FA Hayek's Foresight: Imagining Bitcoin's Unstoppable Rise Through a 'Sly, Roundabout Way’

In recent years, discussions have flourished around the visionary predictions of famed architect and systems theorist Buckminster Fuller, who is said to have anticipated a concept akin to Bitcoin. Similarly, industrial magnate Henry Ford is credited with imagining a novel energy currency with the potential to halt wars. Furthermore, Friedrich Hayek, a towering figure in free-market economics and Nobel Prize winner, is believed to have predicted a Bitcoin-like system. References often include a 1984 video in which Hayek speculated about a future utilizing a “sly, roundabout way” to start “opening accounts in something.”

Hayek Believed Government Control Stifled Monetary Innovation

Friedrich August von Hayek, commonly referred to as F. A. Hayek (1899-1992), made his mark as an influential free-market economist and philosopher. Under the mentorship of Ludwig von Mises, Hayek was among the keen minds at Mises’s private seminar in Vienna, engaging deeply with his university peers under Mises’ expert guidance. His contributions to economic science were recognized with the Nobel Memorial Prize in Economic Sciences on Oct. 9, 1974.
While Milton Friedman, another towering Austrian economist, is widely recognized for foreseeing a Bitcoin-like system, Hayek is similarly acknowledged for hinting at a concept akin to Satoshi Nakamoto’s revolutionary digital currency. A notable moment is captured in a 1984 video, where Hayek delves into the evolution of law, language, and money. He observes, “Now, fortunately, law and language have been allowed to develop. Money has originated in its original form, but as soon as it was there in its most primitive form it was frozen.”
Hayek added:

After two or three hundred years of coins, all the governments put their hands in and stopped any further development. Governments said it must not develop any further. We were not allowed to experiment on it. Money hasn’t been improved. Money has become rather worse over time.

The Sly, Roundabout Way to Approach the Denationalization of Money

The economist remarked that our experience with currency to date has involved governmental creations of money, which have been “mostly wrong” and “mostly abuses of money.” “I have come to the position of asking, has monetary policy ever done any good?” Hayek inquired. “I don’t think so,” he said. Hayek was adamant that it has merely caused “harm,” and he advocated for what he termed the “denationalization of money.”
Upon being questioned by the interviewer on how the system he imagined would function, or whether a private entity such as Chase could circulate its own currency, Hayek offered a simple smile in response. He then said, “While the governments can stop people from issuing money, they can hardly stop them from opening accounts into something. After all, in a modern world hand to hand money, coins, and paper are no longer the most important,” Hayek explained.
The economist continued:

Credits and credit cards are substitutes. So I think we can forget about existing money and existing banks. And open a system of accounts which would displace money … I don’t believe that we shall ever have good money again before we take the thing out of the hands of the government. We can’t take them violently out of the hands of the government, [then] all we can do is by some sly, roundabout way [and] introduce something they can’t stop.

Hayek penned a seminal work titled “The Denationalisation of Money” in 1976, followed by an updated edition in 1978, “Denationalisation of Money: The Argument Refined.” Within these pages, Hayek advocates for dismantling the government’s sole authority to mint currency. He champions the full privatization of the monetary system, asserting that the fabrication, allocation, and oversight of currency should entirely reside within the domain of the free market. This laissez-faire approach, the famed economist posits, would pave the way for monetary innovations.

Following Hayek’s death, several initiatives emerged in the United States aiming to privatize currency, yet they encountered governmental opposition. For example, in 1998, Bernard von NotHaus introduced The Liberty Dollar, a private currency backed by precise amounts of precious metals. By 2007, the U.S. government had seized the company’s bank accounts, closed its website, and levied numerous charges against its founder. Similarly, E-gold faced a shutdown in 2007 after offering a digital currency exchangeable for gold.
The U.S. government contended that the E-gold initiative facilitated money laundering. In contrast, Bitcoin emerged two years subsequently, coinciding with the onset of the Great Recession. Unlike E-gold and The Liberty Dollar, Bitcoin distinguished itself by operating without a centralized authority. The enigmatic creator, Satoshi Nakamoto, unveiled a system akin to what Hayek envisioned, enabling one to “open a system of accounts which would displace money.” Bitcoin’s inception was far from conventional, embodying a “sly, roundabout way” to introduce an unstoppable innovation.
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