourished in what became known as the Belle Époque. But beneath this golden facade, four major powers — Great Britain, France, Germany, and Austria-Hungary — were locked in a quiet but growing rivalry. Nationalism, militarization, and colonial ambition quietly shaped a volatile political undercurrent.

In Russia, the empire of Czar Nicholas II projected the image of grandeur — yet beneath it lay rigid autocracy and widespread poverty. While industrialization was gaining momentum in regions like St. Petersburg, Moscow, and the Donbass, the vast majority of the population remained rural and could barely sustain a living. Still, Russia was experiencing a cultural renaissance: names like Tolstoy, Chekhov, and Rachmaninoff echoed across the world, marking a high point of Russian intellectual and artistic achievement.

By the early 20th century, the leading powers of the world had anchored their currencies to gold, signaling an era of stability — at least on the surface. But beneath that gold-backed facade, the financial foundations of some were beginning to show cracks.

In Great Britain, the Pound Sterling had been tied to the Gold Standard for nearly a century. London had become the financial capital of the world, and countless international contracts were settled in Pounds.

The country’s finances were solid: public debt was relatively low, around 30% of GDP, and the colonial empire ensured a steady influx of wealth. But challenges loomed. Massive investments were made into modernizing the Royal Navy, driven by a growing naval rivalry with Germany. At the same time, Britain’s traditional economic dominance was increasingly challenged by the industrial rise of Germany and the United States.

As for France, the Franc was also on the Gold Standard, adopted officially in 1873 through the Latin Monetary Union. Since the end of the Franco-Prussian War (1870–71), France’s financial position had gradually improved. The country had a high domestic savings rate, and large sums of capital were invested abroad — especially in Russia.

However, France faced difficulties in its colonial territories: uprisings in Algeria and Indochina required costly military interventions. Moreover, industrial development lagged behind that of Britain and Germany.

Germany stood at the height of its industrial transformation. The Goldmark, introduced after unification, was tied to gold (1 Mark = 0.358 grams of gold).

Massive investments in infrastructure and military expansion, including railroads and a growing navy, pushed the economy forward. But the financial margins were thin: military spending, social security obligations, and an expanding public administration placed heavy burdens on the imperial budget.

Though the economy was booming, the Reich’s financial structure was fragile — dependent on contributions from the individual German states and a tax system struggling to keep pace.

By contrast, the United States was thriving. The Gold Standard Act of 1900 formally tied the US Dollar to gold (1 Dollar = 1.5046 grams of gold).

Public debt was minimal, below 10?% of GDP. The nation experienced unprecedented industrial and territorial growth, and its financial system matured rapidly.

Although the US largely pursued an isolationist foreign policy, its economic and military strength was rising fast. A key milestone was the Federal Reserve Act of 1913, which established the Federal Reserve System — a new central banking structure aimed at stabilizing the national economy and managing monetary policy.

1914–1920: War and Monetary Disruption

So by 1914, the great powers of the world stood on firm monetary ground — at least on paper. Their currencies were gold-backed, their economies humming, and their ambitions global. Yet beneath this polished surface lay mounting tensions: arms races, colonial rivalries, nationalist undercurrents, and a fragile web of alliances.

And then — a single bullet in Sarajevo set the entire system ablaze.

When World War I erupted in 1914, the monetary order of the 19th century collapsed almost overnight. One after another, nations suspended the gold standard, abandoning convertibility to fund the largest military conflict the world had ever seen. The discipline of gold-backed currency gave way to political necessity — and to the printing press.

To finance the war, governments issued unprecedented amounts of debt and flooded their economies with paper money. Inflation followed quickly, and in some countries, prices doubled or tripled within just a few years. Wartime economies were redirected toward total mobilization, with little regard for fiscal sustainability.

After the war ended in 1918, Europe lay shattered — physically, economically, and financially. National debts had exploded, currencies had lost their anchors, and entire regions faced food shortages, unemployment, and social unrest. Reparations, especially those imposed on Germany, added further strain to already fragile systems.

Only the United States, which had joined the war late and emerged with its infrastructure intact, retained a relatively stable economy and a currency still linked to gold. By 1920, the US had become the world’s largest creditor, while Europe struggled with inflation, reconstruction, and a shattered financial order.

