MOY: BITCOIN ALLOWS MONEY TO BE PRIVATIZED

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V18 2015 INDEX E-SYLUM ARCHIVE

The E-Sylum: Volume 18, Number 47, November 22, 2015, Article 32

Former Mint Director Ed Moy spoke at a conference panel on Bitcoin recently. This article summarizes his statements. -Editor

Former Director of the United States Mint Edmund C. Moy was featured on a panel during the recent Bitcoin Investor Conference in Las Vegas, and he shared an unique perspective on bitcoin for someone who was once a government official under the Bush and Obama administrations. Unlike most individuals involved in government who focus on monetary policy, economics, or the creation of fiat currency, Ed Moy enjoys the privatized nature of bitcoin as a potential currency. Moy sees Bitcoin as a technology that could bring back the days of a democratized money that is held in the hands of the people.

Money Used to Be in Private Hands
During Ed Moy’s comments at the Bitcoin Investor Conference, it became clear that he’s a fan of privately-held money. At one point, he described the democratized nature of money thousands of years ago:

“[One] reason why I like cryptocurrencies and where my mind has gone on all this is that when you take a look at our earliest notions of money — money was in private hands. You found electrum, which is basically a mixture of gold and silver in the ground. Sizes were important, and if you just pounded it into a mold — and you use that in trade, so money was very — it was in private hands, it was the ultimate democratization of money.”

Old Money Had Its Problems
Of course, there are a few issues with using chunks of electrum as money. Moy explained some of these problems during his remarks on privately held money:

“That limited economic growth because you had this issue of standards, weights, [and[ measures, so electrum — when you find it in the ground — it could be 90 percent gold and 10 percent silver, 92 percent, [or] 94 percent. You wouldn’t know. You might get the weight right, but if you didn’t get that purity right, you had a problem. And then, as commerce got bigger and bigger and transactions got bigger and bigger, you needed more coins, and the technology would not allow the private sector to keep up with demand.”

Governments Tried to Solve Those Issues
Due to the fungibility issues related to old forms of money, governments stepped in to create common currencies that were easily recognizable. Moy briefly mentioned the positive effect this had on trade:

“Government stepped in, and the big step was in Lydia where they figured out how to purify gold. And once they purified gold, you already had weights and measures down, and all of the sudden things started clicking.”

When you have something like a coin made up of a single precious metal, it becomes easier to verify the authenticity of the money and understand its value.

Bitcoin Can Privatize Money Again
Of course, with bitcoin, there is no need to create a uniform coin that is easily recognizable to the general public. A bitcoin is a bitcoin, and there are no standard measurements to worry about. There is no need to weigh it every time it is used in a transaction or store large amounts of it in a vault owned by a third party. Edmund Moy explained that bitcoin could allow money to become privatized once again:

“Well, I see bitcoin as the improvement in technology that allows money to be privatized again, back where it should be because it is my belief that one of the main uses of money is economic transactions. Why is government involved in economic transactions except for the ability to tax that transaction and get their income out of it? So, if money is primarily used in economic transactions between two people, then it makes a lot of sense to me that — if current technology allows, then money should be privatized because it’s used between two people.”

Moy’s comments during this panel discussion fly in the face of JPMorgan Chase CEO Jamie Dimon’s recent comments on bitcoin. While Dimon could never see governments allowing an uncontrolled currency like bitcoin to prosper, Moy believes it could be the financial technology that brings money back to the private sector.

I think Ed's right on the money on this one. If enough people and institutions get behind Bitcoin, the government could lose its franchise. Of course, the government gets to make the laws, and could find a way to muscle back in on the action somehow. -Editor