Money has controlled the world for centuries as a puppet-master of power, politics, and people. But what is money and how does it have so much control? Money is a system of trust in which an object is attributed a value and we trust everyone else trusts and honors that value. Then that object is used in exchanges of goods, services, and sometimes even more money! It first started as gold and silver because people deemed that these metals have value to them due to their beauty and uniqueness. Fast forward thousands of years and it is now paper. The trust people have in money is the reason that it has held so much power throughout the years. 

The Island of Stone Money, written by Jacob Goldstein and David Kestenbaum, discusses an island off the pacific coast known as Yap. The islanders developed their own form of money, giant rocks cut and shaped into coins. However, these rocks were extremely heavy, difficult to carry, and sometimes lost at sea, so “…everybody decided [pieces] of stone money [were still good]…” regardless of where it was.  Instead of lugging around a giant rock for every transaction, people began tracking who owns that rock. This idea of the stones still holding value even without physically having it shows the true essence of money and is similar to how we use money today. The islanders just had to trust that the stones still held value and that the record of their ownership was also true. However, if the islanders ever lost that trust in their stone money, then their entire economy would cripple and ruin; the islanders believed that most of their fellow islanders wouldn’t want this to happen. Therefore, on top of trusting the value of the money and the records of ownership, they also trusted their fellow islanders to not lose trust in the stone money and ruin the economy. This system of trust that the islanders have is exactly what every economy needs in order to run properly. But what if that system of trust failed? 

In 1990, Brazil experienced lack of trust in their money which led to their economy spiraling out of control. Inflation rates were at 80% a month and the price of items would increase multiple times throughout the day. Each president had tried to come up with a solution, but ended up making the situation even worse. It took 3 years for the government to find a solution, but one was found through the help of Andre Lara, Edmar Basha, and their two friends. Their plan was to create a new stable currency in which the people could trust and the price wouldn’t increase. The price of the new currency would stay the same and its exchange for goods would stay the same as well. After this new currency, the URVS, stayed consistent, people began using it more and trusted it enough for it to replace their old currency. “Everyone in Brazil, collectively, as a country, tricked themselves into believing that this fake currency was real,” allowing their plan to work. The people didn’t even need to trust the records of ownership because they had the physical money, but they still needed to trust that other people in the country would trust it and not ruin the economy. According to the plan, the prices were set by the newspaper which allowed everyone to be on the same page in terms of the value of the currency which established the prices of things. Once shop-owners respected the currency, the trust in each other was established as well. As soon as the Brazilians were able to gain a system of trust into their currency, the economy rebooted. Andre Lara and Edmar Basha, along with their two friends, were viewed as heroes by the Brazilian people.

However, money doesn’t need to be attributed to a physical object like the stone money of the Yap islanders and the URV’s of the Brazilians. A new currency known as Bitcoin started back in 2009, which sparked the crazy lucrative idea of cryptocurrency. Cryptocurrency is another form of money that has no physical form and exists solely on computers. Similar to stocks, the value of the currency changes often, and can be profitable if bought at low prices and sold at high ones. Bitcoin, while mind-blowing to most at first, is simply money that is almost no different than American dollars. Just like every form of money, Bitcoin and other cryptocurrencies require a system of trust in them for them to be sustainable. In the early 2010s, trust in bitcoin was scarce as the price would fluctuate intensely in short periods of time with it reaching $266 on day and then $54 just three days later. Prices shot up and down several times until 2020 where the price went all the way to $60,000 and then shot down and stabilized around $45,000. As new cryptocurrencies began to pop up, the cryptocurrency market seemed more stable which made people gain trust in cryptocurrency in general allowing the price to shoot up intensely. Once the trust in the currency was established, people needed trust in the records of ownership because everything was virtual meaning there was no physical proof of ownership. As crypto wallets became more secure, people began trusting that as well. Lastly, people need trust that other people will not lose trust in the currency. With prices remaining stable and more people investing into it, trust in the cryptocurrency was established enough. However, with how unpredictable cryptocurrency can be, not everyone can fully trust it causing some to stay away. This has not greatly affected the value of Bitcoin, however, because there are more people who trust in it than not. The crazy spike in bitcoin has changed the world and revolutionized money as we know it. Now more and more cryptocurrencies are developing and other online currencies as well such as NFTs. It would not be shocking if eventually the entire world converts to an online form of money.

​​Glass, I. Walt, C. Blumberg, A. Kestenbaum, D. January 7, 2011. The Invention of Money. Chicago, Illinois. This American Life

https://www.thisamericanlife.org/423/transcript

Goldstein, J. & Kestenbaum, D. December 10, 2010. The Island of Stone Money. Washington, D.C. NPR https://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money

Renaut, A. April 13, 2013. The bubbly bursts on e-currency Bitcoin. Yahoo News

https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html?guccounter=1