The war had not only redrawn borders — it had rewritten the rules of money. What came next would test every remaining assumption about stability, value, and trust in currency.

1920–1939: Inflation, Illusion, and Collapse

The early 1920s began with chaos. Across much of Europe, the financial aftermath of World War I was impossible to ignore: currencies had been debased, economies strained, and trust in money severely weakened. In Germany, hyperinflation reached historic extremes — by 1923, the Mark had become effectively worthless. Bread prices doubled by the day, and workers were paid twice daily to spend their wages before they lost value.

Other countries, too, faced inflation, though less dramatic. There were attempts to restore monetary order, often through deflationary policies or currency reforms. Several nations — including the UK — returned to the gold standard, hoping to recapture prewar stability. But this move often came at the cost of rising unemployment and stagnation, especially when gold pegs were set too high and disconnected from economic reality.

Meanwhile, the United States boomed throughout the 1920s — the so-called Roaring Twenties. The Dollar was strong, credit abundant, and industrial growth rapid. But beneath the surface, speculative bubbles grew. When the US stock market crashed in October 1929, it triggered a worldwide economic downturn — the Great Depression.

Global trade collapsed, banks failed, and unemployment soared. In response, governments abandoned the gold standard (again), turned inward, and began to experiment with monetary intervention and deficit spending. Currencies floated or were pegged arbitrarily. Money became, for the first time in history, fully political.

By the late 1930s, the world economy had not fully recovered. Fascist regimes in Germany and Italy pushed military expansion to escape economic stagnation, while democratic nations experimented with cautious recovery. In all cases, money was no longer anchored in gold, but in government control and national priorities.

The monetary era of the 19th century was over. What replaced it was more flexible, but also more volatile — and the consequences would soon be felt in the next great conflict.

1939–1945: Total War and the Suspension of Monetary Rules

When World War II began in 1939, the global economy was still reeling from the Great Depression. Currencies were unanchored, trade had fragmented, and trust in financial systems was fragile. Yet none of that mattered for long — the war effort took absolute priority, and economic rules gave way to existential necessity.

Every major economy mobilized for total war. Industrial production was redirected toward weapons, vehicles, uniforms, and rations. Civilian consumption was curtailed. Labour markets were transformed. The monetary consequences were profound: fiat money became the primary tool of war finance.

In Nazi Germany, the Reichsbank quietly abandoned all pretense of restraint. Military spending soared, funded through an opaque network of government IOUs, occupied territories, and plundered assets. Inflation was kept artificially in check through price controls and repression — but the system was fundamentally unsustainable.

In Britain, the pound sterling was no longer tied to gold. The Bank of England issued large quantities of money, while strict rationing and capital controls managed domestic demand. The empire’s resources were fully exploited to maintain the war economy. London, once the center of global finance, now functioned as a command center for survival.

In the United States, which entered the war in 1941, the story was different. The dollar remained strong, still linked to gold, and the nation’s industrial base remained untouched by destruction. Washington financed its war through a combination of war bonds, taxes, and moderate monetary expansion, while emerging as the new banker of the free world. The war turned the U.S. into the largest creditor and economic power on the planet.

Elsewhere, economies were obliterated. France, invaded and divided, lost monetary control. The Soviet Union, under Stalin, managed an extraordinary wartime economy through sheer central planning and massive human cost. Japan financed its war through monetary expansion, colonial exploitation, and massive borrowing — setting the stage for postwar collapse.

By the time the war ended in 1945, millions were dead, cities lay in ruins, and the global monetary system — such as it was — had been bent, broken, or bypassed. But one reality had become undeniable:

The old world of gold-pegged currencies was gone. Money had become a political instrument — managed, controlled, and deeply tied to state power.

Out of the ashes, a new order would be built. And this time, the United States would set the terms.

1945–1971: Bretton Woods – Order in a Fractured World

After the devastation of World War II, the world needed more than reconstruction — it needed a new financial architecture. In 1944, even before the war ended, representatives from 44 nations met in Bretton Woods, New Hampshire, and laid the foundation for a new monetary world order.

