Silver Rises Over 120% YTD 
Have you ever noticed something strange about our favorite fictional worlds?
Lord of the Rings. Game of Thrones. Harry Potter. Even Super Mario Brothers — they all use gold coins as money.
Not because the writers collaborated, but because we instinctively recognize gold as real value. Even in imaginary economies, it’s the default.
Which raises an interesting question Alan Hibbard explores in Episode 5 of Hidden Secrets of Value: Could we design something better than gold? Something with all the same properties, but more portable, more digital, easier to transact.
Cryptocurrencies promised to be that solution. Yet none has surpassed gold’s staying power.
Why?
The Perfect Money Trilemma: Pick Two (But Never Three)
According to Alan, designing money involves a fundamental trade-off called the Perfect Money Trilemma.
Any monetary system can have two of these three properties:
- Scalability (fast, easy transactions)
- Security (no counterfeits, no fraud)
- Decentralization (no central authority that can corrupt the system)
You can pick any two. But you can never have all three.
Think of it like the old saying: “Good, cheap, fast — pick two.” Want something done well and cheap? It won’t be fast. Want it fast and good? It won’t be cheap.
The same logic applies to money.
Gold, silver, and Bitcoin all made the same choice: security and decentralization. They sacrificed scalability to maximize the other two. That’s why you can’t buy a coffee with a gold bar — but it’s also why gold has held value for thousands of years.
Why Most Cryptocurrencies Aren’t Actually Decentralized
Here’s where things get interesting.
Many cryptocurrencies claim to have solved the trilemma. They say they’re secure, decentralized, and scalable.
But Alan’s research into dozens of these projects revealed something surprising: they’re redefining the word “decentralized.”
True decentralization means nobody has special permissions on the network. Everyone is completely equal. This is true of gold (anyone can mine it, anyone can refine it — it’s just atomic number 79) and Bitcoin (no user has special permissions that others don’t have).
But most cryptocurrencies? They have a subset of users with special validator privileges. This makes them distributed, not decentralized.
What’s the difference?
The Federal Reserve is a perfect example. It has 12 regional banks spread across the country. That’s distribution. But it’s still a centralized system — a small group has privileges the rest of us don’t.
Most cryptocurrencies work the same way. They’ve just distributed responsibilities across multiple nodes while maintaining central control.
And here’s the kicker: if a crypto project claims it will “become more decentralized over time,” Alan says don’t believe them. To do that, they’d have to sacrifice either security or scalability — and they’re unlikely to give up either.
Layer 2 Solutions Don’t Solve the Core Problem
Some people argue that Layer 2 technologies solve the trilemma.
But Alan explains why this misses the point.
Layer 1 is the foundation — gold, silver, Bitcoin. It has no counterparty risk. No promises attached. It just is.
Every layer above that is a promise to pay the layer below it:
- Credit cards (Layer 4) promise to pay bank deposits (Layer 3)
- Bank deposits promise to pay banknotes (Layer 2)
- Banknotes used to promise to pay gold (Layer 1)
Each layer makes different trade-offs. Layer 1 prioritizes security and decentralization. Higher layers prioritize scalability.
Here’s the problem: As of August 15, 1971, the US dollar is no longer backed by gold.
The base layer of our economic pyramid was removed. And according to Alan, that’s why our economy has been in slow-motion freefall for 50 years. Without a solid foundation, everything built on top becomes unstable.
How to Get Back on Solid Footing
If you feel like you’re on a financial treadmill — working harder just to stay in place — Alan says it might be because your energy is dissipating through currency.
The solution?
Bring Layer 1 money back into your economic pyramid.
Use gold, silver, or Bitcoin as the absolute base of everything you build your financial life upon.
Not as a way to buy coffee. But as a way to store value that doesn’t leak energy over time.
Because whether we’re talking about Middle-earth, the Mushroom Kingdom, or the real world, the pattern is clear: sound money always circles back to the same place.
Watch the full episode to see Alan break down the Perfect Money Trilemma in detail — this is one of his clearest explanations yet.
Investing in Physical Metals Made Easy
People Also Ask
What is the Perfect Money Trilemma?
The Perfect Money Trilemma states that any monetary system can only have two of three properties: scalability, security, and decentralization. Gold, silver, and Bitcoin all choose security and decentralization, which is why they can’t be used for everyday transactions like buying coffee — but it’s also why they maintain value over time. Learn more about the trilemma in Alan Hibbard’s Hidden Secrets of Value series.
Why do fantasy worlds like Lord of the Rings use gold coins?
Fantasy worlds default to gold coins because we instinctively recognize gold as real value, even in imaginary economies. This isn’t a coordinated decision by writers — it reflects a deep cultural understanding that gold represents wealth and purchasing power. Alan Hibbard explores this phenomenon and why gold remains the standard in his latest video on designing the perfect money.
Are most cryptocurrencies decentralized?
No, most cryptocurrencies are distributed but not truly decentralized. True decentralization means no user has special permissions on the network, which is only true of Bitcoin and gold. Most cryptocurrencies have a subset of users with special validator privileges, making them similar to the Federal Reserve system — centralized with distributed responsibilities.
What is Layer 1 money vs Layer 2 money?
Layer 1 money is the foundation of an economic system with no counterparty risk — examples include gold, silver, and Bitcoin. Layer 2 and higher are all promises to pay the layer below (banknotes promise gold, bank deposits promise banknotes, credit cards promise bank deposits). Since 1971, the US dollar has had no Layer 1 backing, which Alan Hibbard argues is why the economy has been unstable for 50 years.
Can you design a money that’s better than gold?
Not if you want true security and decentralization. Any attempt to make money more scalable (easier to transact) requires sacrificing either security (allowing counterfeits) or decentralization (allowing central control). This is why gold, silver, and Bitcoin remain the best stores of value despite being less convenient for daily transactions. Watch Alan Hibbard explain the design trade-offs.
