(Compiled in collaboration with Grok)
The current global financial system relies primarily on credit-based fiat currencies, with central banks monopolizing the power to issue money. This system has led to persistent inflation, rising debt, currency devaluation, and excessive financial speculation. Financial leverage and information asymmetry further exacerbate wealth disparity and contribute to unfair social distribution. The root cause of many global problems lies in the inherent flaws of this “soft currency” system. Therefore, there is a growing call for a return to “hard currency” – that is, a form of value storage that is scarce and difficult to manipulate artificially.
I. Why Did the Gold Standard Exit the Historical Stage?
The primary limitation of the gold standard lies in its inability to flexibly match economic growth. When GDP growth exceeds the growth rate of gold mining, gold’s function as a value measure weakens, leading to deflation (a continuous decline in prices) and thereby suppressing consumption and investment. Historically, the gold standard struggled to achieve a dynamic balance between economic growth and money supply, which directly propelled the rise of the credit-based fiat currency system. After the dollar decoupled from gold in 1971 (the “Nixon Shock”), central banks stimulated the economy by adjusting interest rates and money issuance, which indeed played a positive role in the early stages.
However, the drawbacks of the fiat system are now fully exposed. As of March 2026, the U.S. national debt has exceeded 39 trillion dollars, with interest payments rising rapidly. If tax revenue fails to cover the interest, the dollar system will face severe risks. This is also one of the important backgrounds for the Trump administration’s active push for interest rate cuts after taking office.
II. Common Limitations and Complementarity of Bitcoin and Gold
Both Bitcoin and gold possess fixed (or slowly growing) supply characteristics and can serve as tools for measuring economic growth. However, neither is suitable alone as a perfect measure for global GDP. If Bitcoin is to fully carry the measurement needs of global trade and GDP, its price would theoretically need to rise to an extremely high level (for example, exceeding ten million dollars per coin), which also forms an important narrative foundation for Bitcoin’s long-term appreciation.
Compared with gold, Bitcoin’s advantages are significant: it requires no off-chain credit and can achieve public verification of total supply and authenticity through the blockchain public ledger; its portability, divisibility, and cross-border transfer efficiency far surpass gold. However, Bitcoin exhibits high short-term volatility and currently resembles “digital gold” more than a mature medium of exchange. Gold’s shortcomings stem from the inconveniences of its physical properties: verification of total supply relies on off-chain credit, authenticity identification costs are high, and storage and transportation pose security and efficiency issues. Overall, Bitcoin is more suitable than gold as a potential measure for global GDP.
III. Issuing Dollars Backed by Bitcoin Collateral: A Feasible Transitional Path (Bitcoin Dollar Standard)
A pragmatic reform approach is to issue dollars with Bitcoin as collateral assets, achieving parallelism between credit money and asset money. This path offers strong operability.
The on-chain migration of the dollar has become a trend, and the rise of stablecoins has actually strengthened the global hegemony of the dollar. If the United States establishes Bitcoin as a strategic reserve asset and the Federal Reserve issues corresponding dollars based on market dynamics (increasing issuance when Bitcoin’s price rises), it can gradually reduce the credit component in dollar issuance. When the credit portion approaches zero, a natural transition to the Bitcoin standard will occur.
From the perspective of actual GDP scale and global trade volume, maintaining a Bitcoin reserve ratio of 30%–50% of Bitcoin’s total supply in Bitcoin-backed dollar issuance is appropriate. This can provide sufficient liquidity while introducing hard asset discipline.
Specific policy recommendations: The United States may consider selling part of its gold reserves (the book value of gold on the Federal Reserve’s balance sheet has long been undervalued) to acquire Bitcoin for backing dollar issuance. This move incurs no additional interest burden. As Bitcoin’s price rises, the appreciation portion can be used to gradually repay U.S. debt. This idea echoes current discussions on the “gold-Bitcoin conversion” scheme.
The “covert contest” between gold and Bitcoin has quietly unfolded among global central banks. One side uses gold as collateral to issue national currencies, while the other explores the Bitcoin path. As state power institutions, central banks find it difficult to easily relinquish monetary issuance rights, but the relative independence of the U.S. Federal Reserve grants it a unique advantage. In 2025, the Trump administration signed an executive order to establish the Strategic Bitcoin Reserve, primarily utilizing Bitcoin assets seized by the government. This signals that the United States may take the lead in realizing a dual-track system of credit money and asset money and build the relevant framework during its term.
IV. Ultimate Goal: Decentralized Measure and Bitcoin Standard
The Bitcoin Dollar Standard is not the ultimate goal; it serves more as a bridge from fiat to a sound monetary system. Bitcoin’s core vision is to create an alternative independent of sovereign fiat currencies, countering central bank over-issuance and inflation through a fixed cap of 21 million coins. In contrast, stablecoins (especially dollar stablecoins) are essentially “on-chain dollars.” While they facilitate transactions on the blockchain, they extend the influence of traditional fiat currencies and stand in contradiction with Bitcoin’s decentralized spirit.
As pointed out in relevant discussions on the X platform (for example, articles by @zhuweisha2), we need a truly decentralized value measure. The DW20 proposed by the author (a decentralized standard currency design based on community autonomy and combined with Bitcoin collateral mechanisms) serves precisely this goal, aiming to overcome the defects of credit currencies such as the dollar and realize the ideal form of the Bitcoin standard. More related discussions can be referenced on the Chainless website (chainless.hk).
V. Vision for a Future Global Bubble-Free Financial System
The ideal financial system should possess the following core characteristics:
- No Central Bank Monopoly: Eliminating the root cause of bubbles.
- Necessary Bailouts: Still achievable through market-oriented or community mechanisms.
- Automatic Stabilization Mechanisms: Financial markets closely correspond to the real economy, expanding only with productivity development, significantly reducing bubbles.
- Efficiency Improvement: Reducing regulatory costs, achieving disintermediation of financial needs; supporting coexistence of anonymity and real-name systems, enhancing openness, fairness, and justice, and reducing corruption and fraud.
- Technical Architecture: A single-layer cross-chain system that requires only settlement and no traditional clearing.
- Governance Model: Legal and financial systems based on community autonomy.
This vision emphasizes starting from “hard money” anchoring and gradually moving toward a decentralized, transparent, and efficient global financial order. Bitcoin, as a scarce digital asset, will play a key role in it.
VI. Summary and Practical Considerations
Returning to a pure gold standard faces problems of insufficient off-chain credit and inadequate transparency; directly achieving a Bitcoin standard faces challenges such as high adoption thresholds and high volatility. The Bitcoin Dollar Standard (or asset-backed dollar dual-track system) as a transitional scheme is more practically feasible, especially against the backdrop of the United States already launching the Strategic Bitcoin Reserve. This path can balance stability and innovation while paving the way for the eventual realization of a decentralized measure.
Any monetary system reform must be advanced cautiously to avoid turbulence during the transition period. The ultimate direction depends on market forces and policy games among countries, rather than a single design. Readers are welcome to further discuss in combination with the latest data and DW20-related discussions. The process of researching decentralized standard currencies like DW20 is long-term. In comparison with Bitcoin—from the theoretical discussion period (beginning with David Chaum in 1980, to Nick Szabo’s Bit Gold ending in 2005), to Satoshi Nakamoto realizing Bitcoin in 2009—the entire evolution has spanned decades. DW20’s theory stands on the shoulders of giants and saves time; the key lies in whether the adoption scenarios succeed.