The result was the Bretton Woods system — a framework designed to combine the stability of fixed exchange rates with the flexibility needed for national economic policy. At its core:

• The US Dollar became the central reference currency.
• Other currencies were pegged to the Dollar, and
• The Dollar was convertible into gold at a fixed rate of 35 USD per ounce.

Effectively, the US became the world’s gold proxy, and the Dollar, the new standard for international trade and reserves. Two major institutions were founded:

• The International Monetary Fund (IMF) to support currency stability, and
• The World Bank to aid reconstruction and development.

The early decades of Bretton Woods brought a period of remarkable economic growth, especially in the West. Germany and Japan rose from the rubble into export-driven powerhouses. The US, relatively untouched by war, acted as banker to the world.

But the system had cracks. As the global economy expanded, so did the need for Dollars — but the amount of US gold reserves remained finite. By the late 1960s, the US was facing twin deficits: budget and trade. Dollar inflation grew, and foreign nations — most notably France under de Gaulle — began to redeem their Dollars for gold.

1971–1980: The End of Gold and the Shock of Oil

In 1971, President Richard Nixon closed the gold window — ending the direct convertibility of the US Dollar into gold and dismantling the last pillar of the Bretton Woods system – a decision driven by mounting US deficits, gold outflows, and growing international pressure.

Currencies were no longer backed by gold but became free-floating, with their value determined by markets and central bank policy. It was a historic break from centuries of monetary tradition.

This shift opened the door to monetary expansion. Without the gold constraint, governments could now run deficits and issue currency with far greater freedom. In the short term, the system adjusted — but the real test came just a few years later.

In 1973, the first oil crisis erupted. Triggered by the Yom Kippur War and an OPEC oil embargo targeting the US and its allies, oil prices quadrupled within months. Energy costs soared, fueling a wave of inflation across Western economies.

The result was a rare and toxic combination: high inflation and stagnating growth — known as stagflation. Central banks struggled to respond. Interest rates rose, unemployment surged, and the trust in fiat money eroded in many countries.

By the end of the decade, the world had learned a painful lesson: Without a hard anchor like gold, monetary discipline required political courage — and in its absence, inflation could run wild.

1980–2000: Volcker’s Shock, Bundesbank Discipline, and the Rise of Global Finance

The 1980s began with a crisis of confidence in money. Inflation was rampant, particularly in the United States, where the consumer price index had soared into double digits. The turning point came with Federal Reserve Chairman Paul Volcker, who launched a historic tightening of monetary policy — interest rates peaked above 20% in 1981. Painful, yes, but effective: by mid-decade, inflation was under control, and trust in monetary authority was restored.

In Germany, inflation control was never surrendered. The Bundesbank had long held a reputation for monetary discipline. Rooted in the trauma of the 1920s hyperinflation, the Bundesbank was granted a high degree of independence — and it delivered. The Deutsche Mark became the anchor of monetary stability in Europe, and in many ways, it was the anti-Dollar: hard, disciplined, conservative. Germany’s monetary policy often stood in contrast to the looser fiscal policies of its neighbors.

In France, the 1980s began with socialist experiments under President François Mitterrand — including nationalizations and expansive public spending. But by 1983, facing inflation and market pressure, France executed a dramatic policy U-turn known as the “tournant de la rigueur”, aligning more closely with German-style stability policies. The French Franc, once volatile, was now increasingly “shadowing” the Deutsche Mark.

In the United Kingdom, Margaret Thatcher‘s government took a different approach. After years of stagflation, the UK embraced monetarist reforms: deregulation, privatization, and tight money. The pound initially suffered under high interest rates and unemployment, but over time, the City of London was revitalized, becoming a hub of global finance once again — especially after the Big Bang deregulation of 1986.

Across continental Europe, preparations were underway for something bigger: the Euro. Beginning with the European Monetary System (EMS) and the Exchange Rate Mechanism (ERM), European currencies were slowly tied together in expectation of a shared future. This monetary convergence was made possible largely by the credibility of the Bundesbank — and its standards would go on to shape the design of the European Central Bank (ECB) itself.

