How will the future of money look like if the sources that preserves it changes it path.
Wood is an organism, but it is also a wood reserve. After being cut down by lumberjacks, its history as an organism ends. But its history as a timber reserve continues, and its history as a home has not yet begun.
Likewise, money is more than just a thing. Traditionally, these are three things: a medium of exchange, a store of value, and a unit of account. It's easier to think about the future of money when you realize that three different things called money can have three completely different futures. See Marco Polo's description of paper money in the 13th century Kublai Khan Empire (written for Europeans unfamiliar with the concept). Khan printed a note on mulberry paper and asked his subjects to accept it as payment for the death penalty. In Marco Polo's simple account of this Prometheus moment, he illustrates how Hannah's currency brings all three stories together:
- Unit of reckoning: everyone in the Khan Empire accepted their paper as a valid standard of value because they were meant to be. This requirement is less because everyone is doing the same thing.
- Medium of exchange: Merchants and merchants prefer to use Khan paper as it is easier to transport and share than precious stones or metals.
- The Store of Wealth: Hannah's newspaper makes him the richest man in the world. (Though he naturally diversified his fortune by using paper to buy jewelry, metals, real estate, and the like.)
Back then, Hannah's iron fist was the glue that held the three functions of paper money together. A lot has been winding down lately. For example, traders in the United States are not required to accept dollars; the only truly guaranteed successor to the dollar is the US government. In addition, anyone in the world can now print currency, and many people seem interested in buying this non-state currency. Then the three functions of money begin to separate, like loose braids. Some examples:
- Bitcoin functions well as a store of wealth, although it does not function well as a unit of account (due to volatility) or as a medium of exchange (due to transaction fees and technical practices such as key management).
- Coins are stable as a unit of account and as a store of wealth almost at the same time as fiat currency, but remain less efficient as a medium of exchange.
- In the future, the thread may tear more dramatically. We can have an excellent medium of exchange that acts as a store of value (for example because they use demarrage) and a strong stock of assets that are almost impossible to transact (for example because of a betting program).
The most interesting thing is that I can imagine that the account currency function is radically fragmented. Bitcoin maximists predict that Bitcoin will become something of a universal unit of account; and this prediction is undeniable, because it will come true when enough people believe in it. But I can imagine a different future where units of account multiply dramatically instead of becoming universal.
Emerging associative communities can measure value in their own way and in their own way. The more seriously they take their endogenous conditions, the more they can shape and stimulate endogenous trade and thereby enrich themselves with minimal dependence on global markets. This is much more interesting than a world where everything is measured in dollars, bitcoins, galactic guilders, or something similar.
Khan's currency unites all the money stories because Khan has all the constraints. But the opposite also happens: he has all the compulsion because he encapsulates all the stories about money. Today, when we try to demand money to govern everyone, we implicitly try to focus the coercion on whoever has the money. Yes, this is a critique of Bitcoin, but note that it is also a critique of "universal" base income. I want to guarantee everyone a dignified base, but it is impossible to say what is missing or where power is being concentrated when the monetary base is a universal unit of account that management is not seriously responsible for. Basic income from "local" or "communal" income seems less dangerous.
Radical pluralism, included in our value criteria, is the real source of wealth. Let's let go of the universal story about money and remember the words of economist John Maynard Keynes when Britain abandoned the gold standard: "We have nothing to fear, frankly nothing." Three toasts to a more confusing and sustainable world.