I set out to write some thoughts about why Bitcoin should be considered M1.
But Bitcoin doesn’t belong in M1 at all.
M1 is just a ledger of IOUs. When you see a balance in a bank account or exchange, you don’t own money. You own a legal claim against an institution. You’re an unsecured creditor relying on balance sheets, regulators, and courts to keep a promise. That promise can be broken, frozen, bankrupt, or litigated away.
Bitcoin isn’t a promise. It’s settlement.
That’s why Bitcoin is M0.
M1 is the Rule of Men. It works only as long as bankers, lawyers, and judges enforce it.
M0 is the Rule of Math. It settles with finality, without permission, faster than any deposit, and without recourse. It doesn’t need a court order to exist or a sheriff to move.
For the last century, the economy has been built on M1. Layered promises abstracted further and further from the base. Bitcoin forces a return to M0: a monetary foundation that doesn’t depend on trust.
Banks are understanding this. That’s why they want to hold Bitcoin as an M1-style asset: to wrap a bearer settlement instrument back into an IOU and reinsert discretion.
We shouldn’t be asking whether Bitcoin is M1.
We should be asking why it is M0.
And if Bitcoin is M0, then most Bitcoin macro commentary is simply wrong. It treats a settlement asset like a risk-on deposit.
But that is only the case if you give up the keys.
This is a critical distinction. Comparing the Monetary Base to M1 or M2 tells a story of institutional leverage vs. actual supply.
As the below charts show, the 'total money supply' (M1/M2) is multiples larger than the actual Monetary Base. This delta represents the magnitude of the credit economy, money that exists as a ledger of bank promises. Returning to a 'Bitcoin as M0' standard threatens the dominance of this credit-tier because it replaces discretionary promises with mathematical settlement.
However, as you mentioned, banks are already finding ways to maintain the credit economy by wrapping Bitcoin into various financial products. The question is whether people will choose the yield of M1 products or will they choose to keep their keys.
Monetary Base
M1
M2
Unfortunately it seems like the banks are sinking their teeth into bitcoin to expand the credit economy and the games will continue.
For how long is anyone's guess.
lawyers cannot enforce anything on me, without my consent.
Lawyers are just state lackeys. In other words... SCUMBAGS.