Meanwhile, China was embarking on a transformation of historic scale. After 1978, under Deng Xiaoping, the country began liberalizing its economy. While the Renminbi (Yuan) remained strictly controlled, market reforms and the opening of Special Economic Zones ignited massive growth. By the 1990s, China had become a manufacturing powerhouse — though its currency was not yet internationally significant. China was still largely a Dollar-based trade economy.

At the global level, the US Dollar remained dominant, especially after the fall of the Soviet Union in 1991. The newly liberalized economies of Eastern Europe, Russia, and Latin America often held their reserves in Dollars and used it for trade. The 1997 Asian financial crisis reinforced the Dollar’s supremacy, as investors fled to safety — and that safety was still perceived to be the US.

In my previous post about Bitcoin and my thoughts about it, I have already covered some part of this journey through history: we have looked at the Roman Empire with its Denar and Aureus coins, we have seen how these once strong currencies degenerated beyond recognition in the centuries to come and what role the Roman emperors played in that.

The question, that now arises, is the following: was the case of the Denar and Aureus just a cautionary tale of monetary decay, or is this one example of a repetitive pattern? Best way to answer this question is to take a good look at other states and currencies.

The Islamic Dinar – Rise, Stability, and Decline

The Islamic Dinar was introduced by Caliph Abd al-Malik ibn Marwan around 696/697 AD (77 AH). The reform was driven by a desire to establish economic independence from the Byzantine Empire and to unify the vast Islamic Caliphate under a consistent, Islamic monetary standard.

The new gold coin took inspiration from the Byzantine solidus, but all imperial and Christian imagery was removed. Instead, the coin featured Quranic inscriptions, most notably the Shahada (Islamic declaration of faith), and was minted at a standard weight of 4.25 grams of high-purity gold (based on the mithqal).

Alongside the Dinar, a silver Dirham was issued, weighing approximately 2.9 to 3 grams. This continued the bimetallic system seen in earlier Roman and Persian monetary models, facilitating both domestic and international trade.

The Dinar exhibited remarkable long-term stability in both weight and purity during the Islamic Golden Age. It became a widely respected international currency, accepted across the Islamic world and beyond — from Europe and North Africa to India and Central Asia. Islamic banking practices such as sakk (early letters of credit) and cheques evolved alongside the monetary system, supporting a flourishing trade network. Cities like Baghdad, Damascus, and Cairo emerged as major financial centers.

However, with the eventual decline of the centralized Caliphate and the rise of regional dynasties, monetary unity unraveled. Local rulers began minting their own versions of the Dinar and Dirham, leading to inconsistencies in weight and purity. Over time, debasement eroded public trust. By the 14th and 15th centuries, European gold coins like the Venetian Ducat gained dominance in long-distance trade, gradually displacing the Islamic Dinar as the preferred medium of exchange.

China – The First Paper Currency

From 618 AD to 907 AD, China was ruled by the Tang Dynasty. Copper coins, such as the Kaiyuan Tongbao, dominated the monetary system. Gold and silver were not used for daily transactions, but served primarily as a means of wealth storage and large-value exchange.

Through the Silk Road, China became deeply embedded in international trade networks, stretching from the Yellow Sea to the Mediterranean. However, the low intrinsic value of copper compared to silver and gold made it impractical for large transactions and long-distance trade — particularly due to the physical weight of transporting large sums.

To address this, the Song Dynasty introduced the Jiaozi around 1020 AD — the first officially issued paper currency in world history. This innovation was well accepted and functioned effectively for some time.

Later, under the Yuan Dynasty (1271–1368 AD), the Jiaochao was introduced and became the sole legal tender across the empire. It marked the first true fiat currency in recorded history — not backed by gold or silver, and not redeemable for precious metals. Its acceptance was mandated by the state, which initially ensured stability.

However, without intrinsic value or convertibility, the currency’s fate was sealed. Precious metals disappeared from circulation, and over time, inflation rose sharply. As confidence in the system eroded, trust in the currency collapsed.

The Ming Dynasty (1368–1644 AD) attempted to revive the model by issuing a new paper currency: the Da Ming Baochao. Unfortunately, it followed a similar trajectory. Excessive printing led to hyperinflation, and by the 15th century, the paper currency had lost virtually all value. China returned to a silver-based monetary system, and paper money disappeared from daily economic life for centuries — until its reintroduction in the 20th century.

