ARTICLE 08 OF 09
Redeemability
“Claims to a definite amount of money, redeemable against a debtor beyond the slightest doubt, can render all the services money renders.”
Under the gold standard a $20 banknote was redeemable into a one-ounce $20 coin of fine gold. In the same way, e‑cash tokens (bitcoin credit) redeem 1:1 into outright bitcoin at the maturity of the underlying minted e‑bill. See the FAQ →
Honesty
Redeemability is what keeps issuers honest, and therefore what keeps a monetary system stable. Knowing that credit can be redeemed for bitcoin removes the trust requirement: it is an infallible test of any issuer’s soundness, and it exposes any creation of excessive credit money.
Non-inflationary
Redeemability is a natural check on inflation, because it limits the total bitcoin credit money supply to the real value present in the economy’s production and supply chains: real goods and services already produced but not yet paid for.
Nation state power
Redeemability can discipline the insatiable appetite of governments and central banks for excessive credit money creation: any attempt to debase would trigger an outflow, as holders run to exchange their tokens for bitcoin. That power is bounded, though: governments can suspend or abolish redemption obligations by changing the law.
International trade
Bitcoin-redeemable credit money is an ideal medium of exchange for international trade because it makes settlement uncensorable and final. Overreaching nations can no longer weaponise their money to impose their political will on other sovereign nations, at the expense of their people and businesses.