Is this Money?
The question “What is money?” is posed so often in the Bitcoin space that I decided it was time I finally answered the question and put the matter to bed. I will admit that the thinking so many others in the space have done on the matter has provided the framework for my thinking on this, specifically Michael Saylor’s idea of money as energy (at least I think he was the originator). I think this gets us thinking in the right direction but runs the risk of leading people to think of it as energy in the physical (electric) sense. When you think of money as something that can be experienced with the senses, we are falling into the trap of the physical, that is to say we then require an object to represent it. I see money as almost the opposite. The surplus generated by human interaction is a surplus of time (I didn’t come up with this I’m pretty sure Jeff Booth has said something like this more times that he would like). That surplus of time is to the benefit of all (at least ideally) and moves humanity a little further down field.
The physicality, scarcity and desirability of gold made it perfect as a representation of the surplus generated by human ingenuity and commercial interaction. It was perfect until information began travelling several orders of magnitude faster than any physical object could. This lead (as any good bitcoiner will tell you) to paper gold and eventually to fiat money. Fiat money has no connection to productivity, the way in which it is created adds no value to it and most importantly its supply is dictated by a very small group of people. These realities no doubt prompted the creation of Bitcoin and are why Bitcoin is growing in relevance every day. Bitcoin’s ability to speed around the globe at the same rate as an inane text brings money’s speed back to parity with information’s speed which cannot be understated in its importance.
But what is money? Money is the ability to direct or incentivize human effort. Incentive can now travel with instructions to exactly who is meant to receive them. Now there is no one between the incentivizor and the incentivized, no one is adding or subtracting incentive as the money transits the globe. So maybe a good way to look at the question of “What is Money” is Money = Incentive to act. It is a coordinator for human effort whereby once Money is promised in return for action a person is able to confidently direct their time and effort toward the end of the action. The person has accepted the value represented in the Money and reasoned that it is to their benefit to perform the action requested of them.
If we look at Money this way it becomes fairly clear (to me anyway) that no human intervention in its composition or natural (market driven) distribution is necessary or even advisable. It represents the natural force of human achievement brought to life through our shared ability to reason through problems and identify opportunities for improvement. Human intervention in the supply of naturally produced Money natur can only corrupt it. It is perfect the second it has been created therefore once Money has been given form by humanity it begins the process of corruption either through counterfeiting or through creation without associated effort (No, Central Bankers, adding zeros and pushing print isn’t effort….get real jobs). This is where the intangibility of Bitcoin harmonizes with the notion that Money is not well represented in the physical world. It should never be tangible if possible. It should never be manifested through anything other than work/effort/progress. Bitcoin achieves this beautifully as it exists only as information on a ledger.
Money was invented by every sufficiently sized community of peoples. It was not an idea that originated in one geographic location and spread across the world. It came about because of the innate need for people to store their efforts into the future. The fact that all civilizations manifested Money seems to be lost in the current public discourse which enables otherwise intelligent people to say things like “money is the root of all evil” or “we don’t need money”. Money is a tool, and a tool cannot be evil as it has no intentions. Money evolved with society for a reason… or dare I say NEED and is therefore definitely something we need now and will need into the foreseeable future. As a people we need to remove control of money from people. This is impossible with fiat money as fiat money needs people to create and destroy it according to their whims. A hard or sound money needs only exist in its form and to be traded according to the free desires of the population. In this way it’s value is derived from the individuals transacting with it and not the machinations of individuals who benefit from its control ( be that its creation or destruction ).
Imagine money is like a tape measure for the “house” society is building. Every day we add a little more onto our shared home ( the economy in this case ) and we take a step back and figure out what is the next best thing to add to our house. We do this every day as every day we come back to add more. Now try and imagine how stable that house would be if every day the distance an inch measured was different. Some days it was more than the standard inch and on some days it was less. The change between days needn’t be drastic for there to be some serious structural concerns about the house. It may last for a year… maybe two… but as we keep adding to it using a varying tape measure eventually that house is going to come crashing down and need to be rebuilt. That is the current system we use for determining the value of all things, it changes based on the whim of an incredibly small group of people who could never knew what the true measure of an inch was in the first place let alone what it should be over the course of a year. Choosing to leave that system behind was not possible until 2009. It is now possible to reorder ourselves using an unflinching value benchmark known as Bitcoin.