There have been many forms of money in history. Some have worked better than others because they have characteristics that make them more useful.
Better money always beats weaker money and that's a fact.
A thread of monetary properties👇
Better money always beats weaker money and that's a fact.
A thread of monetary properties👇
Seashells, glass beads, rai stones, cattle and silver are some examples of money which were eventually dethroned by gold, which was in turn ousted by government controlled fiat money.
Without further adieu, money has the following properties:
Without further adieu, money has the following properties:
1/ Durability
Money needs to be durable to survive the rigours of time. Perishable goods therefore are not good examples of money. Cash is made to be somewhat durable, and Digital money is very durable. It's also the most widespread money used today.
Money needs to be durable to survive the rigours of time. Perishable goods therefore are not good examples of money. Cash is made to be somewhat durable, and Digital money is very durable. It's also the most widespread money used today.
2/ Portability
Money should be easy to bring from A to B, whether that's going to the local shop or to another country. That's easier said than done as transporting gold officially is expensive, and as many refugees can attest to. It's difficult to carry on your person.
Money should be easy to bring from A to B, whether that's going to the local shop or to another country. That's easier said than done as transporting gold officially is expensive, and as many refugees can attest to. It's difficult to carry on your person.
3/ Divisibility
Money must be divisible into smaller units. A gold bar or €20 can be exchanged for smaller denominations. Art unfortunately cannot.
Fiat money is divisible by 2 decimals, while #bitcoin is divisible by 8 - making it the most divisible monetary asset in the 🌎
Money must be divisible into smaller units. A gold bar or €20 can be exchanged for smaller denominations. Art unfortunately cannot.
Fiat money is divisible by 2 decimals, while #bitcoin is divisible by 8 - making it the most divisible monetary asset in the 🌎
4/ Fungible
Each unit of money should be the same, so that they are interchangeable with one another, as it would be very difficult to transact if each unit had to be weighed or measured each time. Fungibility is another way of saying Uniformity.
Each unit of money should be the same, so that they are interchangeable with one another, as it would be very difficult to transact if each unit had to be weighed or measured each time. Fungibility is another way of saying Uniformity.
5/ Limited supply
In order to maintain its value, money must have a limited supply.
Platinum is more scarce than gold, but gold is a better money as there is more of it, but not too much either.
There should be an unforgeable costliness to increase the supply. #hardmoney
In order to maintain its value, money must have a limited supply.
Platinum is more scarce than gold, but gold is a better money as there is more of it, but not too much either.
There should be an unforgeable costliness to increase the supply. #hardmoney
6/ Acceptability
Money must also be acceptable by the majority of people. Let's say you want to buy a car with a piece of art. Well, the value of art is truly subjective, therefore it's likely to not be accepted by most people.
Money ≠ barter
Money must also be acceptable by the majority of people. Let's say you want to buy a car with a piece of art. Well, the value of art is truly subjective, therefore it's likely to not be accepted by most people.
Money ≠ barter
Money is the intersection of a need & technology, as technology continually upgrades - the definition of money must be upgraded too with new properties.
If the existing money cannot gain these new properties, it will begin to fail against those that can.
Enter #Bitcoin
If the existing money cannot gain these new properties, it will begin to fail against those that can.
Enter #Bitcoin
7/ Censorship-resistance
Censorship-resistance is considered to be one of the main value propositions of Bitcoin. The idea is that no nation-state, corporation, or third party has the power to control who can transact or store their wealth on the network.
Censorship-resistance is considered to be one of the main value propositions of Bitcoin. The idea is that no nation-state, corporation, or third party has the power to control who can transact or store their wealth on the network.
Fiat money & altcoins / cryptocurrency fail spectacularly here, as @wikileaks , canadian truckers & the entire country of Russia can attest to.
Gold in theory should be fine, but it's centralised by the central banks and governments and thus prone to censorship & confiscation.
Gold in theory should be fine, but it's centralised by the central banks and governments and thus prone to censorship & confiscation.
8/ Programmability
Programmable money is digital money that is programmed to act in a certain way based on predetermined criteria set out in the protocol.
It can be upgraded so long as a BIP (improvement proposal) is formally accepted by the community.
Bitcoin = #innovation
Programmable money is digital money that is programmed to act in a certain way based on predetermined criteria set out in the protocol.
It can be upgraded so long as a BIP (improvement proposal) is formally accepted by the community.
Bitcoin = #innovation
The path laid out for Bitcoin cannot be altered due to it's censorship-resistance properties.
This means that Bitcoin will keep creating new blocks every ~10 minutes until the last block is mined, enshrining bitcoin with a sense of predictability & assurance
This means that Bitcoin will keep creating new blocks every ~10 minutes until the last block is mined, enshrining bitcoin with a sense of predictability & assurance
9/ Decentralization
Bitcoin leverages a decentralized network of nodes, miners and transactors. It's a key piece of the #Bitcoin puzzle, freeing it from meddling by any party.
This flaw is associated with the physical properties of gold and why Bitcoin is simply better money
Bitcoin leverages a decentralized network of nodes, miners and transactors. It's a key piece of the #Bitcoin puzzle, freeing it from meddling by any party.
This flaw is associated with the physical properties of gold and why Bitcoin is simply better money
X / Established history
People often include established history as a property of money. I fail to see how it can be a property. It's better suited to the property of acceptability. With time, network growth and the Lindy effect, bitcoin will be more widely accepted.
People often include established history as a property of money. I fail to see how it can be a property. It's better suited to the property of acceptability. With time, network growth and the Lindy effect, bitcoin will be more widely accepted.
When all these properties are present in one form of money, that money can be considered the strongest money.
The strongest money will - in time - take its position as the next base monetary layer for a new financial system.
The strongest money will - in time - take its position as the next base monetary layer for a new financial system.
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