One might say that China was the first:

The first to invent a fiat currency — and the first to suffer its failure.

Meanwhile in Europe: the Venetian Gold Ducat, the Spanish Real, and the Dutch Guilder

While China experimented with paper money and the Islamic world maintained a gold-backed dinar system, Europe followed its own path — defined by trade, city-states, and maritime empires. And with that came three of the most influential currencies in European monetary history.

The Venetian Gold Ducat, introduced in 1284, quickly became one of the most trusted and stable coins in the world. Minted from 99.4% pure gold, weighing around 3.5 grams, it remained virtually unchanged for over 500 years. In a world where debasement was the norm, the Ducat stood firm — a monetary rock in the turbulent waters of European politics. Traders across the Mediterranean, the Middle East, and even parts of Asia accepted the Ducat without hesitation. It was, quite simply, hard money.

A few centuries later, Spain’s Real de a ocho — also known as the Spanish dollar — emerged as a global force. Originating in the late 14th century, the Real evolved into a standard silver coin that became the backbone of global commerce during the colonial age. It was the first world currency, accepted from the Americas to China. In fact, the modern dollar symbol ($) can trace its roots back to the Spanish Real. This coin moved empires and underpinned the early global trade system.

And then there was the Dutch Guilder. With the rise of the Dutch Republic in the 17th century, the Guilder (or Florijn) became the hallmark of fiscal discipline and merchant reliability. Backed by the booming trade of the Dutch East India Company, and anchored by the financial innovations of Amsterdam’s banking system, the Guilder helped establish the Netherlands as a global economic power. It wasn’t just a currency — it was a symbol of the emerging financial capitalism of early modern Europe.

Three coins. Three systems. All grounded in trust, metal, and trade — each reflecting Europe’s path to modern finance.

None of them were unlimited. None of them could be printed at will. All of them relied on scarcity, reputation, and merchant consensus. But like so many other currencies throughout history, these once mighty coins did not last forever.

The Venetian Ducat, after centuries of remarkable stability, began to fade as the Republic of Venice lost its political and economic influence. When Napoleon conquered Venice in 1797, the minting of the Ducat ended. Though the coin had maintained its weight and purity for over 500 years, political collapse brought its story to a close. Trust in the coin had never failed — but the system that upheld it did.

The Spanish Real faced a different kind of demise. While it had served as a global currency, the massive influx of silver from the New World — especially from mines in Potosí (modern-day Bolivia) — led to oversupply, inflation, and eventually debasement. By the 18th century, the Real had lost much of its original weight and purity. Spain’s growing fiscal problems, endless wars, and colonial overreach accelerated its fall. In the 19th century, the Real was replaced by the Spanish Peseta, and the global dominance of Spanish silver came to an end.

The Dutch Guilder survived longer — evolving into a modern national currency. It remained in use through the Dutch Golden Age, the Napoleonic Wars, and well into the 20th century. But in 2002, the Guilder was officially replaced by the Euro. Its end did not come through debasement or collapse — but through monetary integration. Still, the loss of monetary sovereignty marked the end of an independent tradition that had shaped Europe’s financial history.

Three different ends — but one common pattern:

No currency lasts forever. Not even the most trusted ones.

And Then Came the British Pound… and the US-Dollar

As the old trading empires faded, two new powers emerged — Great Britain and the United States. And with them came two currencies that would shape the modern world: the Pound Sterling and the US Dollar.

The British Pound, one of the world’s oldest currencies still in use today, gained international prominence during the 18th and 19th centuries, as the British Empire expanded across the globe. What set it apart was the introduction of the Gold Standard in 1816, which formally tied the value of the Pound to a fixed amount of gold (~113 grains of pure gold, or about 7.3 grams). This gave the currency stability, credibility, and global trust — qualities that made it the preferred medium of exchange in international finance throughout the Victorian era.

London became the financial capital of the world, and “Sterling” became synonymous with trust and solidity. For much of the 19th century, global trade settled in Pounds, and British banks set the tone for international monetary policy.

