Money Becomes Code

Halloween in the crisis

On 31 October 2008, while central banks and governments were still trying to understand how deep the wound opened by the failure of Lehman Brothers really was, a short message appeared on a mailing list frequented by cryptographers, signed with a name no one knew: Satoshi Nakamoto. The message did not sound like a political manifesto, did not promise the end of banks, did not announce a social revolution. It presented, with almost engineer-like concision, a document titled Bitcoin: A Peer-to-Peer Electronic Cash System: a proposal for creating electronic cash that could be transferred directly from one person to another, without passing through a trusted financial institution [Nakamoto 2008] .

The timing was too striking not to become part of the legend. At the very moment when the traditional financial system was showing the world its fragility, someone was proposing a form of digital money built to reduce dependence on banks, clearing houses, credit-card companies and central intermediaries. In the previous chapter we saw how the crisis of 2008 had been, in substance, a crisis of trust: banks no longer trusted one another, interbank credit seized up, states had to intervene to prevent the entire network from collapsing. Nakamoto’s document arrived in the middle of that rupture. It did not explain it in economic terms, did not comment on it as a political essay would; but it grasped its most sensitive point: what happens when trust must pass through institutions that can fail, lie, be rescued, be captured by power?

And yet it would be misleading to present Bitcoin as a bolt from the blue of the crisis. Its real novelty can be understood only if it is placed inside a much longer history: the history of the progressive detachment of money from matter. At the beginning of the book we met clay tablets that recorded debts in barley and silver; then coined metals, convertible paper, banknotes no longer convertible, bank deposits, accounting transfers, credit created by banks and guaranteed in the last instance by the state. At every passage, money became less a thing and more a relation, less an object and more a record, less metal and more promise. Bitcoin did not inaugurate immaterial money: when it was born, modern money was already, in very large part, an electronic inscription in the balance sheets of banks. It inaugurated, or at least made visible, another possibility: that this inscription could be maintained not by a central institution, but by a shared protocol.

There was also a more specific prehistory inside cryptography. In the 1980s David Chaum had shown how blind signatures and cryptographic protocols could make privacy-preserving electronic cash thinkable [Chaum 1983] . In the 1990s and early 2000s, the cypherpunk milieu experimented with ideas of digital money, pseudonymity and computational cost: Hashcash used proof of work to make the abuse of network resources costly [Back 2002] , while b-money imagined a community of digital pseudonyms able to keep accounts and enforce contracts without an external authority [Dai 1998] . Bitcoin did not simply copy these attempts, but recombined them into a working system: digital signatures, public ledger, proof of work, incentives and programmed scarcity.

The decisive word, therefore, is not only digital. Credit cards were digital, bank transfers were digital, financial markets were digital, the reserves of banks at central banks were already numbers in computer systems. The decisive word is without a centre. For centuries monetary trust had needed a recognisable guarantor: the temple that recorded the debt, the king who stamped the coin, the bank that promised payment, the state that declared legal tender, the central bank that defended the stability of the system. Nakamoto proposed replacing that guarantor with a procedure: a set of public rules through which many participants, who did not need to know or trust one another, could agree on who owned what.

In this sense the chapter that opens here tells the last relocation of the bearer of trust. Trust, which had migrated from metal to sovereign, from sovereign to bank, from bank to state and central bank, is now pushed into code. It does not disappear. No money lives without trust, not even money that claims to do without it. What changes is the place where trust is deposited: no longer the vault, no longer a bank’s balance sheet, no longer only the signature of the state, but a public register, replicated and verified by a network. The fact that this shift was greeted by some as liberation and by others as illusion already says how deep the stakes are. As always in the history of money, this is not merely a payment technique. It is a matter of deciding who can say what is worth something, who can record a transfer, who can cancel it, who can create more, who can be believed.

Money was already a record

To understand what really changed with Bitcoin, we must first free ourselves from a misunderstanding: the idea that before cryptocurrencies money was still mainly a physical thing. It was so in our everyday experience, when we paid with banknotes and coins; it was so in the imagination, where money continues to have the colour of gold, the rustle of paper, the weight of metal. But in the deep structure of modern economies money had long been a network of records. A bank deposit is not a pile of banknotes kept in a safe with the depositor’s name on it. It is a liability of the bank toward the customer: a promise recorded in a balance sheet. When we pay by bank transfer, we do not hand over an object; we ask two accounting systems to modify their respective registers. When we use a card, we do not transfer money at the exact moment of the gesture; we activate a chain of authorisations, clearings and settlements that, in the end, updates balances.

