The concept of currency is intriguing to say the least.  Its importance is constantly stressed in every society, and separates people based on how much of it they have.  The interesting part, though, is that the material that is used as currency does not necessarily have to have any type of innate value.  This means that literally any material can be used as currency so long as society establishes its value.

A notable example of this idea is in the story of the Yaps, as told by Milton Friedman in “The Island of Stone Money”.  The Yaps were islanders who used large stone discs as their form of currency.  However, due to the enormous size and heavy weight of these stones, they would often not be physically moved to their owner.  Instead, this type of currency heavily relied on an abstract sense: faith.  For instance, if someone owned a large stone that was located in their backyard and traded it to another person, the stone itself would not move, but rather it would be understood that someone else now owns it.

Although the Yaps’ currency might seem primitive, our monetary system here in America is not all that different.  In America, we use paper as our primary currency.  Similar to the stones of the Yaps, the paper that we use does not have any sort of intrinsic value.  Another parallel that can be found between our system and the Yaps’ is that we do not necessarily have to physically exchange our money in order to make a purchase.  We can swipe our credit or debit cards and it will be understood that the money that we have stored in our accounts somewhere else will now be possessed by whoever we made the purchase from.  In this sense, the currency we use today in America is just as abstract as the currency on the island of Yap, and still relies heavily on the principles of trust and faith.

Another economy that comes to mind for having abstract currency is Brazil.  In recent years, the country developed “Bitcoin”, a new currency that is stored only online.  “Bitcoin” is literally never physically seen or felt, but is still given worth simply because people are willing to believe and trust in it.  This proves that currency can be anything, whether tangible or not, so long as it is mutually agreed upon by the population of a society to give it worth.

The phrase “money makes the world go round” comes to mind when analyzing the idea of money.  After all, money does motivate a good portion of our decisions in life.  We invest in going to school to receive a good education, and we use that education to get a good job so that we can make a good amount of money.  We work so that we can earn more paper and have a bigger number in our bank account, neither of which would mean anything unless we did not give them value.  After objectively analyzing the concept of money, the saying “money makes the world go round” might actually make more sense to be adjusted to “people make money make the world go round”.