Money is a big part that plays in life that we need. It keeps the world going. We are all affected by it. We constantly think about how much money we have or how much we’re making but have never stopped to think about what it is. There are many different types of money across the world also known as currency, but the value of it is what matters.

“It may seem like a simple question to ask “How much money is out there in USD”. After listening to the podcast “Invention of Money”, it is not that simple. The example said in the podcast by one of the speakers, explained that if you asked everyone how much money they have, they would probably open their wallet to count the cash, then add the money in checking and savings in their banking accounts. The speaker said, “the bank is a bank”. If you deposit any type of money into your account, the bank takes that money and eventually loans it out to someone that may be opening a “Shoe Shining Store” downtown. The new store owner is holding your money, then let’s say he decides to take “your ” money and pay someone to remodel his store. That company is now holding “your” money that will later be deposited into his/her bank account. This cycle creates the issue of “double counting” the money since once “your” money is deposited into your bank account, it is scattered. The speaker Ira Glass mentions that her colleague Jacob says our money works this way because of all the different kinds of financial institutions we have.

Money comes in many different ways. I was shocked when I read Milton Friedman’s essay on “The Island of Stone Money ”. There is a tiny island in the middle of the pacific ocean that economists love. “What is Money”. Hundreds of years ago the people of the island made up a form of money called “Stone money”. Coins are made of stone. These coins were the size of cars. The island is called yap. Hundred of years ago explorers found a limestone cave, carved these limestones in a high stone disc, and brought them back in bamboo boats. As the boats got built stronger they would bring back even bigger stones. There is a story about a crew of workers bringing back a big stone to yap, but unfortunately lost it during a big storm, and ended up at the bottom of the ocean. When they got to the island they told everyone what had happened and they said “ok, no problem, that piece of stone money is still good even if it is on the bottom of the ocean”. This is the definition of abstract money. The speaker announced in the podcast that he uses stone money all the time. It’s like writing a check to someone. I mean what is changing in the world? That stone money on the bottom of the ocean you used to own, now belongs to someone else. On yap today they still use stone money but now they use something not as heavy, the dollar.

A currency that is now used constantly today is Bitcoin. It is the first cryptocurrency and is one of the largest and best-known cryptocurrencies among 19,000. The question is “What Is Bitcoin?”. It is a digital currency that is bought, sold, or even traded, but without a bank. The creator of Bitcoin was Satoshi Nakamoto, she first launched it in 2009. She stated the need for “an electronic payment system based on cryptographic proof instead of trust”. Every transaction made exists on a ledger that anyone can access, this way it makes it more difficult to fake. The reason cryptocurrency is worth money is simply because we made the decision it has value just like gold does. Bitcoin has intensively risen in value. Bitcoin was once sold for $150 per coin. As of June 8, 2022, 1 bitcoin is worth around 32,200, this is because there are only 21 million coins. The price will keep rising more and more as more people invest in cryptocurrency. It was stated that there are more than 19 million BTC coins in motion. Many people generally use Bitcoin for investments such as stocks and bonds., Bitcoin can also be used in big companies such as Microsoft, Paypal, Whole food, etc. You can also connect your debit card to your crypto account, But this causes your bitcoin to turn into dollars instantly. Cryptocurrency is designed for people to have another opportunity to store their money, without having to rely on a currency run by the government for worst-case scenarios. This currency has value just like stone money did.

There is a story about a group of economists who tricked and saved people from inflation. About twenty years ago Brazil’s inflation rate rose to a crazy rate each month. It rose to 80 percent. The speaker described it as if eggs cost $1 one day, then $2 the next month, if it kept on rising for a year the eggs would cost 1,000. The plan the economist had was to convince every civilian in Brazil that the government was “helpless to control inflation”. People had to be convinced money held its value. The economist created a new currency, which was called URV (“Unit In Real Value”) the “fake currency”.

Everything would be listed in this currency such as taxes, wages, everything. Brazil had its currency which was called cruzeiros, that still was in circulation. The only thing that changed was how much each cruzeiro was each unit in real value. This resulted in the economist realizing how well this currency was working, so they decided to call it “Real”. This became the country’s new currency.

Everyone now paid for all prices in this currency, and basically, inflation came to an end
Currency is evolving in many different ways. As the people are now relying on these currencies. There will always be different kinds of currencies being launched. It will always be up to the people to keep the value.

References

Planet Money. (2018, February 19). The invention of money. This American Life. Retrieved September 21, 2022, from https://www.thisamericanlife.org/423/the-invention-of-money

Friedman, M. (1991). 1991 island stone money – hoover institution. Retrieved September 21, 2022, from https://miltonfriedman.hoover.org/internal/media/dispatcher/215061/full
Ashford, K. (2022, September 15). What is bitcoin and how does it work? Forbes. Retrieved September 22, 2022, from https://www.forbes.com/advisor/investing/cryptocurrency/what-is-bitcoin/