Systemic Technical Debt in the Financial System

Rogue Report #111 | November 6, 2025 | Block 922,515

One of the people I've learn a lot from over the years by consuming his content is Jeff Snider of Eurodollar University. I agree with him on many things, but I'll use one of his recent tweets to highlight the very important areas where we differ.

In the the tweet below, he is ranting about using the term fiat money. I have often ranted about the exactly same thing in bitcoin and sound money circles. We do not have fiat money. The hallmark of fiat money is printing to the asset side of the balance sheet only, completely unbacked assets. Our current system, however, is not like that. When money is created in banks, it is created on both sides of the balance sheet, meaning it is not fiat, it is credit-based money. One new dollar asset, is offset by one new dollar in debt liability. So, I agree with Jeff there.

I also agree with Jeff in his dismissal of the idea of “debasement.” But it is a nuanced disagreement. It is my position that "debasement" can only happen in commodity-backed money. A currency has to be debased against something. For example, changing the gold value of the dollar from $20.67/oz to $35/oz in 1933 is debasement. We have no backing against which to technically debase the dollar today. Jeff, however, overlooks depreciation. The dollar is irrefutability depreciating today, which provides any needed impetus for an inflation hedge.

Bitcoin and Speculation

In his tweet, Jeff compares bitcoin to AI stocks due to their speculative nature. While this comparison is warranted in some ways, it isn't in others. Bitcoin does go through periods of mania, no one will deny that. However, but equities are not limited in supply, where bitcoin is. When there is a speculative mania in a certain sector of stocks, those companies can issue more shares to capture that value. That is the same in commodities and even bonds, too. When price significantly rises, there's more reason to produce more.

Bitcoin is different, you can't produce more bitcoin. Only 21 million will ever be produced. So in this respect, bitcoin is not like a speculative equity at all. It is more akin to real estate with no overhead, or highly rare minerals and metals. It is hard to produce more supply when price rises, in bitcoin's case, none at all. That's why we call it "hard" money.

The speculative aspect of bitcoin is nature's way of spreading the good news. More people hear about it, more people save in it, available marginal supply decreases, price must go higher. It's very simple supply and demand, but most people cannot bring themselves to believe it's that simple. They overthink it and are often clouded by bias, which we'll discuss below.

Altcoins
Pushback on bitcoin often comes in another form, too. People will say that there are thousands and thousands of bitcoin clones, so the supply is not limited. That's like saying gold's supply is that of gold, but also fool's gold, and copper, and silica, so basically, gold's supply is infinite because there's infinite other things somewhat like gold. The argument is ridiculous on its face.

Bitcoin has extremely unique properties that are not replicable by other clones. And they've tried. We've gone through whole market cycles of hype over new strategies to launch distributed networks fairly and honestly that have categorically failed. None have proved a viable, scalable option, because bitcoin gets the formula just right. Other attempts always result in centralization. Most are as much like bitcoin as PayPal or Venmo are. Try to send an altcoin to a bitcoin address and see if you still think they are perfect substitutes. Bitcoin is bitcoin, altcoins (crypto) are totally different.

This is not the post to go into a long explanation of concepts like proof-of-stake vs proof-of-work, all the bootstrapping problems, and misaligned incentives, but suffice it to say, altcoins don't increase bitcoin's supply just like sand doesn't increase gold's supply.

Bitcoin as Money

Snider asserts that "bitcoin is not money, it's a tradable portfolio asset." Note, he doesn't say what money is, because money IS a tradable portfolio asset. Indeed, it is THE tradable portfolio asset. What else would money be if not that?

Bitcoin is a form of money. Money is a tradable portfolio asset that fulfills the functions of medium of exchange (ownership changed in a transaction, not to be confused with means of payment like PayPal), store of value, and unit of account. Bitcoin fulfills all these functions to a degree today. It is used to settled in transactions. Bitcoin is easier to used internationally than major currencies like the euro, yen or yuan. Try paying for something in South America with euros. There are many more places that accept bitcoin there.

It is obviously a store of value, as can plainly be seen in a chart of any 4-year or greater period in bitcoin history.

