Monetary Economics of Bitcoin

Bitcoin's Missing Credit Money Supply for the Real Economy

Overview

Bitcoin is sound base money (M0), but it lacks the credit layer needed to function as a global monetary system. Without a mechanism for issuing short-term, non-inflationary credit denominated in bitcoin, its purchasing power remains volatile and real-world adoption stalls.

Bitcredit fixes this by introducing bitcoin credit money (M1). Businesses issue electronic bills of exchange to pay for real goods and services. Bitcredit mints convert qualifying e-bills into bitcredits: a bitcoin-denominated currency for instant, private payments that settle on the Bitcoin mainchain at maturity.

Volatility

Bitcoin's volatility will not go away by itself. It needs credit money to stabilise a base money. more →

Valuation

As a store of value, Bitcoin is stuck. As a medium of exchange, it can capture gold's monetary premium. more →

Real bills

Every e-IOU traces back to a genuine commercial transaction between businesses. more →

Elasticity

The supply of e-IOUs expands and contracts with real economic demand, not by decree. more →

Reserves

Mints hold bitcoin reserves against every e-IOU issued, fully and verifiably. more →

Proofs

Reserves and liabilities are cryptographically provable on Bitcoin, not taken on trust. more →

Reedemability

Every e-IOU is paid out in bitcoin at maturity so the system can't be cheated. more →

Acknowledgements

Bitcredit builds on centuries of sound money thinking, from real bills doctrine to cypherpunks. more →

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