What Is Money?
Happy Bitcoin Friday! — Sept. 5, 2025
What Is Money?
When was the last time you stopped and asked yourself: what is money?
Most of us go through life without ever thinking too hard about it. We earn it, spend it, save it, and worry about it but rarely do we peel back the layers.
And here’s the key:
money is layered.
The Layers of Money
The dollar in your bank account isn’t the same thing as the dollar bill in your pocket. A balance on Venmo isn’t the same as a Treasury bond.
Each sits on a different “layer” of the monetary system.
At the base layer of government money is debt—an IOU. Government fiat currencies, whether dollars, euros, or yen, are liabilities of the state and of the banking system.
To scale this system, governments and banks create additional layers. Think checking accounts, credit cards, payment networks like Visa, settlement networks like Fedwire.
Each layer adds convenience, but also distance from the base, and more reliance on trust in the institutions that issue and maintain those obligations.
The vast majority of “money” people interact with day to day isn’t cash at all. It’s credit. It’s ledger entries, promises to pay, debt instruments.
Every swipe, every ACH, every balance you see is backed by layers of trust in someone else’s ability (and willingness) to settle.
Bitcoin: A Layer One Asset
This is where Bitcoin is fundamentally different.
When Satoshi Nakamoto released the white paper, it described “a peer-to-peer electronic cash system.” Many interpret this narrowly, as though Bitcoin is trying to compete directly with Visa, Mastercard, or PayPal. But that’s a misunderstanding. Those companies operate on higher layers; rails that move credit and IOUs around.
Bitcoin operates at the base layer.
It isn’t built on debt.
It doesn’t rely on trust in third parties.
Its transactions settle natively, final and irreversible, without an intermediary. Its supply is verifiable by anyone running a node. Its monetary policy is transparent and cannot be unilaterally changed.
Bitcoin isn’t competing with dollars.
Bitcoin is competing with the idea of money itself—by showing us what it means to have a first-layer monetary asset that is both digital and scarce.
Trust vs. Verification
Traditional money requires trust in governments, banks, and payment processors to maintain the system. Settlement is delayed, rehypothecation is rampant, and opacity is the norm.
Bitcoin flips this. It runs on a “don’t trust, verify” protocol. Settlement is built in. Transparency is the default. Monetary issuance is fixed and knowable.
That’s the real peer-to-peer breakthrough. Not just sending digital cash between friends, but doing so on a base layer that requires no permission, no reliance on debt, and no trusted middlemen.
Why It Matters
When you step back, the distinction becomes clear:
Government fiat: a layered system of credit and debt, scalable only by trust in institutions.
Bitcoin: a base layer monetary asset, scalable by math, verification, and open networks.
So the question worth asking isn’t whether Bitcoin can buy coffee more efficiently than Visa. The real question is: would you rather build your financial future on layers of debt—or on a verifiable base layer of money?
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Enjoy the weekend!
I am not an investment or financial advisor. All opinions expressed are mine alone. Read the full DISCLAIMER on the About page.
HODL on Garth.