Money is Shielded Cryptocurrency, and Nothing Else.
Note: This article is not investment advice.
About a hundred years ago, there was a devastating banking crisis. JP Morgan was called to testify before Congress about why his private NY bank was so successful when all others were failing.
During that testimony, Morgan made one of the most epic statements in the history of finance:
S. Untermyer (Congress): The control of credit involves a control of money, does it not?
Morgan: A control of credit? No.
Untermyer: But the basis of banking is credit, is it not?
Morgan: Not always. That is an evidence of banking, but it is not the money itself. Money is gold, and nothing else.
What did Morgan mean? What makes gold money, the basis of banking? And why is shielded cryptocurrency the new money, and nothing else?
1. Limited Supply
Despite many attempts, gold cannot be created. The amount that exists on this earth is all there ever will be. 197,576 metric tons above ground and an unchanging amount underground.
With Ycash, a shielded cryptocurrency, there is also a fixed total amount, 21 million YEC coins. This is hard-wired into the code and reinforced by consensus.
Gold is the most malleable metal. It can be drawn into a wire of single-atom width.
Likewise, YEC can be drawn into a single Yoshi, or 0.00000001 YEC.
Gold does not rust, tarnish, or degrade. Pure gold held today will physically be the same in a year, ten years, or 100 years. This is why gold holds its value during recessions or times of inflation.
Assuming one stays current with potential network upgrades or turnstiles, a private key grants access to your YEC a year from now, ten years, or 100 years.
Gold is a sovereign bearer asset. There is no counterparty risk. Whoever holds it has full rights and privileges to do what they like with it.
Same with YEC. It is fully yours. No permissions, banks, or third parties are required to enjoy.
Every atom of pure gold is the same. Gold has no history or memory. The gold in your pocket could have been on a sunken pirate ship for centuries or stored in the Queen of England’s bedside table.
Shielded coins exhibit no history or memory. Zero-knowledge encryption shields any balance, history, or transaction from public knowledge, keeping every shielded coin identical and fungible.
What about “and nothing else”? Can Euros, Yen, Dollars be money?
Paper cash and coins are bearer assets and fungible, but fiat money fails all other standards of foundational money. People who think fiat currency is money will likely enjoy it for a short time, but as Voltaire said in 1729, “fiat money eventually returns to its intrinsic value — zero.”
Can Bitcoin, hailed as digital gold, be money?
Bitcoins have a history, every step stamped on the blockchain. So bitcoin fails fungibility (#5). One bitcoin may have a clean history while another may have a less fortunate history, making one coin potentially more valuable than another. Bitcoin account balances, history, and transaction details are searchable in clear view to the whole world until the end of time.
YEC is your electronic cash. Being electronic enables it to travel and settle worldwide, faster, more efficiently, more reliably, at any time, day or night, 24/7/365. Ycash doesn’t keep bankers’ hours. The world of today and of the future is digital, interconnected, and always-on, which requires money that doesn’t sleep.
JP Morgan knew that gold was money. He knew that it was foundational because it had limited supply, malleability, durability, sovereignty, and fungiblity. That firm footing led Morgan’s bank to weather storm after storm and grow exponentially for a century to become the largest bank on earth, measured by market capitalization.
If shielded cryptocurrency is a new and better money, will it emerge as foundational, the bedrock on which economic activity stands? Will its custodians, acting as their own self-sovereign private banks, become the richest people on earth in the coming hundred years?