Bitcoin: Will It Make Henry Ford’s Dream of Energy Currency a Reality?
Henry Ford’s impact stretches far beyond cars — nearly 75 years after his death, Ford’s contributions to the modern economy can still be seen. Ford changed the way people traveled, improved the operations of manufacturing plants, and led to higher wages and better treatment of employees.
One little-known fact, though, is that Ford was a strong proponent of “energy currency,” touting it as a potential replacement for gold. Ford believed that if we used energy-backed currency, each country in the world would have imperishable natural wealth, and, ultimately, wars would end.
Bitcoin — Is It a Form of Energy Currency?
Unfortunately, during Ford’s lifetime, the establishment of an energy currency did not occur. But in the modern era of Bitcoin and other forms of cryptocurrency, it’s easy to draw similarities to Ford’s vision. The intrinsic value of BTC comes from the amount of energy that miners input when mining new blocks on the blockchain. This figure is called the Bitcoin energy-value equivalence.
Intrinsic vs. Extrinsic Value
However, there is another factor we must keep in mind: while BTC can be considered an energy-backed currency, that only applies to its intrinsic value. We mustn’t forget about its extrinsic value: BTC gains additional value based on the perceptions of people; e.g., supply and demand. Huge fluctuations in the price of Bitcoin occur on a daily basis, but the amount of energy necessary to mine this crypto isn’t changing. In order for Bitcoin to realize Ford’s dream of a replacement for gold, extrinsic factors must be limited, and the crypto must become less volatile.
Bitcoin’s Energy Will Decrease
Bitcoin has a set amount of coins that can ever be mined: approximately 21 million. Back in 2009, about 50 BTC were produced for every block mined. But every four years, the mining reward is halved. As of today, miners get 6.25 BTC per 10 minutes, and this figure will continue to decrease over a 4-year period until all blocks have been mined.
So, in order to use the same amount of energy, Bitcoin’s price must double every four years, to account for the halving process. In 2033, the price would have to be 8 times higher than today, and so on. Obviously, this is not ideal for a worldwide energy-backed currency.
How Bitcoin Meets Ford’s Dreams
Although Bitcoin might not be an ideal energy-backed currency, it does still meet some of what Henry Ford was looking for. Ford’s main goal was to eliminate wars that are caused by traditional currency. And Bitcoin does a good job of undermining currency wars; it cannot be influenced by governments, as it doesn’t fall under the jurisdiction of any central bank or authority. Bitcoin is owned by the people — which goes a long way towards eliminating national boundaries. We may be close to realizing Henry Ford’s vision — just in a different way than he predicted.
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