This truth is not new. The history of money has from the beginning been a history of records: tablets, accounts, receipts, bills of exchange, banknotes, deposits, securities, reserves. Glyn Davies, in telling the long story of money, insists precisely on this point: monetary forms change because the institutions and techniques with which a society records, transfers and guarantees obligations change [Davies 2002]. In the Middle Ages, a bill of exchange made it possible to move value without moving metal; in the Renaissance, a banking network made trust transferable through branches and correspondence; in the twentieth century, the payments system increasingly turned money into a flow of messages between banks. Digitalisation merely accelerated an ancient process: reducing money to credible information.

Payment cards were one of the visible thresholds of this passage. The gesture was simple: present a card, sign, then enter a code, then bring a device close to a terminal. But behind that gesture moved a complex architecture of issuers, merchants, networks, banks, clearing rules, commissions, guarantees against fraud. The customer saw a payment; the system saw an authorised message. The same was true, on a larger scale, in interbank systems and financial markets, where enormous sums moved not by physically crossing space, but by changing position inside electronic registers. Money was already code, in the most banal and most important sense: instructions, databases, procedures, identities, authorisations.

But that code belonged to someone. Every register had a custodian. Every transfer presupposed an authority capable of saying whether the balance was sufficient, whether the identity was valid, whether the operation was legitimate, whether a payment could be blocked, reversed, corrected. Electronics had made money faster, but it had not made it less institutional. On the contrary: the more money became immaterial, the more it depended on institutions able to certify information. A gold coin could circulate even when the minter was far away, because its matter preserved at least part of the promise; an electronic balance, by contrast, exists only inside a register maintained by someone. If that someone disappears, if the register is not accessible, if the authority that manages it is not recognised, the balance loses substance.

This dependence was not necessarily a defect. Central institutions served precisely to make monetary information reliable. A bank prevented the same balance from being spent twice; a card network protected the seller from fraud and the buyer from certain abuses; a central bank provided the ultimate anchor of the payments system; the state gave money its fiscal and legal status. Monetary modernity did not eliminate trust: it concentrated it in specialised nodes. Bank electronic money was efficient because someone kept the ledger and everyone accepted, or was compelled to accept, that this ledger was authoritative.

Here the essential difference appears. Before Bitcoin, the dominant digital money was book-entry money kept by intermediaries. After Bitcoin, it became thinkable that digital money could have a register that did not belong to a single custodian. The question was no longer only how to move monetary information at the speed of light, but how to make that information credible without a centre. It is a question that, in another form, runs through the whole book. The king’s seal solved the problem of the weight and fineness of metal; the bank solved the problem of custody and transfer; the central bank solved the problem of systemic panics; the cryptographic protocol claimed to solve the problem of trust among digital strangers.

The word “claimed” matters. Not because the claim was false from the outset, but because no monetary innovation ever realises in pure form what it promises. Coinage did not eliminate debasement; banking did not eliminate runs; the gold standard did not eliminate politics; fiat money did not eliminate the need for credibility. In the same way, the decentralised register did not eliminate every form of trust. It transformed it. To understand how, we must enter the technical problem only as far as necessary, without turning the chapter into a manual of computer science.

The double-spending problem

Physical cash has an apparently banal property: if I hand a banknote to someone, I cannot hand the same banknote to someone else. The object changes hands, and precisely because it is an object it cannot be simultaneously in two pockets. Digital money, however, is born as information; and information, by its nature, can be copied. A file can be duplicated indefinitely. A message can be sent to several recipients. If electronic money were simply a file, its possessor could try to spend it more than once. This is the problem of double spending: how can the same digital coin be prevented from being spent twice?

The traditional solution is simple in principle: entrust the register to a central authority. A bank, a payment network or a clearing house maintains the ledger of balances; when a payment order arrives, it checks that the balance exists, updates the register and makes it impossible to spend the same unit again. The problem of double spending is thus solved by trust in a third party. If that third party is honest, efficient, solvent and recognised, the system works. But precisely this dependence on the third party was what Nakamoto wanted to avoid. The implicit subtitle of the white paper could be read as follows: how can the effects of a reliable ledger be obtained without handing it to a custodian?

