Radical System Change: Bitcoin & Degrowth — Issue #4

Jyn Urso
4 min readMay 25, 2022

This issue’s topic: The price of money is interest and so what?

Bitcoin and degrowth aim for the same goals. Localism, end to debt money and living frugally. Photo credit: Erik Scheel

Just thoughts on the connection between bitcoin and elements of the “degrowth” movement that argues that never-ending economic growth is leading us toward an unsustainable and ecologically destructive path.

A reader suggested that I read the writings of Margrit Kennedy. Kennedy was an architect and professor who wrote about interest and inflation-free money. I found one of her books, Interest and Inflation Free Money: An Exchange Medium that Works for Everybody (she later published a book called, Occupy Money), and read some of it this past weekend.

At the start of the book, Kennedy mentions Silvio Gesell. Gesell was a German economist and early 20th-century reformer. He reportedly drew inspiration from anarchist Pierre-Joseph Proudhon. Guido Preparata, an economist and anarchist, claims that John Maynard Keynes softened Gesell’s theory of interest, making it more palatable to the finance class. Given the role of interest in a debt-money system, let’s briefly examine Gesell’s perspective and see if we can make sense of it through a bitcoin-degrowth lens.

Preparata describes Gesell’s theory of interest as a “radical formulation…he then ascribes virtually all manifestations of social evil…to the fundamental misapprehension of the true nature of money.” That is, that money is not merchandise. Essentially, interest — not money — is the root of all evil*.

For Gesell, the problem was that money doesn’t reflect the life cycle of the goods it’s meant to represent as a medium of exchange. This is reasonable, most goods and services depreciate over time. Gesell believed that money should, too.

Clearly, this depreciation is not the same thing as inflation. In a way, demurrage is not so unlike the transaction fee we pay to use the bitcoin network. We pay a fee when we send bitcoin, which maintains the integrity and security of the network. Similarly, you can think of demurrage as a fee that maintains the integrity of the act of exchange itself. This depreciation also makes it possible to eliminate interest. It’s a radical idea, but given the rentier economy we live in now, eliminating rent-seeking would go a long way to move our economy toward a more productive and less unequal direction.

How does Gesellian money work in practice? In an analog world, this meant that money had an expiration date unless the user of the money bought a stamp that would extend its lifetime (anywhere from 0.1 to 1% of the face value). This stamp would be the demurrage — the gradual depreciation over time — of the money.

Gesell’s ideas were put into practice in the early 1930s in Wörgl, Germany. This is a real currency note that the town used with the stamps located on the right side of the note. The users of the money were required to purchase a new stamp once a month. By all accounts, the experiment was a great success. The demurrage was invested into public works and alleviated unemployment in the town during the worst part of the Great Depression. Other towns wanted in on the project, but unsurprisingly, the German central bank opposed it and ultimately killed the experiment.

The funds raised from the stamps are then invested in public works. It wasn’t impossible to save money in a Gesellian monetary system, you could still hold money in the bank. Unlike money in circulation, the money in a savings account did not depreciate. So in comparison, your money still held its value. Banks used these deposits to invest in various ventures, but banks were also held to the same demurrage requirements and could not charge interest (Correction, 5/30/22: Banks could charge interest, but the theory was that over time this would fall due how demurrage turns money into a game of “hot potato”).

Given the vast damage that the banking system has done to the environment and the planet, changing the fundamental nature of money to eliminate interest is very appealing. Moreover, under this scenario, money cannot easily escape beyond nature’s growth trajectory. Interest’s growth, unlike nature’s, is exponential. Paying interest requires more money to be put into the system, which also means more debt, and it becomes a vicious cycle that is nearly impossible to break.

Could this work with bitcoin? I think that in some ways, bitcoin is similar to Gesellian money. The transaction fee we pay acts somewhat like the stamps. If a community incorporates bitcoin mining into its economic structure, it could acquire a portion of the transaction fees and invest that into public works.

Additionally, self-custodying your bitcoin is free of charge. Through mutual associations, some of that saved money could be multi-sig’d and all those participating could raise money for things like paying for healthcare or a home. Finally, the deflationary aspect of bitcoin makes interest wholly undesirable because the value of money is increasing over time, making it harder to pay back the interest. No reasonable person would enter into an interest-based loan. Of course, in this case, bitcoin is not quite like Gesellian money. Still, could they achieve the same ends?

There’s a way in which true Gesellian money could work with bitcoin, but I’ll save that for the next edition. I’ll also touch on how dangerous Gesellian money is in the hands of the wrong people…

*Similarly, Islamic law is also opposed to interest, because they consider it a sin to charge for the use of money. Also, according one self-described Gesellian, it wasn’t so much interest, but the store-of-value that was the root of all evil. While I understand store-of-value is what is being decoupled, I did not come to the same conclusion.



Jyn Urso

A physicist who works on climate change issues and who believes in a free, decentralized and open Internet. magusperivallon [at] gmail.