Across the Atlantic, the United States had adopted the US Dollar in 1792, with early silver and gold coinage designed to mirror the widely trusted Spanish Real. Like the British system, the US also moved toward a bimetallic standard, later shifting to a de facto gold standard by the 1870s.

By the end of the 19th century, both the Pound Sterling and the US Dollar were gold-backed, globally accepted, and widely seen as the pillars of modern monetary order. They enabled industrial expansion, global trade, and cross-continental investment.

But even then, the seeds of fragility were present.

Because history had shown it many times before: Stability built on gold can last — until it doesn’t.

We have seen empires rise and fall — and with them, their currencies. What came next was different: A new century, two world wars, and a global financial order unlike anything before. We will cover this in the next post, when we turn to the 20^th century. But even then, the old pattern continued…

For many years, I had a pretty fixed opinion about Bitcoin: to me, it seemed like a fancy idea designed mostly to pull money out of people’s pockets. A digital “something” without real-world value – and, as such, not something that would ever hold lasting worth.

But I’ve never been so convinced of my own views that I’d refuse to take a second look. Partly out of curiosity, and partly driven by a gut feeling that there might be more to it than I had initially seen, I started digging.

Now, I’ll spare you the technical rundown – the mysterious creator known as Satoshi Nakamoto, the blockchain technology, the decentralized architecture, and the fact that no single entity controls it. Those aspects have been discussed endlessly. If you’re interested, just google them – you’ll find more information than you’ll ever need.

What caught my attention was something else entirely: the ideas behind Bitcoin. The why, not just the how. And as I explored that landscape, I came across a range of arguments and perspectives. Some I quickly dismissed – too speculative, too doomsday-driven, too far out. But others made me pause.

This post is about those ideas. I won’t tell you what to think – instead, I’ll share what I found compelling and let you decide what it means for you.

The First Idea: Value

The first idea that made me reconsider was about value – and my original assumption that something existing purely in the digital world couldn’t possibly have any. You can’t grab it. You can’t put it in your pocket. You can’t hand it to someone physically. It’s just ones and zeroes in a virtual universe.

But then again – why not?

At the end of the day, we decide what holds value. Value is a social construct – a shared agreement that something is worth something else in exchange. And that “something” doesn’t have to be physical at all.

A great early example is seashells. Across many parts of the world, and independently from one another, people used shells as currency. It worked because shell money satisfied a few key requirements:

• Scarcity: Not just any shell would do. Typically, rare or hard-to-produce shells were used – ones that couldn’t simply be picked up at the beach, making the currency difficult to counterfeit or inflate.

• Portability: Currency has to be easy to carry and exchange. If you can’t transport it, you can’t trade with it – simple as that.

• Mutual acceptance: This is the most fragile and most essential requirement. For a currency to work, everyone in the system needs to agree on its value. If you and I agree that something has value, we can trade. But if the next person doesn’t accept it, the system breaks down.

And underlying that mutual acceptance is trust. We’ll only accept a currency if we trust that it will retain its value over time. That means it must be hard to fake, limited in supply, and relatively stable. If any of those qualities fail, trust evaporates – and so does value.

The Second Idea: Control

The second idea that caught my attention was about control.

Any one of our traditional currencies — now and throughout history — has always been under the control of someone. A government. A central authority. A ruler.

Let’s take a look back at ancient Rome.

The Roman Empire used the Denarius (a silver coin) and the Aureus (a gold coin). The Aureus first appeared in the 3rd century BCE, but regular minting began under Julius Caesar around 49 BCE. At that time, it contained about 8 grams of pure gold. Under Augustus (~14 AD), it was slightly reduced to 7.8 grams. By the time of Trajan (~117 AD), it had dropped to 7.22 grams — a slow, steady decline. Even under Septimius Severus (~211 AD), it still held around 7.19 grams.

But then things changed.

Facing political instability, military overreach, and economic crisis, the Roman Empire started aggressively debasing its currency. Under Emperor Valerian (~260 AD), the gold content of the once-stable Aureus had fallen to just 3.4 grams — less than half of what it had been just 50 years earlier.

