Humble beginings of Money
I am going to write a little story about money. As I have mentioned earlier, finance is the main driving force of modern world, for anything massive. Maybe it is the war, maybe it is the religion, maybe it is skyscrapers or environmental protection mega projects, even the trajectory of our space race is even determined by the modern finance. And fundamental to the process is money? I know you are interested in Crypto, yet we can assume this also has the properties of a printed, traditional bank note. Let's go back to the humble beginnings of money.
A bucket for a fish - exchange of goods
Well, we do not have to time travel. You just have to watch a film on Netflix, on medieval times. Maybe one episode of Robbin Hood series, where there is a market. And in these markets, the exchange of goods was the norm. You exchange whatever your excess production, with someone else. You give your fish in exchange for a bucket. And fish and bucket, both served the purpose of money. As you can understand there were no, rules. So people needed standardization. It makes no sense, when you can exchange fish with a bucket and you can exchange same bucket with two fish with the next vendor. There is no specific "Value" for a fish. Which is the fundamental problem solved by "money".
Story of Tobacco and inflation
In some colonies of ancient USA, people solved the problem, by using Tobacco leaves as money. So instead exchanging your fish for a bucket. You can standardize your price of a fish with two tobacco leaves, and price of a bucket as three tobacco leaves. Then from any vendor, will have the same price, and you are guaranteed not to be scammed. However, there were more problems to come. As some landowners, started to grow some Poor-quality tobacco in large quantities, and this leads to the "Inflation". As you would need ten tobacco leaves to buy a fish now. The problem was sloved by authorities. They banned growing large quantities of tobacco. And gave license.
What is money?
Storekeepers would store your pile of tobacco and give you a note. Where the amount of your tobacco and the quality is printed. You can now walk to the market and buy some fish in exchange for this note. And these became form of "Bank notes" or money. Later tobacco was replaced by gold, and the security notes, became printed money.
I am sure, there is more to the story. By the way I am not a historian. I just wanted to understand money, just for philosophical reasons. Let's look at the money to understand its value. As an introduction we can assume, money has value as long as it has the ability to buy something. Let's take a different angle to understand money.
What is worth? Apples or dollars?
If you give a 100 dollar note to a toddler and an apple. What would he choose? Let's assume you present this to a freshly captured tribal man from the heart of Amazon jungle. I am sure this hungry toddler, or the tribal man would choose the apple. Not the dollar bill. As he doesn't know that the dollar bill, can be used to buy dozens of apples. For someone who doesn't have some knowledge, and social agreement that we have on money, or the trust, money has no value. Infact, even you would choose an apple over a dollar bill if you were stranded in a middle of a desert for days in thirst and hunger. Money has no inherent value. You simply cannot eat a dollar bill.
Inflation in modern world.
The natural way of this happening is the inflation. If there is less production of items, and abundance of money, either way this artificial value of money will start to decrease, and we would need a half a barrel of notes to buy a half a loaf of bread. This almost happened to us in massive scale when there was covid, as all the production lines were stopped, people had less value for money and prices suddenly sky rocketed. Fortunately, it stopped before people start to kill each other for a bag of rice. And exactly what happened in the island nation of Haiti, after it was hit by a hurricane Mathew in 2016. With already plummeted economy, I saw group of people gather to grab a bag of rice with a club in the other hand to kill each other if wanted.
Now to the most interesting part of our argument. I have showed you money is just a number in your bank, or more precisely in your memory. It is just a social convention, which can be broken in extreme situations. We can apply this knowledge to anything.
Value of a diamond is a social rule.
Value of a Ship is a social convention -> as it can be converted to dollars in your bank.
Value of a Swiss watch for that matter any branded or non branded item is a social convention.
What I want you to do is to apply this principle even to other things you value. An experience, a relationship, a family.Point out exactly to where is the value? I have previsouly done a case study of a Pot, and a Shmidth Tunnel. If you are finding it hard to imagine I suggest you imagine an extreme situation.
Imagine you are on a ship in a boat, which is sinking, like a titanic, with all the family members of your extended family. And there is one who will come out alive. And you are given the task to choose by God, and you are included in the cohort. Who would you choose to live? It is natural you would choose, the most "Valuable person" from the lot. Maybe it is your parents, or you, or your children. And see the value of others "disappear". And your friend would choose otherwise. And make an eternal argument with you as, nobody knows true value as it is just relative.
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