The answer was a public, shared register that is hard to rewrite. Instead of having a bank preserve the single authoritative copy of the ledger, many participants in the network preserve copies of the register and follow common rules for adding new operations to it. Each group of operations is gathered into a block; the blocks are linked into a sequence; changing the past would require redoing the work that made that sequence valid and overtaking the work of the honest network. The technical detail is complex, and there is no need here to follow it into its algorithms. What matters historically is the idea: using cryptography, computation and economic incentives to make a network of strangers converge on a shared version of the history of payments [Nakamoto 2008] .

The distributed ledger is therefore a new form of institution. It is not a bank, not a state, not a temple, not a mint; but it performs an institutional function, because it establishes which history is to be considered valid. To say that Bitcoin eliminates trust is therefore a simplification. It eliminates, or seeks to reduce, trust in a central intermediary; it does not eliminate trust in the validity of the rules, in the correctness of the software, in the persistence of the network, in the economic rationality of the participants, in the energy that powers the system, in the community that decides which changes to accept. Even code, to be money, must be believed.

The most famous mechanism of this architecture is proof of work. In narrative terms, proof of work replaces the sovereign’s seal with proof of cost. The king stamped his authority on metal; the network accepts a block because it incorporates verifiable computational work. The metallic coin said: this quantity of metal has received a recognised mark. The block says: this sequence of transactions has passed a test that the network recognises. In both cases, a sign turns matter or information into something that can circulate. The difference is that, in the first case, the sign refers to political power; in the second, to a public and replicable procedure.

This analogy must not be pushed too far. Coined money was part of a legal and fiscal order; Bitcoin was born as a voluntary system, without obligation of acceptance and without a sovereign behind it. The central bank can create liquidity in a crisis; Bitcoin follows a predetermined issuance rule, precisely in order to remove money creation from human discretion. Paper money can be declared legal tender; a cryptocurrency lives as long as someone is willing to accept it, hold it, exchange it, price it. What these worlds have in common is not their form, but their function: all seek to produce trust at a distance among people who do not know one another.

The innovation, then, lies in a radical question: can a procedure replace an institution as the source of monetary credibility? Bitcoin’s supporters answered yes, and saw in the protocol a monetary constitution more reliable than states, because it could not be modified at will by governments and central banks. Critics replied that a currency is not merely a technically coherent register: it is a social, legal, fiscal and political institution, embedded in relations of production, taxation, debt and power. Between these two positions opens the historical field we must tell. Bitcoin was not only a computer-science invention; it was a social experiment on the possibility of moving trust from the promise of an authority to the consistency of a protocol.

A currency in search of a public

In the early years, Bitcoin was above all a curiosity for small communities: programmers, cryptographers, libertarians, experimenters, people attracted by the idea that privacy and individual sovereignty could be defended with mathematical tools. It was not yet the mass phenomenon it would later become. It was a laboratory. Those who used it had to accept technical difficulties, legal uncertainties, custody risks, extreme volatility, absence of protections. But precisely this marginality gave it narrative force: it seemed to be money born outside institutions, living proof that a group of strangers could create and circulate value without asking permission.

Every currency, however, needs a public. It is not enough for a register to be coherent; someone must attribute value to its units, someone must be willing to exchange them for goods, services or other currencies, there must be places to buy and sell them, words to describe them, myths to make them desirable. The history of Bitcoin after the first experiments is also the history of the construction of this public: forums, private exchanges, early platforms, custody businesses, developers, miners, investors, journalists, detractors. The technical network became a social fact. And like every monetary social fact, it began to produce its own institutions, even when it presented itself as an alternative to institutions.

Here emerges one of the most interesting paradoxes of decentralised money. To possess and transfer Bitcoin without intermediaries, users should directly hold their own keys, understand at least the fundamental risks, and assume full responsibility for access to their funds. Most people, however, do not want to live like that, or cannot. Around the protocol, therefore, intermediaries emerged: exchanges, custodial wallets, payment services, custody companies, funds, platforms. The system born to reduce dependence on intermediaries generated new intermediaries. Some failed, others were hacked, others became powerful. The decentralisation of the register did not prevent the centralisation of many gateways. Here too the history of money repeats itself: a technology can change the place of trust, but human beings still seek institutions that make that trust manageable.

