The Concept of Money

Money is a concept that not many people question. Most do not question where money comes from or how much we have in the country. When you think about it, it’s nearly impossible to calculate the money we have in the country because of things like bank loans where you’re using someone else’s money and paying others with it. The system continues to get more and more complex over time with the additions of new ways to pay like credit cards and phone apps such as Venmo and CashApp. The only reason most of us understand a dollar is a dollar simply because someone told us. Not many people know or understand how the value is backed and what it’s truly worth.

A great example of people not understanding the worth of their currency would be the “The Island of Stone Money“. In this case the people of a small island called Yap had a currency of large beautiful stones. Although it was not backed by anything. The large rocks were also much too heavy to carry around in your pocket so the currency was denoted to just the ownership of the stone. For example, it was stated that while some of the people of yap were trying to transport the rock via boat, it had fallen off and sank to the bottom of the ocean. When the sailors arrived on shore they explained their troubles and the officials agreed that the stone would still hold its value to the owner even though it was at the bottom of the ocean.

Five reporters recently had the question of “what is money?” in the podcast called  The Invention of Money: Act II.  They raised this question because of how difficult it is to answer. One of the reporters stated that his aunt who was a business woman claimed that money is fiction. This baffled him because it was coming from a person who worked with money everyday. In 1933 the government decided that you would no longer be able to trade in cash for gold but cash would just represent the idea of gold and money. Another reporter also stated that we have somewhat reverted back to the old way of money for example when someone is paid by direct deposit then they pay their bills online. The person never touches the cold hard cash, it is merely just an exchange of information. 

Another way we are reverting to the old fashioned way of money is with online currency such as bitcoin, NFT’s and many other forms of online money. Although the difference from then and now is that the value of these online currencies can change within seconds. “after rising to dizzying heights, the digital currency suffered its first true crash this week.” (Renaut). E based currency is also very difficult to understand for most considering its complex ways of getting value. “Bitcoin is made of strings of dazzlingly complex code created by raw computing power — a process called “mining” that can in theory be carried out by anyone with a computer. The software is written in such a way that it becomes increasingly difficult to generate new Bitcoins, with the number in circulation designed to eventually top out at 21 million. Once mined, Bitcoins are stored on a user’s hard drive in a virtual wallet, and can be sent directly to another person, bypassing banks and remaining largely anonymous.” (Renault). These types of currency relate better to an investment other than cash but it’s an addition to the confusion of what money actually is. 

The currency system has been very complex since the start of money. There are many unanswered questions within the whole system. Billions of people trust this system that has the ability to one day mean nothing all the while their wealth is at risk. Although, without trust in these systems there would be no money. Money nowadays is scarcely the physical object of cash and has shifted more towards card and electronic payment which may ultimately hurt us in the end. It seems that the money system will never be perfected and we will never truly understand the concept of money. 

References 

Inside Higher Ed. (2021, January 22). Australian study examines impact of pandemic on scientists. https://www.insidehighered.com/news/2021/01/22/australian-study-examines-impact-pandemic-scientists

NPR Cookie Consent and Choices. (2011, February 15). NPR. https://choice.npr.org/index.html?origin=https://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money

Yahoo is part of the Yahoo family of brands. (2020). E Based Currency. https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html?guccounter=1