Should gold only be coin?

In a previous article we argued that data and messaging have always been part of money. But suppose you disagree. Suppose you draw a hard line: some uses of Bitcoin are monetary, and some are not.

Even then, does it follow that non-monetary uses should be forbidden?

Gold has never been just coin

For most of human history, gold and silver constituted money. The United States Constitution itself, in Article I Section 8, grants Congress the power "to coin Money, regulate the Value thereof," and Section 10 prohibits states from making "any Thing but gold and silver Coin a Tender in Payment of Debts." Gold was money, by law.

Yet people have always used gold for things other than money. A man gives his wife a golden wedding ring — not as currency, but as a demonstration of value and commitment. The wealthy decorated their homes with gold. Kings wore it on their heads. Temples were adorned with it. Dentists filled teeth with it. Engineers put it in circuit boards. In every case, gold was being used for something other than its monetary function, and in every case that non-monetary use was seen as legitimate — even admirable.

There has never been a movement in the history of money that demanded: "You must not give a golden wedding ring to your wife, because we need that gold in circulation as coin." The idea is absurd.

And it would have been counterproductive. Gold's non-monetary uses did not weaken its monetary function — they strengthened it. The diversity of demand for gold — monetary, decorative, industrial — is precisely what underpins its price stability and its credibility as a store of value. A wedding ring is not a drain on the money supply. It is a demonstration that the money supply is backed by something people actually want.

A gold that could only be coin would be a poorer money.

Block space is the new gold

Block space is Bitcoin's scarce raw material. Like gold, it must be mined. Like gold, anyone can acquire it by paying the market price. Like gold, its scarcity is what gives it value.

And like gold, people want it for different reasons.

One user wants to send a payment. Another wants to anchor a PGP key into an irreversible ledger — so that it is always independently verifiable, without relying on any key server or certificate authority. A third wants to timestamp a document. A fourth wants to mint an NFT.

BIP-110 treats the payment as legitimate and the rest as spam. But why? All four consume scarce block space. All four must satisfy Bitcoin's consensus rules. All four compete for inclusion through the fee market. The resources they consume can be measured objectively: weight, bandwidth, validation work, UTXO impact, and storage.

What cannot be measured objectively is whether one user's purpose is more worthy than another's.

One could just as easily argue the reverse: the coffee buyer can use Lightning or Ark without burdening the main chain, while the PGP key may have no equivalent off-chain anchor offering the same security guarantees. Which use is "more monetary"? The question has no objective answer.

Bitcoin can measure the cost of a transaction. It cannot measure its worth. Scarcity justifies pricing. It does not justify judging purpose.

Diverse demand is a feature

This is not merely an abstract principle. It has concrete economic consequences.

When block space has only one permitted use — payments — then demand for block space depends entirely on payment volume. When payment volume drops, fees drop, and miner revenue drops. The security budget shrinks.

When block space serves multiple uses — payments, timestamping, identity anchoring, asset issuance — demand becomes more resilient. Different use cases have different demand cycles. A decline in payment volume can be offset by rising demand for notarisation or asset settlement. The fee market deepens and stabilises.

This is exactly what happened with gold. Industrial demand for gold does not compete with monetary demand — it complements it. The jeweller and the central bank both want gold, and their combined demand makes gold a better store of value than either alone could sustain.

BIP-110 would artificially narrow the demand for block space to a single use case, weakening the very fee market that secures the network in the long run.

The arms race

Even on its own terms, BIP-110 faces a practical problem. Restricting particular methods of embedding data does not eliminate the ability to embed data. It changes how data must be encoded and what it costs.

Alternative embedding techniques already exist. The Ordinals project itself has a pull request ready to merge that routes around the proposed restrictions. Every restriction creates an incentive for a workaround. Every workaround creates pressure for another restriction. Over time, the protocol accumulates increasingly specific rules attempting to distinguish acceptable from unacceptable uses — a growing body of case law in a system that was designed to operate without judges.

The underlying problem remains: Bitcoin can identify what a transaction does technically, but it cannot reliably determine why the user created it.

Price the resource, not the purpose

No one banned the golden wedding ring. No one demanded that jewellers justify their consumption of monetary metal. The market handled it: gold was scarce, gold had a price, and anyone who wanted gold for any reason paid that price.

Bitcoin already has this mechanism. The fee market prices block space according to demand. A user who wants to anchor a document pays the same rate per virtual byte as a user who wants to send a payment. If demand rises, prices rise, and marginal uses are priced out — not by a committee's judgement of their worth, but by the collective willingness of all users to pay.

The costs that concern node operators — bandwidth, storage, validation time — are real and measurable. They deserve engineering solutions: better pruning, more efficient encoding, smarter relay policies.

Those are measurable problems. Those are engineering problems. And they deserve engineering answers — not a decree that gold must only be coin.