Without it we'd be screwed. What would you get paid in? How would you exchange your work for what someone else has done? We need to exchange with others to get all the stuff we need to live.

For nearly 50 years central bank fiat currencies, in paper and electronic form, have been used world-wide. The United States Dollar remains the undisputed Fiat King. Today, taxi drivers from Bangkok to Buenos Aires will take your crisp US 20 dollar bill.

Nowadays 'money' is, literally, whatever banksters loan out.. and it's backed by?... well, more loans created out of thin air. The money system is one of manipulation, politics and corruption. People are turning to alternatives such as bartering, cryptos and precious metals.

Desirable properties of money

But what is this thing called money anyway? And what makes for a good one? Ideally money should be:

• Fungible - one unit is more or less identical to another
• Intrinsic - has alternative uses and value in of itself
• Durable - doesn't degrade over time
• Store of Value - preserves wealth for later
• Convenient - portable, secure, unobtrusive
• Broadly accepted - voluntarily without threat of violence

The last one is actually obvious right? Everyone has to agree to believe in the scheme. When someone offers you a dollar or a euro you say, "sure I'll accept that, thanks".

Money is basically a human technology - a way to measure work done and value created. Wheat was once used as money. So were shells. Rare feathers, oil, slaves and stone tablets have also been used. Humans in every corner of the world have voluntarily gravitated towards silver and gold. These metals uniquely (so far) satisfy most requirements listed above.

In the 19th century the Western world introduced paper notes backed by gold and silver. Money became a receipt for a fixed amount of gold or silver, the amount usually printed across the paper note itself. People were skeptical at first but eventually they copped on, and quickly it took off. Britain, the USA, and Germany and others boomed off the back of this technological innovation in money.

Comparison of fiat v. gold/silver v. cryptos

This is completely subjective on my part - more a thought experiment really. But the table reveals I'm not 100% convinced cryptocurrencies are a good money technology. Not yet anyway.

They definitely meet some requirements (fungible) but fail badly on others (store of value) and they only marginally beat fiat currencies IMO. I have massive concern over cryptos being a long term store of value; so far they are anything but.

	fiat	g+s	cryptos
Fungible	10/10	8/10	10/10
Intrinsic	0/10	10/10	0/10
Durable	2/10	9/10	7/10
Stores Value	2/10	10/10	0/10
Convenient	8/10	5/10	10/10
Accepted	9/10	2/10	5/10
Scores	31	44	32

Cryptos are convenient but are a dismal store of value. In fact, they're so bad I sleep better holding fiat in the short term. My guess is technical difficulties will be worked out over time, and the manic swings in value will dampen down.

Nevertheless.

Earlier this June I transferred some of my BTC to LTC (Litecoin) but most into fiat currency (Euros for now). I expect to see USD 1,000 BTC before Christmas, though I'm playing it by ear so we'll see.

Bottom line: I think gold and silver remain money par excellence, but this could change as cryptos develop.

How are my scores above? Did I miss anything? Should I be more in love with cryptos?

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