This is an op-ed by Bitcoin Graffiti, a software developer and graffiti artist.
“Those things I say now may be obscure, and yet they will become clearer in their proper place.”
in the annals of history, Nicholas Copernicus He is celebrated as the pioneering astronomer who overthrew the geocentric view and revealed the heliocentric model, placing the sun at the center of our solar system. However, there is a lesser-known facet of Copernicus’ genius that remains shrouded in mystery: his profound contributions to critical thought.
While his astronomical achievements captivated generations, his insights into the nature of money and its effects on the economy have been largely ignored.
As the medieval era drew to a close, marked by transformative inventions such as the Gutenberg printing press and the destructive power of gunpowder, Copernicus’ pioneering work challenged not only prevailing astronomical beliefs but also accepted notions of money.
The advent of the printing press ushered in an era of unprecedented dissemination of knowledge, gradually eroding the Catholic Church’s monopoly on information. At the same time, the widespread adoption of gunpowder rendered the knights and their armor powerless, signifying the decline of the feudal system. Amidst this background of change, Copernicus emerged as a visionary, his mathematical calculations eventually proving that the Earth was not the center of the universe.
While we may look back at our geocentric ancestors and marvel at their supposed ignorance, we must admit that most of us are completely unable to prove heliocentrism ourselves. We generally accept the current belief. If this is true, then shouldn’t there be obvious things that we might miss today? What if our assumptions about money, the lifeblood of economics, are also flawed, and the study of economics is still in its infantile stage? Perhaps, just as Copernicus shattered the prevailing astronomical narrative, we are on the cusp of an intellectual revolution that will expose the shortcomings of contemporary critical belief.
Here, in the midst of these deep reflections, Copernicus’ hidden expertise in monetary matters reappears. Unbeknownst to many, this visionary mind not only revolutionized our understanding of the sky, but also made lasting contributions to the field of critical thought.
Copernicus World Criticism
Born in 1473, Copernicus was a native of Prussia (now part of modern Poland) and lived most of his life in Frombork, where he was a polymath at the royal court as an accountant and adviser to monetary reform after King Sigismund I He was asked to look at the depreciation of the country’s currency.
It was his first monetary contribution strengthen the theory We now know as Gresham’s law. The law prescribes that when there are two currencies in circulation, and the government decides on a fixed exchange rate, the bad money drives out the more expensive. In such a scenario, it is profitable to exchange the decrepit currency and store the hard currency. In 1526, his findings were compiled into a pamphlet entitled “currency system– “Monetization.” Copernicus opened his treatise on Haikian style, emphasizing the covert nature of critical degradation:
“Though there are innumerable pestilences by which kingdoms, principalities, and republics tend to decline, these four plagues (in my estimation) are the most powerful: discord, mortality, barrenness of land, and cheapness of money. Three that obviously no one knows that It is so, but the fourth, in regard to money, is considered by a few and only by the most serious, because it did not happen all at once, but gradually, in some kind of secret way. It overthrew republics by means of reason… Money, therefore, is like a measure of some common estimations. It is, however, necessary that what should be a permanent measure be fixed and maintain the state of order. Otherwise, it is necessary to confuse the organization of the Republic, and to defraud sellers and buyers in many ways, as if the arm had no certain weight.”
In an insistent tone, he called for coinage reform, for the destruction of old coins and for the return of silver coins of full weight to circulation. Prussia had just experienced a war and subsequent devaluation. The amount of copper in the coin increased at the expense of the precious metal, and finally reduced the money to pitiful little pennies. Since a fixed exchange rate was in effect, it became more profitable to melt the coin and extract the silver.
Eventually, Prussia’s currency became worthless, leaving the population unable to trade abroad because no one would accept the tangled money. Good money gone. storing, melting and exporting them – Gresham’s Law for example. Although this mechanic was previously known to other civilizations, Copernicus was the first European to properly write it down. Unfortunately for Prussia, the king did not heed his advice.
The quantity theory of money
Murray Rothbardan American economist of the Austrian School, claimed that the Polish polymath theorized an early version of The quantity theory of money (QTM). Rothbard summed up Copernicus’ ideas in “Economic Thought Before Adam Smith Vol. 1::
“The causal chain began to deteriorate, which led to an increase in the amount of money supply, which in turn led to a rise in prices. The money supply is the main determinant of prices. And we, in our sluggishness, do not realize that the high cost of everything is a result of the cheapness of money. Prices rise and fall according to the state of money.”
While modern man remains financially illiterate, Copernius, half a millennium ago, had already brilliantly theorized a linear relationship between the money supply and market prices. Somehow we take our unit of account to be a constant of supply, and we never conclude that higher prices are the result of currency depreciation. Like the geocentric model, it’s hard to part with this immersive, tilted view.
Today, QTM is defined quantitatively in Fisher formula. Here, money supply (M) multiplied by average velocity (V), is equal to the sum of all transactions in the economy (q) multiplied by their price (p). Given that the behavior of expenditure remains stable (V) and the production of goods and services remains level, we conclude that the increase in the money supply varies directly with all prices in the economy.
Next, let us highlight that price (p) is a vector of all prices that individually respond differently to inflation but, on average, increase linearly with the money supply. For example, during a monetary expansion through a technological downturn, a digital service may decline, while scarce real estate will rise in value. This is a point not lost on Michael Saylor, CEO of MicroStrategy and the largest owner of bitcoin, as he points out when It was stated in a tweet To Keynesian Paul Krugman in May 2021 on monetary expansion:
“Inflation is a vector. The benchmark can be biased by choosing certain items. The index assumes that humans do not need food, energy, or home ownership, and do not desire assets such as property, stocks, bonds, or commodities. It is clear that most inflation has been in assets “.
The end of an era
Copernicus Basically finished with the “Heavenly Orb Revolutions” In 1532but he published his treatise on heliocentrism only On his death bed in 1543 For fear of contempt of the Church. The seed was sown, but the theory ran a century later After the endoscope arrives. Galileo Galilei was an early follower of telescopes who made the first observations of anomalous celestial bodies that could It can only be explained by adopting the Copernican model.
Rejection is easy in the absence of current form rigging devices. Heliocentrism remained an abstraction before the telescope. But then, what about Copernicus’ critical findings? Do we simply lack the tools to turn this view into reality?
With Bitcoin still in its early days, Copernicus still appears to be well ahead of Keynesian economists and can be considered a Bitcoiner avant la lettre. Bitcoin, with its fixed supply of 21 million coins, is a digital telescope for anyone who wants to dig deep into the economic machine. By now we may all notice what the multitudes of yesteryear were saying all the time – that healthy economics is about healthy money. And even though it was designed by humans, Bitcoin shines as the natural center we have all been looking for. For this time, it may be the right place, where the simple monetary laws will refuse to remain obscure any longer.
“However, at rest, in the middle of everything is the sun.”
–CopernicusCopernicus
This is a guest post by Bitcoin Graffiti. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.