From the Athenian Silver to the Bitcoin Standard: Private Money in a State-enforced Free Banking Model
30 Pages Posted: 29 Apr 2021 Last revised: 31 Dec 2021
Date Written: December 30, 2021
Currently numerous market-driven cryptocurrencies challenge to dethrone the state-controlled supply of fiat money. The outcome hinges on the old question of whether privately produced money with or without government is possible. This paper revisits the issue by looking for insights in the successful precedent of classical Athens. It is found that in this case the government defined a unit of account (Attic drachma), linked it to a commodity (silver), and used it in its domestic and foreign transactions. Βy drawing on its share of silver from the Laurion mines and other sources, the government acted as a major supplier of the said currency; and lastly, it enacted and enforced rules and regulations that aimed at safeguarding the integrity of the currency while leaving private markets free to co-determine the supply of the currency and credit, and the drachma to circulate in competition with all other foreign currencies within its borders. On this account and the evidence that the Attic drachma dominated for three centuries in the wider Mediterranean region, it is concluded that the application of the silver standard in classical Athens provides a most suitable framework of free banking after which to pattern the emerging regime of a privately produced bitcoin-based digital standard with amicable state sponsorship and enforcement.
Keywords: Athenian model of the silver standard, Cryptocurrencies, Roles of government in money, Anonymity of citizens, Civil liberties.
JEL Classification: D78, E42, E5, G21, G28
Suggested Citation: Suggested Citation