Bitcoin’s public narrative changed several times. At first it was presented mainly as electronic cash: a direct means of payment, resistant to censorship, suited to transferring value without banks. Then, as its price became unstable and its programmed scarcity became central to the story, the metaphor of digital gold emerged. The idea was powerful: like gold, Bitcoin would be scarce; unlike gold, it would be transferable across the Internet; unlike fiat currencies, it would not be created at the discretion of the authorities. For those who distrusted central banks after the great monetary expansion that followed 2008, this narrative had an almost moral force. Bitcoin appeared as discipline incorporated in code, a money that no government could debase by political decision.

But the metaphor of digital gold also carried deep ambiguities. Gold, historically, has been at once commodity, reserve, ornament, monetary standard, symbol of power. Bitcoin had no comparable non-monetary uses, no millennial history of acceptance, no incorporation into state fiscal systems. Its scarcity was real in the protocol, but the value of scarcity always depends on demand: scarce does not automatically mean precious. Moreover, a money that fluctuates violently against goods and wages struggles to function as an everyday unit of account. Many have been able to buy it as an asset; few have truly been able to think the prices of life in Bitcoin. Thus the aspiration to be electronic cash intertwined with the more dominant function of speculative object and risky reserve. This is not an accidental contradiction: it is the sign of a money that has not yet decided, or cannot decide by itself, which monetary function should prevail.

The speculative bubbles that accompanied its spread inserted it, in turn, into the long history told in the previous chapters. Every new financial technology carries with it a promise of the future; every promise of the future can attract capital, enthusiasm, imitations, frauds, panics. Tulip mania, John Law, the South Sea Bubble, railways, dot-coms, housing credit: very different episodes, but united by finance’s capacity to capitalise narratives. The crypto world too generated manias, crashes, sudden enrichments, sudden ruins, serious projects and empty projects, genuine innovations and banal frauds dressed as the future. Here it is necessary to keep the right tone: to dismiss everything as mania would be historically lazy; to mistake every mania for proof of revolution would be just as naive. Speculation does not prove that a technology is useless, but it reveals how fragile the boundary is between innovation and the desire to get rich.

Niall Ferguson has told financial history as a sequence of inventions that enlarge human possibilities while also producing new fragilities [Ferguson 2008]. Bitcoin belongs to this ambiguous family. On the one hand it shows that a scarce digital good without a central issuer can be created, and this is a significant historical novelty. On the other hand it does not abolish the classic problems of money: stability of value, widespread acceptance, protection of users, relation with law, concentration of power, illicit use, informational inequalities. Code solves some problems and moves others. Trust in the protocol does not cancel trust in developers, operators, markets, infrastructures, laws that decide how to treat fiscally and legally what the protocol records.

For this reason Bitcoin should be read as a historical event before it is read as a definitive answer. It forced economists, jurists, central bankers and citizens to distinguish things that were often confused: digital money and bank money, state money and private money, technical scarcity and social value, register and institution, payment and speculation. It brought back to the centre a question that seemed confined to textbooks: why does something count as money? Because it is useful? Because it is scarce? Because the state accepts it in payment of taxes? Because a community recognises it? Because a liquid market prices it every second? Cryptocurrencies have not closed this question. They have reopened it with a force that ordinary money, precisely because it was ordinary, no longer produced.

The state rewrites cash

If Bitcoin was born as an attempt to produce monetary trust outside institutions, the response of states and central banks showed that institutions had no intention of leaving history. For some years, many observers dismissed cryptocurrencies as marginal curiosities or as vehicles of speculation. Then it became clear that the point was not only Bitcoin. The broader problem was that payments were becoming digital, physical cash was losing ground in many economies, large private platforms could aspire to create their own monetary circuits, private tokens anchored to public currencies could circulate globally, and monetary sovereignty no longer depended only on the printing of banknotes but also on the architecture of payments.

