We Study Billionaires - The Investor’s Podcast Network BTC010: Bitcoin & Layered Money w/ Nik Bhatia (Bitcoin Podcast)
Jan 27, 2021
Nik Bhatia, a CFA charter holder and finance professor, dives into the fascinating history of money, tracing its evolution from the Florentine Mint to Bitcoin. He discusses counterparty risk in banking and the revolutionary concept of layered money. Bhatia shares insights on Bitcoin regulation, the implications of central bank digital currencies, and the transformative potential of the Lightning Network. He also contemplates what could make him change his stance on Bitcoin and reflects on the dynamic nature of the government’s relationship with cryptocurrency.
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Florentine Mint's Stability
- The Florentine Mint's gold florin remained unchanged in purity and weight for over 300 years.
- This stability, likely due to the post-feudal republican government, facilitated trade and accounting across Europe.
Emergence of Second Layer Money
- Physical transfer risks associated with gold coins led to the development of a second layer of money.
- This second layer consisted of promissory notes, representing deferred settlement and reducing the need for physical coin transfers.
Bankers Creating Money
- Double-entry bookkeeping revealed how bankers created money through balance sheets, not minting.
- Issuing loans without precious metal backing effectively created new money, a concept also known as the "bookkeeper's pen."
