I just finished reading "The Internet of Money - Volume One" from Andreas M. Antonopoulos, which is an absolutely fantastic book I can recommend to anyone. If I was asked by someone who is entirely new to the topic cryptocurrency, this is definitely the book I'd recommend. It highlights the huge potential of this technology, as well as how and why it can and most probably will disrupt various, if not all, industries.

WTF is Money?

Besides the technology, one of the most interesting things about bitcoin and cryptocurrencies is the fact that they raise a fundamental question, one that seemingly has not been asked and discussed for quite a while:

• What is money?

A lot of people tell me, that bitcoin and cryptocurrencies don't have any value. Some compare it to gold, that can be used for other things as well, thus having value. Others compare it to the fact that money needs to be issued by a sovereign entity in order to be legit and have value. And some refuse to use it, because it's only used by criminals, thieves, scammers and alike (basically everything the internet was accused of being used for and used by, back in the days when it was new). So let's get back the initial question, What is money? And maybe also ask, how old is it?

"Money is as old as civilization" - A. Antonopoulos, The Internet of Money

How old is Money?

It was surprising to me when I discovered, that Money seems to be as old as civilization itself. Archeological discoveries of writing show that some of the first things people wrote about is money - ancient ledgers. Other findings revealed, that people in the Stone Age used things like feathers or stones as money. Which is something children do today, by choosing things like rubber bands, pokemon cards or other things to exchange as tokens of value, tokens of affection, tokens of popularity. Furthermore, it seems that even primates can be taught the concept of money, by rewarding them with bananas for a specific type of stone. In that sense, money can be looked at as a linguistic construct that is used to express value.

"We use money to communicate value to each other, to express to each other how much we value a product, a service, a gesture." - A. Antonopoulos, The Internet of Money

Money as an expression of value

If money is the expression of value, then a currency can be defined as an abstraction of value. And in order for something to become money, it has to fit the needs of this abstraction by being scarce, easily transportable, easy to divide and universally valued. Over time this abstraction evolved from things that only fulfilled these criteria on a local scale to things that can uphold these characteristics on a global scale. The use of feathers and shells was replaced by gold and other metals, which were minted into coins and became one of the first abstractions of money that was used on a global scale. As time passed by, gold was replaced by paper, a certificate of an equivalent amount of gold being stored in a secure location. And no surprise, this was generally perceived as a bad move. People needed to get used to this strange type of money and it took some time until that strange piece of paper was trusted to be valuable. As time went on, another strange phenomenon arose - plastic money in form of credit cards which took the abstraction of value to the next level, and again, people didn't like it.

Today, money isn't backed by gold anymore and is mostly an abstract construct of bits and bytes in a database, on some server in a data center - it's a centralized form of digital money.

"... every time we do abstraction of money, society freaks out because this new thing can't possibly be real money." - A. Antonopoulos, The Internet of Money

Why Bitcoin is more than just a currency

If we already got digital money, why in the world do we need Bitcoin and Cryptocurrencies? And what makes this cryptocurrency thing different from the digital money we currently have - the centralized bits and bytes saved on servers residing in data centers of banks, representing FIAT Currencies?

The fundamental difference lies in the fact, that Bitcoin and Cryptocurrencies are far more than just a currency. If brought to a broader context, this technology, this idea is about a decentralized platform to build trust without any intermediaries and without the need to trust any other person on the network. Currency is just the first use case, the possibilities are endless.

"Saying bitcoin is digital money is like saying the internet is a fancy telephone." - A. Antonopoulos, The Internet of Money

If Bitcoin and cryptocurrencies are brought into a broader perspective, they can change everything. With today's Banks, we experience the effect of the so-called "Coase coefficient". Due to strong centralization, the overhead created by the organization became so big, that the overhead for communication is greater than the marginal increase in efficiency, which results in high fees and low interest-rates.

But wait, there is more: The technology is open to anyone, anywhere, censorship-resistant, operated as a dumb network with smart applications. It pushes the power of innovation to the edge of the network, to its users, that are free to innovate without permissions and without the need of having a huge demand for their idea. Creativity can prosper and will lead to a true explosion of innovation. By owning a device with a Bitcoin (or other Cryptocurrency) wallet, you don't need a bank - you are a bank. In that sense, cryptocurrency is to money what the internet was to communication - a true gamechanger.

Which cryptocurrency will win?

That's a question I read a lot and also ask myself a lot: Out of all these hundreds, soon thousands of cryptocurrencies, which one will most likely emerge as the winner? But why does there need to be a winner?

"We're not going to have hundreds of altcoins. We're not going to have thousands of altcoins. We're going to have hundreds of thousands, and then millions of altcoins" - A. Antonopoulos, The Internet of Money

If we take money as an abstraction by which value is expressed, a form of expression, it becomes a language in some way. And why should there only be one language? In that way, a currency can express the value of a service, a person or an organization, and it is valued upon the fact of how many people use it, how often it is used and in relation to the service it provides. Currency can become an expression of things I admire, people I like and communities, ideas or companies I commit to.

"We need to get used to a world where we have to judge currency not by who issued it, but by who uses it. Or rather, by how many people use it and what they use it for." A. Antonopoulos, The Internet of Money

While money was created by sovereignties in the past, in the future, it is money that creates sovereignties. Bitcoin and Cryptocurrencies are the next evolutionary step on the never-ending journey of abstracting value into something called money.

Closing Words

The Internet of Money by Andreas M. Antonopoulos is a true masterpiece, in which he was able to accurately phrase and express things, I only had an intuition or feeling for but lacked the words and knowledge to express. I have the utmost respect for what he is doing for the cryptocurrency space and can only recommend his books, talks, and interviews. There wasn't a single one that didn't teach me something new. I'm looking forward to his future work, and hope you liked my recapitulation of one of the exciting questions Andreas M. Antonopoulos addresses with his work.

Let me know what you think and leave your questions, feedback, and comments below.

Thanks for reading and have a great day!

Sources and Additional Information

• Andreas M. Antonopoulos – The open blockchain expert
• Andreas M. Antonopoulos (@aantonop) | Twitter
• Books – Andreas M. Antonopoulos