Thanks for tuning in. Today we’re going to answer the question…
…would a medieval banker care to invest or day trade cryptocurrencies? Or are medieval people too stubborn and stupid to grasp such a concept?
As usual, trying to answer these hypothetical questions will allow us to see a much bigger picture, and by the time you’re done reading this article you should know a bit more about medieval finance, theology and philosophy. For a skimmer’s convenience, I bolded keywords and juicy bits besides my juiciest conclusions at the end.
“It is proper for a man,” says Dante Alighieri in his Divine Comedy, “to win his bread and advance his race: And because the usurer takes another way, treating nature and what follows from her contemptuously, he puts his hopes elsewhere.” Indeed, Dante and many of his Christian contemporaries believed there was a special place in Hell for those who profited off of interest on debts, which helps to illustrate what many medieval people thought about unconventional (or “unnatural”) passive income. Although day trading or investing in cryptocurrency isn’t quite the same thing as usury, it’s similar to another medieval financial move–retail arbitrage.
In medieval times, a person could make a lifelong career out of retail arbitrage, which in the case for coinage was buying silver or gold in one part of the world where it was cheap and traveling somewhere to sell it where its value in weight was more prized. And many a time a king noticed that his minted coins were leaving his realm because people were melting them down and selling them elsewhere for profit. These kings got very upset and severely punished those who were caught melting coins. But just because this practice was highly frowned upon didn’t mean it wasn’t frequently practiced by risk takers.
This means there was a place in medieval society for people who did more than just “pray, fight and work”–Chaucer’s Three Estates. When Arabic numerals replaced Roman numerals and the horse-collar replaced the oxen-yoke across Europe between the 12th and 13th centuries, there was more room for a Fourth Estate–those who trade. This is when we saw a huge rise in mercantilism and mercenary contracts, a time (the High and Late Middle Ages) when finance truly became “the sinews of war” and Thomas Aquinas wrote about money in ways that had never been considered by theologians and philosophers before. This is when it would be much easier to convince a banker to buy something novel and strange. Now, if we were to go back to Diocletian’s Edict on Prices in AD 301 when the value of monies were frozen by law, it may be very difficult to get someone to buy something as novel and strange as an invisible coin.
Bills of exchange weren’t commonplace in Europe until the 14th century, and by 1494 double-entry bookkeeping had been invented, creating live balances for the first time. The Amsterdam Stock Exchange in 1585 was when and where the first stocks as we know them were invented, as people tried to long and short the success of trading companies sailing to Africa and the New World, for the word “stock” had originally meant a ship’s cargo.
Perhaps the closest thing the people of this time experienced to Bitcoin‘s explosion in price in January, 2021, was the tulip mania of 1636 as the price of one tulip bulb from Constantinople was trading for the equivalent of 1,500 florins in the Dutch Republic before the price suddenly tanked when the frenzy ended in 1637. This was when the world learned for the first time, thanks to the invention of public banks and corporate investments in the 17th century, not to mention the rise of paper money, that ridiculous, inflated prices on non-essential goods can’t be sustained forever. Perhaps this should act as a reminder for risk-averse people who invest in Bitcoin today. What’s wrong with buying a much cheaper alt-flower? Anyways, back to medieval times…
Just like how the best bowyers were sawyers as I like to say, the best moneychangers were also goldsmiths. They had the tools and the skills to weigh and assess coins very quickly in busy settings, and in the 12th century anything that could possibly fund the Holy Crusade would be taken very seriously by religious fanatics and anyone dealing with money who could profit off their fanaticism, because the Holy Crusade was no typical war. If you had the right religious leader preaching about how Bitcoin was brought down by God to fund the Christian reclamation of the Holy Land, you might see it adopted rather quickly (of course, like all else discussed here, this scenario would only be possible in a fantasy setting, a realistic one at that!).