In this context the great interest in CBDC arose. The idea, in its most general form, is simple: if the public uses ever less cash and ever more digital payments, the central bank could offer a digital form of its own money, just as today it offers physical banknotes. A CBDC is not a cryptocurrency in the sense of Bitcoin, because it is not born to do without central authority; on the contrary, it is the money of central authority in digital form. Nor is it an ordinary bank deposit, because the deposit is a liability of the commercial bank toward the customer, while a CBDC would be, in principle, a direct liability of the central bank. The distinction seems subtle, but it is crucial: it concerns who guarantees the balance and what place that balance occupies in the hierarchy of money [BIS 2021] .

Central banks look at CBDCs for different reasons. One is the continuity of public money. If cash declines and all everyday payments pass through banks, cards and private platforms, the ordinary citizen risks almost never using central bank money, but only private promises denominated in public money. A retail CBDC, available to the public, could maintain direct access to public money even in the digital age. Another reason is competition in payments: a public infrastructure could reduce dependence on a few large private operators and foster innovation. A third is sovereignty: in a world in which global platforms and private digital currencies can cross borders with ease, states fear losing control over the unit of account, the transmission of monetary policy, and the capacity to apply anti-money-laundering and fiscal rules. A fourth is the efficiency of cross-border payments, still often slow and costly compared with the speed promised by the digital [BIS 2021] .

In the mid-2020s, surveys by the Bank for International Settlements indicate that the great majority of central banks are exploring at least one form of CBDC, with development more advanced on the wholesale side than in direct use by the public [Illes et al. 2025] . The Eurosystem has moved forward with the digital euro project as a possible complement to cash, moving in October 2025 to a new phase focused on technical readiness, while the United States Federal Reserve has maintained a more cautious stance, stating that it has not taken a decision on issuing a digital dollar [ECB 2025] [Federal Reserve 2026] . These examples are enough to show the historical point: states do not respond to digital money by withdrawing, but by seeking to incorporate it into their own architectures.

A CBDC, however, is not a neutral solution. It carries deep dilemmas, and precisely for this reason the debate is heated. The first concerns privacy. Physical cash allows anonymous or nearly anonymous transactions in small everyday exchange; a digital central bank currency could, if badly designed or used by an authoritarian power, make every payment traceable. Supporters reply that degrees of confidentiality, limits, intermediate architectures and legal protections can be built; critics fear that the programmability of money will become the programmability of behaviour. Here the problem is not only technical. It is constitutional: what space of legitimate opacity should remain to the citizen in a digital society?

The second dilemma concerns commercial banks. If citizens could hold large quantities of central bank money directly in digital form, why leave deposits with private banks, which always carry some risk? In normal times the problem can be managed with limits, differentiated remuneration and intermediate models. In times of panic, however, the possibility of rapidly moving bank deposits into safe digital central bank money could accelerate a bank run. A CBDC designed to make the payments system safer could, under certain conditions, destabilise the banking system. It is the recurring paradox of monetary innovations: what reduces one risk can create another.

The third dilemma concerns programmability. Public digital money could make certain payments more efficient, automate transfers, reduce fraud, simplify public disbursements. But whenever money becomes programmable, a political question arises: programmable by whom, for what purposes, with what limits? Money has always been governed by rules; what changes is the precision with which those rules can be incorporated into the infrastructure of payment itself. One thing is a rule that forbids an illicit use and is applied after the fact; another is a system that technically prevents certain transfers before they occur. Between efficiency and control runs a thin line, and the future of digital money will be decided largely on that line.

The comparison with Bitcoin, at this point, becomes illuminating. Bitcoin pushes trust toward the protocol and distrusts authority; the CBDC pushes code into authority and seeks to make it compatible with the digital age. Bitcoin is born from a culture of programmed scarcity; the CBDC is born from a culture of monetary stability and public sovereignty. Bitcoin has no lender of last resort; a CBDC would be an extension of the central bank’s balance sheet. Bitcoin promises resistance to censorship; the CBDC promises safety, efficiency and inclusion, but must prove that it will not become an instrument of surveillance. They are opposite answers to the same transformation: money can no longer avoid code. The question is who will write that code and to what idea of trust it will obey.

The question returns

At the end of this path, the question of the first chapter returns in a more radical form: what is money? If we look at Bitcoin, we can answer that money is a credible register of scarcity and transfers. If we look at CBDCs, we can answer that money is a liability of the monetary authority, made accessible in a new technical form. If we look at bank deposits, we can answer that money is spendable credit. If we look at gold, we can answer that it is a commodity socially selected as a reserve. If we look at taxes, we can answer that it is what the state accepts and imposes as unit of account. Each of these answers captures part of the phenomenon, and none is enough by itself.