Unit of account is less straightforward. It is usually used to mean, that in which prices and balances are denominated. The currency of accounting in other words. Bitcoin does fulfill that function in a niche market today. Freelancers, some native bitcoin companies, and individuals denominate their income and savings in bitcoin. Some of those businesses also denominate their revenue in bitcoin terms, especially if they are in the business of acquiring more bitcoin regularly.

But the unit of account discussion goes further. When dollars were defined as a certain weight of gold, the currency of account was dollars as an abstraction of gold. Gold was the money, the true unit of account, but prices were not in grains or ounces of gold, but in dollars through a defining link. In the same way, bitcoin could very easily be ported into dollar prices and accounting. As more people hold bitcoin each year, eventually it'll reach a stage where dollars could be linked to bitcoin, the same way they were linked to gold, and hence instantly become a unit of account. This is much more of a binary, centralized decision, versus a natural characteristic of monetization.

So bitcoin is money, it fulfills all the functions of money to a limited degree already, and more so each year. One could argue that it is not the thing that fulfills all these roles together the best, but that's moving the goalposts. Define money, then show why bitcoin is not money, but dollars, euros, yen, etc are all money.

Bitcoin Replacing the Dollar?

Jeff says bitcoin is not replacing the dollar, because they don't compete directly with each other. Federal Reserve Chairman has said the same thing, that bitcoin competes with gold, not the dollar. Of course, I agree with him here, again!

The dollar is a label. That label is not threatened by bitcoin because that label can be applied to anything. It's been a dollar of silver, a dollar of gold, a dollar of bitcoin isn't far off.

• Pre-1792: No standard, foreign pieces-of-eight, Spanish dollar, peso
• 1792-1834: Bimetallic, silver and gold, 15:1 ratio
• 1834-1873: Bimetallic, silver and gold, 16:1 ratio
• 1873-1933: Gold standard, $20.67/oz
• 1933-1944: Gold standard, $35/oz (foreign-only)
• 1944-1971*: Gold standard, Bretton Woods foreign pegs
• 1971*-2008: Eurodollar, free floating, credit-based dollar reserves
• 2008-present: Free-floating, credit-based, secured repo
• Future: Re-anchored digital era

* Not a clear defined switch over, evolved over decades

So, Jeff is right that the dollar doesn't compete with bitcoin, but he's wrong that the Eurodollar doesn't compete with bitcoin. The Eurodollar as a financial system is directly competes with a bitcoin-backed dollar system for its future role.

Progressive Money Myth

From what I've learned of Jeff's theories he believes in a progressive improvement in money, especially starting in the central banking era to modern times. His view appears to be that each iteration of money gets better and better. This is a progressive fallacy. We are not in a march toward the end of time, where we will one day figure out how to engineer and centrally control the perfect monetary instrument. No, money is the most saleable good under specific circumstances, which oscillate in long periods of time.

There have been many periods of elastic money financing in good times. Notably, the British Industrial Revolution and Colonial Empire was financed through highly elastic money in the form of bills of exchange. This led to different bubbles, and eventually back to a more stable and rigid classical gold standard. I compare this to the globalized order that started in the post-WWII West, and went truly global in 1991 after the Cold War ended. The boom welcomed the elasticity of the Eurodollar, but in the "forgot how to grow" bust, a new money will be preferred. Credit-based money is not the "best" money ever, it was the best-suited to the post-WWII global order.

The Eurodollar is only 50-60 years old, and it's already led to stagnant complexity and the inability to ever fully recover without a major hyper-deflationary jubilee. In software, "technical debt" is accumulated cost of past changes and patches in system design, coding, or architecture that make future development harder, slower, and riskier. Your "forgot how to grow" is this concept applied to the monetary system, we can call it "monetary technical debt."

To fix the system, we can't just remember how to grow, we have to rid the system of the technical debt. This has occurred many times in history by returning to sound money. It'll happen again, only this time, there exists an asset that has superior properties to gold. As that global order continues to fracture, money will evolve not progress. Changing environments leads to changing selective pressures.

HODL strong. Thanks for being members!

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