Henry Ford Proposed the Original Idea of Bitcoin a Hundred Years Ago

Henry Ford, the founder of Ford Motor Company, proposed the creation of an energy-based currency in 1921, which he believed could establish a new monetary system.

According to Cointelegraph, this monetary system bore remarkable similarities to the peer-to-peer electronic cash system introduced by Satoshi Nakamoto in Bitcoin’s 2008 white paper.

At the time, Ford stated that under this plan, the new standard would define one dollar as equivalent to the amount of energy consumed in one hour. He described the goal as finding an alternative to gold, eliminating banks, and putting an end to wars. Although Ford was unable to implement his idea, the emergence of Bitcoin later proved that creating an energy-based currency was indeed possible.

Bitcoin is the energy-based currency Ford envisioned

On December 4, 1921, The New York Tribune published an article presenting Henry Ford’s vision of creating an energy-based currency to replace gold.

Such a currency, Ford believed, could eliminate the banking system’s control over global wealth and bring an end to power-driven wars. His plan involved building the world’s largest power plant to establish a new monetary policy based on nations’ natural resources such as rivers and other sources of energy.

Henry Ford told The New York Tribune:

“In an energy-based currency system, a fixed amount of energy consumed within one hour is considered equivalent to one dollar. The calculations and mindset behind this system differ greatly from the doctrines imposed by international banking. We’ve become so accustomed to the banking structure that we assume no better standard can exist, yet in this system, the value of money is determined only when Congress decides it should be.”

Ford was never able to bring his vision of an energy-backed currency to life. Yet, a century later, many of the characteristics he described can now be seen in Bitcoin.

Since 2009, more than 18.8 million Bitcoins have been mined using electricity and powerful computers solving complex mathematical problems. While many critics argue that Bitcoin’s mining method, the proof-of-work mechanism, has severe environmental impacts, they often overlook the innovation it has inspired in the development of clean energy technologies.

A replacement for gold and a means to end war

Ford explained his view on the link between gold and war as follows:

“The evil connection between gold and war is a controllable fact; take control of it, and war will stop.”

Some staunch Bitcoin supporters believe that the sound financial principles behind cryptocurrencies could similarly become a tool to end power-driven conflicts.

Under the gold standard (a monetary system based on gold), governments financed their needs through conflicts of interest and inflation. Wars were often funded through large loans, making them profitable for many states.

Richard Nixon, President of the United States from 1969 to 1974, effectively ended the remnants of the gold standard in 1971 by suspending the convertibility between the dollar and gold.

The quasi-gold standard lasted until 1973, and by 1976 all definitions linking the dollar to gold were eliminated. The United Kingdom was the first to abandon the gold standard in 1931, a move that the United States followed two years later.

Although Satoshi Nakamoto never mentioned Henry Ford in his Bitcoin forum posts, some speculate that Ford’s early ideas may have influenced the creation of Bitcoin.