Blockchains Are a Diamond’s Best Friend

Abstract

This chapter discusses Bitcoin and its underlying technology. Specifically, it addresses how new uses of that technology shed light on money as money of account. This bolsters the arguments of alternative monetary theorists like Geoffrey Ingham and Randall Wray, which were often seen in opposition to the Zelizer view. Both Zelizer and alternative monetary theorists agreed on the paucity of the mainstream economists' take on money as a neutral medium of exchange. Zelizer highlighted its social variegation. Ingham highlighted money of account, the “means of accounting for value.” Such accounting is always linked to the state's ability to demand taxes paid in its own token and the systems of claims and counterclaims in credit-money that ultimately relied on states' and banks' promises to pay. Whatever social variegation may exist, Ingham argued, would still be determined by and denominated in money of account. The chapter asks whether developments like Bitcoin and other forays into new payment services more generally have the potential to open up these relations between states and banks with regard to money.