WHAT IS MONEY?
WWW.REDDIT.COM/u/BITGOLDWALLET REDDIT POST (FROM THE 30TH SEPTEMBER 2018)
What is money?
I would like to offer a story that has been on my mind for a while now. It's a story about money in a small Micronesian island called Yap. There existed a time perhaps between three quarters of a century and two and a half centuries ago, where the population of this island (estimated in the thousands), regularly used and accepted large heavy circular stone blocks as currency.
These circular stone blocks were originally carved from the earth of a neighbouring island and then transported to the island and used as money. Similar to BANK MONEY TRANSFERS, the ownership of these stones changed hands through an agreed verbal (and occasionally written) record since the stones were not usually moved due to their heavy weight. Once a transfer of stone was made, everyone in the island village knew and agreed that the stone had changed ownership even though its physical location remained the same. There also existed many smaller similarly shaped stones that 'were' physically exchanged for food and other items and these can be likened to physical PAPER MONEY in our society.
One of the interesting characteristics of these stones is that their value was not uniform but depended on the quality and size of the stone as well as other factors. Generally though, each individual stone had a commonly agreed upon value held by the populace usually determined by its size. This characteristic of the stones can be seen to be quite similar to GEMSTONES and other JEWELS in our current world.
Also, according to folklore and the verbal record, one of the largest stones (if not the largest stone) ever existed, resided under the sea due to a shipping transport accident many generations previous and was owned by the richest family on the island. Even though the stone was no longer with them, its existence and ownership status was agreed upon by all the residents on the island. Could it be deduced then perhaps, that this family actually owned an unlimited amount of this stone, which could be lent out to the island's residents at will, since it was no longer necessary to prove the actual existence, size or quality of the stone. This would have bestowed the power of our modern CASH PRINTING PRESSES on this family as they had authority to lend indefinitely from this underwater stone.
At the end of the day, this entire system of keeping and accepting stones in exchange for something else was real to the Yap people and functioned as a form Yap gold. It was like our yellow metal GOLD since it was a physical item that was usually secure from theft, was hard to forge or create, was used as a store of value, and was a valuable medium of exchange (much like the real GOLD that is stored in the large vaults of banks and other secured sites of our modern world).
The most interesting part of this story comes next. According to an American researcher by the name of William Henry Furness III who spent several months in Yap in 1903, the German government bought the island in 1898 and commanded the local populace to work on developing the island. He described that the natives did not want to do the work. However, after the government claimed ownership (or confiscated) the most valuable stones on the island by marking them with a black cross, the locals miraculously did the work. Now, you might not agree with how the villagers responded to their situation and think you would have acted differently. But do at least try to picture yourself in their shoes. If everyone in your isolated island world accepts the stones as payment, and now suddenly the most valuable stones are owned by a foreign group, then you have every reason to work for this foreign group to acquire the stones, in order to exchange value in your society and to trade for goods and services and labour. And to survive. Whether this precise timeline of events occurred exactly as described or whether some elements of it were embellished, the details are not relevant. What is relevant is that the basic premise of this story is true. Your money, or what you perceive as money, is real, and the form that you choose to store it as, matters. Your usual form of wealth is likely more vulnerable to change and confiscation and control by other people than you might want to believe.
What I would like to ask now is this: does the above story of what happened to the Yap people; to their accepted form of money sound similar to any stories of wealth observed in our modern world? Does it resonate with you in anyway? Is it sort of like those countries whose currencies have been ravaged by inflation due to unrestrained money printing? Or does this sound similar to the government bail outs of financial institutions who have mismanaged people's money? Or the confiscation of bank account deposits of ordinary citizens over certain amounts otherwise known as bail-ins? Or the sudden replacement of large denomination notes of legal tender after declaring old notes void experienced in some countries?
Perhaps this just sounds to you like fiat money in general, and its use as a system of debt and credit in our financial system, where your total wealth is determined by what is recorded on a ledger or digital record somewhere?
How then is bitcoin different from these stones and how is it different from practically every other form of money listed above? In short, BITCOIN is 'real' money that once stored properly cannot be seized and cannot lose its value at hyper inflation rates (over the medium to long term). It is money that can be easily transferred peer to peer via the internet without a trusted intermediary. It is superior to these other forms of money listed above because it has a strictly limited quantity and growth rate, and cannot be created out of thin air without 100% consensus from the decentralized network. It is global in its scope, not limited or restricted by a country's borders and is one of the most liquid forms of currency out there. It can be broken down into many smaller, equal units while still maintaining its key attributes that make it valuable. It is cryptographically secure in its operation and method of validation and can be stored purely in the mind. The bitcoin blockchain is the most secure financial database in the world. There can be no double spends or false transfers. There is no need for central trusted banking institutions or government decrees.
It is a system of money which requires a human being to rewire their brain on the concept of what money is before they can embrace it.
It stands out from its own breed of asset class which it itself has spawned, because it was the first to the scene and is a relatively widely distributed unit of wealth with a natural adoption curve. Its never ending list of dissenters together with natural human psychology have combined to ensure this outcome. Its core mechanisms of how it works can more easily be understood, and therefore more trusted, by ordinary people.
Bitcoin is the future evolution of money and its invention is like the advent of the nuclear age and the creation of the atomic bomb. For all its good and bad, it has been discovered upon the world and it cannot be undiscovered. The technology cannot be banned away, out of existence. The question really is: do you want to get in on it while only 0.2% -1 % of the population currently own and embrace it and it is relatively cheap to acquire; or do you want to wait until 50% - 99% of the global population own and embrace it and it is relatively expensive to acquire?
I do not know about you but I know my decision.
Bitgoldwallet.com owner