A century ago, Henry Ford imagined an “energy currency”

In the New York Tribune newspaper dated December 4, 1921, an article announced the intention of Henry Ford, the founder of the Ford Motor Company, to replace gold with an energy currency, which he believed would be able to "break the hold of the banking elites on the world's wealth and put an end to wars."

To achieve this, Henry Ford had imagined building "the largest power plant in the world" and creating a new monetary system based on "units of energy". The industrialist then proposed creating an energy exchange system that would establish the currency's rating according to the quantity of energy used.

ford bitcoin — Front page of the New York Tribune, December 4, 1921. Source: Library of Congress

You should know that Henry Ford never realized this idea. However, this revolutionary idea at the time does not seem to have completely disappeared. Indeed, for many bitcoiners, this energy currency is very close to Bitcoin.

Proof of work, energy consumption and Bitcoin

Bitcoin runs on a consensus protocol called Proof of Work that helps validate and secure transactions on their network. In this type of network, miners must solve a complex mathematical problem to create a new block of transactions. To solve these complex problems, miners use massive amounts of computing power that runs on specially designed computers like ASICs. The competition to solve the problem incentivizes miners to increase their computing power, which results in significant energy consumption.

So, basically, bitcoin can be measured and determined in terms of energy power. When Bitcoin was launched in 2009, it did not have a set value. The first time bitcoin received a dollar quote was on the site New Liberty Standard which estimated the price of bitcoin based on the cost of electricity.

new liberty standard bitcoin — In 2009, 1578 bitcoins were worth a single dollar. Source New Liberty Standard

"It is simply a matter of thinking and calculating in terms different from those imposed on us by the international banking group to which we are so accustomed that we believe there is no other desirable standard."
Henry Ford, 1921

An idea that continues its story

His idea is certainly interesting, especially when you know about Bitcoin, but let's remember that there are differences between Ford's "energy currency" and Bitcoin. The first and biggest difference is the limited supply of Bitcoin, which is opposed to the unlimited supply of Ford's energy currency.

However, remember that Henry Ford proposed this idea in a context where the system was based on convertibility between gold and the dollar, before its abolition by Nixon in 1971. For Ford, the accumulation of wealth enabled by gold was primarily used to finance wars by banking elites. He wrote: "The essential evil of gold in its relation to war is the fact that it can be controlled. Break the control and you stop the war." He thus believed that this new system of an energy currency would prevent the financing of wars.

What is all the more interesting – a century later – is that many bitcoin enthusiasts think that precisely Bitcoin, due to its characteristic deflationary peut prevent wars.

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