Most of us use money every single day without ever stopping to ask: what actually is it? Where did it come from? And who decides how much of it exists?
These aren't abstract questions. The answers shape the cost of your mortgage, the purchasing power of your savings, and the economic choices available to your children. Here's the story of money — the short version — and where Bitcoin fits into it.
The evolution of money
Commodity money
Early societies traded things with intrinsic value — shells, cattle, grain, salt. The word "salary" comes from the Latin for salt, because Roman soldiers were sometimes paid in it. These worked as money but were hard to carry, divide, and store reliably.
Gold and silver coins
Precious metals solved most of commodity money's problems. Gold and silver are durable, divisible, portable, and scarce. For thousands of years, gold was the global standard of value — trusted across cultures, borders and centuries.
Paper money backed by gold
Carrying gold was inconvenient. Banks began issuing paper receipts redeemable for gold. These receipts became the first paper currency. For centuries the system worked because every note represented real gold in a vault.
Fiat money — backed by nothing
In 1971, US President Nixon ended the dollar's convertibility to gold. Every major currency in the world followed. Since then, money is backed only by government decree and institutional trust — with no physical limit on how much can be created.
Bitcoin — digital scarcity
Bitcoin introduced something new: a form of money with a mathematically enforced, fixed supply that no government, bank or individual can change. For the first time in history, digital scarcity became possible.
What happened in 1971?
The moment Nixon closed the "gold window" is one of the most consequential decisions in modern economic history — and one of the least talked about in everyday life.
Before 1971, the US dollar was pegged to gold at $35 per ounce. Other currencies were pegged to the dollar. This system, established after World War II, gave the global economy a stable anchor. Governments could spend, but they couldn't print endlessly without running out of gold.
When that constraint was removed, something changed permanently. The money supply could now expand without limit. And it has.
of the purchasing power of the Australian dollar has been lost since the Reserve Bank of Australia was established in 1960. What cost $1 then costs roughly $30 today. Your money is a melting ice cube — slowly, invisibly shrinking.
What makes good money?
Economists and monetary historians have identified several properties that make something work well as money. It's worth running Bitcoin and the Australian dollar through the same checklist.
"Good money should be scarce, durable, divisible, portable, fungible, and resistant to counterfeiting. Sound money adds one more property: no one should be able to create more of it at will."
Gold scored well on most of these for thousands of years — but it's heavy, hard to divide precisely, and impossible to send digitally. The Australian dollar scores well on convenience but fails the most important test: scarcity. New dollars can be created whenever needed.
Bitcoin scores well on every dimension. It's scarce (21 million cap), durable (digital, exists as long as the network runs), perfectly divisible (down to 100 millionths), highly portable (sendable anywhere in the world in minutes), fungible, and resistant to counterfeiting. It's arguably the hardest money ever created.
Why does this matter for ordinary Australians?
The shift from gold-backed money to pure fiat in 1971 didn't happen overnight in people's everyday lives. But the consequences accumulated steadily. House prices that were once three or four times the average annual income are now ten to fifteen times. The single-income household that was common in the 1970s has been replaced by the necessity of two incomes just to stay afloat. Retirement savings that would have lasted a generation are now barely enough.
None of this is a conspiracy. It's the predictable outcome of a monetary system with no hard limit on supply. When more money is created, the money you already have buys less. Savers are penalised. Borrowers are rewarded. And the cycle continues.
Bitcoin as a response to history
Satoshi Nakamoto embedded a message in Bitcoin's very first block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." It wasn't an accident. Bitcoin was designed explicitly as an alternative to a monetary system that had repeatedly failed ordinary savers in favour of institutions deemed too big to fail.
Understanding the history of money isn't just interesting. It's the context that makes Bitcoin's design choices make sense.
We're not here to tell you what to do with your money. But we do think everyone deserves to understand the system they're operating in. If you've ever wondered why saving feels harder than it used to — history has a lot to say about that.
Come and explore this further.
Our next meetup is the second Monday of the month, 6:00pm – 9:00pm. In person in Bendigo or join us remotely. All welcome — no experience needed.
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