The Denarius followed a similar path. When introduced in 211 BCE, it was nearly 4.5 grams of high-purity silver. For nearly two centuries, it remained relatively stable. Around 44 BCE — during Julius Caesar’s time — 1 Aureus equaled 25 Denarii.

But over time, the Denarius, too, was debased beyond recognition. By 241 AD, it contained only 48% silver, and by the mid-3rd century, it had become virtually worthless. At that point, 1 Aureus was worth more than 1,000 Denarii — not because the Aureus gained value, but because the Denarius had lost nearly all of it.

Eventually, trust in the Aureus eroded as well. The response? A currency reset. The old gold coin was abandoned and replaced by the Solidus, introduced by Constantine the Great around 312 AD. The Solidus contained approximately 4.45 grams of gold — and was worth a staggering 275,000 Denarii. That number says it all.

The Solidus marked a complete reboot of the Roman monetary system. The emperors had overspent for decades — on wars, subsidies, pensions, and public “support payments” of all kinds. The result was hyperinflation, and the only way out was a hard stop. A new currency. A new start.

Needless to say, very few managed to preserve their wealth during the transition. The state had full control over the currency — and when it collapsed, so did the value stored in it.

The Third Idea: Independence

It’s not really a standalone idea — rather, “independence” is the logical result of what happens when “trust” is broken due to “control”, the two topics we explored earlier.

The story of the Aureus showed us how the Roman Empire “adjusted” its monetary system to finance its ever-growing ambitions. But this wasn’t a unique case. Its successor, the Solidus, introduced in 312 AD, began as a 4.5-gram coin of nearly pure gold. For centuries, it remained stable in both weight and purity, earning the trust of people across the late Roman and later Byzantine world. It was hard money, and it worked — for 700 years.

But even the Solidus eventually fell. In the 11th century, economic crises, mounting military expenses, and growing trade deficits led to a reduction of gold content — first to ~85%, then lower. Trust eroded. The once-reliable coin was finished. In 1092 AD, it was replaced by the Hyperpyron.

The Hyperpyron kept the original weight of 4.45 grams and started strong, with a gold content of 90–95%. For a time, it succeeded — becoming the new standard. But history repeated itself: by ~1200 AD, its purity fell to 80–85%. By 1350, it dropped to 50–60%. Once again, trust gave way to manipulation.

All throughout history, currencies have followed the same tragic pattern:

• They start strong — stable, trusted, and valuable.
• They serve well — until the issuing authority, often the state, begins to manipulate them for short-term political gain.
• Overstretching, inflation, loss of backing, and abuse of control lead to collapse.
• And in nearly every case, this process plays out in the name of “necessity” — financing wars, buying loyalty, or avoiding hard fiscal choices.

Every single one of them.

This was what caught my attention – listening to some audiobooks while driving from Hamburg down to Frankfurt twice. And because I was intrigued by the insight, I verified it myself – and found it to be accurate.

Conclusion:

Now, with all that in mind, I took a closer look at the present situation — the United States with the US Dollar, China with the Yuan, and Europe with the Euro.

• At the end of 2024, the United States had accumulated a staggering 35.5 trillion US dollars in national debt — about 124% of GDP and roughly 106,000 dollars per capita. The country faces excessive military spending and a persistent trade deficit.
• China, at the same time, reported an official national debt of around 4.23 trillion US dollars, equivalent to just 25–26% of GDP. However, this number does not include the massive local government debts and state-owned enterprise obligations. When those are factored in, China’s true debt load is estimated to be as high as 120–125% of GDP.
• Europe presents a more complex picture, since we’re not looking at a single country but rather a union of sovereign states. By the end of 2024, the combined national debt of the EU countries had reached approximately 15.8 trillion US dollars — around 81% of GDP. Germany alone accounted for 2.69 trillion euros, or about 62.5% of its own GDP.

So while the absolute numbers differ — and depend heavily on how and what you measure — one thing unites all three major economic areas:

Massive debt burdens, the ongoing need to refinance them, and full state control over the respective monetary systems.

Only a wicked mind would draw any parallels to previously discussed topics… which brings us back to: Bitcoin. But before we go down that rabbit hole, we need to take a look at various states & currencies over the centuries, then a detailed one one the 20^th century… in my next posts.