Bitcoin had the historical merit of showing that digital scarcity is possible. Before it, the digital world seemed the realm of infinite copy; after it, it became thinkable to create digital objects that are non-duplicable in the economic sense of the term, because the network recognises a single valid history of transfers. This is no small invention. In terms of the long history of finance, it is a new technology of time and trust: a way of promising today that a certain rule of issuance and transfer will be respected tomorrow, without depending on the discretion of a central authority. William Goetzmann has described finance as a technology for moving value through time [Goetzmann 2016]. The decentralised monetary protocol can be read as an extreme attempt to automate that temporal promise: do not trust the future ruler, trust the rule that everyone can verify today.

But money is not only scarcity. It must measure, transfer, preserve, settle, be recognised. It must enter contracts, wages, taxes, balance sheets, the mental prices of people. It must withstand crises, errors, frauds, wars, successions, technological changes, political conflicts. Algorithms are powerful at fixing rules, but money also depends on exceptions: rescues, restructurings, legal disputes, failures, inheritances, thefts, coercion, forgiveness. A perfectly rigid currency may appear just to those who fear arbitrariness, but it may appear cruel or inadequate to those who consider a capacity for collective response necessary. Here there is no simple solution. It is the old controversy between rule and discretion, between gold and fiat, between discipline and politics, translated into the language of code.

In the same way, a CBDC is not automatically progress because it is digital. It can make payments more efficient and keep public money alive; it can also concentrate data and power. It can foster financial inclusion; it can exclude those who do not have access to the necessary tools. It can reduce costs; it can create new systemic risks. It can be designed in a privacy-respecting way; it can become an infrastructure of control. As always, monetary technology does not decide its own social form. Coinage served both commerce and imperial propaganda; banking financed both enterprise and war; paper money allowed both economic expansion and bubbles; digital money may serve freedom or surveillance, openness or concentration, pluralism or monopoly. It will depend on institutions, laws, conflicts, design choices.

The most important point is perhaps this: code does not eliminate the politics of money, it makes it less visible. When a monetary rule is incorporated into a protocol, it can appear natural, technical, inevitable. But someone chose that rule, someone defends it, someone benefits from it, someone pays its cost. Programmed scarcity favours certain holders and penalises certain forms of flexibility; traceability favours certain needs for control and sacrifices certain liberties; irreversibility protects against censorship but makes errors dramatic; the possibility of intervention corrects abuses but opens the door to arbitrariness. Every monetary architecture is an economic constitution, even when it presents itself as software.

And yet the change should not be underestimated. For the first time in history, millions of people have been able to observe a currency being born not from a mint, not from a decree, not from a bank, but from a technical document, free software, a voluntary network and a shared story. Whether this money will or will not become universal everyday money is an open question; that it has already changed the way we think about money is a fact. It has forced central banks to ask themselves about digital cash, governments to define new legal boundaries, economists to return to elementary questions, citizens to discover that ordinary money is less simple than it seemed.

From the barley grain recorded in Mesopotamian temples to the protocol published on a cryptography mailing list, the trajectory is less strange than it seems. In both cases, a community needs to know who owes what to whom, and needs that knowledge to be credible enough to sustain exchange among strangers. The clay tablet, the coin, the banknote, the bank deposit, the central-bank reserve, the blockchain are different answers to the same problem: making an obligation visible, transferable and credible. Money becomes code not because it ceases to be social, but because society increasingly entrusts code with the recording of its promises.

The next chapter will have to look beyond Bitcoin and beyond the first CBDCs, toward the broader future of money: instant payments, private platforms, global debt, programmable money, the decline of cash, new forms of sovereignty and new forms of dependence. But the underlying question will not change. Who guarantees the promise? In the past the answer was the temple, the king, the bank, the state, the central bank. In the present someone answers: the protocol. Someone else answers: the state in digital form. Perhaps the future will not choose a single answer, but will make several forms of trust coexist in competition and tension. In any case, the history of money is not the history of a substance changing medium; it is the history of the ways in which human beings make the invisible credible. Today one of those ways is code.