Now let us take a meander through the banking guilds and money-changing tables of medieval Florence, shall we? We’re in the 14th century, and the price of gold is down because a bunch of gold mines had recently been discovered in Hungary, drastically increasing the amount of gold in circulation across Europe. How, when we come to sell our gold in the market, is a money-changer to react to the inflation of price? He will of course take full advantage of the inflation and buy up as much gold as he can from us at the new low price. Doesn’t this kind of remind you of buying Bitcoin after the dip in 2018 when the price went from $18,000 to $4,000 USDT in a single year? Now, at the time of writing this, the price of Bitcoin is at $54,000 USDT, and that is still considered a low price to many risk-keen people who trade it daily. Yes, a medieval banker would gobble up our cheap gold and may not have to travel far to sell it at a higher price. He simply needs to wait upon any investor’s best friend to make a profit–almighty time, baby!
But what if we came up to a 14th-century banker in Florence and said, “Greetings, sir! We have a coin that you’ll love to invest in. It’s called Bitcoin, and if you buy many from us now we will store them for you in a secret place and bequeath them to your great, great, great grandchildren in the year 2021, and they will become some of the richest people on God’s green earth thereby!”
The banker will surely notice that we have no money bags and body guards. “Where is this Bitcoin you speak of?” he’ll ask. “Do you take me for a mooncalf?”
“Huzzah!” we’ll reply. “That’s where you’ll be amazed, our good fellow. You see, there’s no physical Bitcoin. It’s stored where no man can see or touch it, in our secret place.”
Now you might expect the banker to be rather upset by this point, but medieval people loved discussing the dryer parts of philosophy, and you might be surprised by how much faith a medieval man can have in something he can’t see or touch. In fact, Aristotle’s Physics was a highly read manuscript in the Middle Ages, and Dante references it right before he talks about the sin of usury in Inferno XI. Next, Dante, when asked to define faith in Paradiso XXIV, says, “Faith is the substance of things hoped for and the argument for what is not seen.”
To that–and I’m not making this up!–Beatrice replies, “You have examined well the value and weight of that coin, but tell me if you have any in your purse?”
Dante answers, “I have, yes; so shining and so round that there is no doubt about the mint.”
If reading these quotes from the Divine Comedy doesn’t give you goosebumps, then nothing I say will. Moreover, if we were to convince a medieval banker to have faith in the invisible Internet, we might cite Petrarch’s Itinerary when he speaks of something medievalists now call virtual pilgrimage. On this, Petrarch says, “…[W]e sometimes know many things that we have never seen and many things that we have seen we do not know.” For many medieval people who preferred not to travel but could afford a book, a virtual pilgrimage, which is reading someone else’s itinerary and imagining yourself being there, was a common practice and it wasn’t uncommon for this to be considered sufficient in replacing a real pilgrimage. Therefore, if we were master theologians and philosophers, we might have a fun time convincing this medieval banker to buy a Bitcoin. But would he bite?
Before I give my final answer…
…to the big question “Would a medieval banker buy Bitcoin?” I will ask you a question, and I want you to think about everything you just read after I ask it: How easy would it be to convince your grandparents to buy Bitcoin?
Perhaps the best reason you could give to a medieval banker for adopting cryptocurrency into his deposits would be that cryptocurrency, thanks to blockchain technology, can never be debased or clipped unlike coins made of precious metal. That fact alone would be a huge selling point, for coin clipping and debasement was a rampant problem throughout the Middle Ages. The English Mint finally solved the problem of clipping by introducing reeding (notches on the edges of coins) in 1663. The problem of debasement for fiat money, however, has arguably never been solved to this day, unless, of course, you tote cryptocurrency as the solution.
The medieval banker who would be most likely to buy cryptocurrency, as either an investment or a retail arbitrage opportunity, would be one in the Later Middle Ages who isn’t afraid to sin in the eyes of the Catholic Church and might already have a gambling problem, maybe an early Protestant or a member of the Medici family if you could somehow show them what the future beholds. Perhaps if you study all the many paintings that were commissioned by the medieval Medici family long enough, you might see a Bitcoin hidden somewhere…
HODL! HODL! HODL!
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Thank you kindly. I have so much hope for the future of mankind!