Wednesday, July 18, 20185 likes

Wait, what IS money? 💸🤔 (Proof-of-Take #002)

Proof-of-Take: a dose of perspective and context in the noisy world of Crypto

Welcome to Proof-of-Take: a dose of perspective and context in the noisy world of Crypto. If you want to learn more about why I’m writing this, check out Issue #001.

Today, we’re going to talk about money.

But first, a quick trip down memory lane.

When I first heard about Bitcoin in 2014, I REALLY wanted to love it. I tried reading Satoshi’s Whitepaper*. I tried talking to crypto enthusiasts. I tried hard to understand these alien words and concepts.

But despite my best efforts, I simply didn’t get it. At all.

So I took a break, and tried again in 2015. And then in 2016. And 2017. Each year I tried to get into it, and each year I failed 🤦‍♂️🤦‍♂️🤦‍♂️.

I thought Bitcoin was a toy for nerds 🤓. That it would never get used on a massive scale. That the government could shut it down 🙅‍♀️. Or that it would eventually get hacked.

Besides, why did we need to “disrupt” money anyway? I have a bank account, a credit card, and Venmo. These all work well enough. So why should I use Bitcoin instead of the current financial system?

And then it hit me. I was thinking about this all wrong. Before I could understand the importance of changing money, there was a MUCH more important question to ask:

What. IS. Money?

This is the foundational question I’ve asked in my journey down the Crypto rabbit hole. And the one I keep coming back to.

Most of us don’t question why the world works the way it does. And there’s a good reason for this. Questioning the rules of this game is hard and disorienting.

We’re dropped onto this planet, with the rules of society and capitalism in place. We could question “the system,” but it’s easier to just figure the how to win given the rules of the game. In our society, most people define “winning” as accumulating a lot of money 💵💵💵.

But why is this so? How did these green pieces of paper became the object of our collective desire?

If an alien 👽 landed on our planet and started observing our interactions with money, they might be a little confused. On the surface, our US Dollars (green pieces of paper) look “worthless.” We can’t eat them, we can’t wear them, and we can’t sleep under them. They just kind of sit there, not doing much**.

However, my dollars do have one pretty cool aspect to them. No matter where I am, if I hand someone these green pieces of paper, then they’ll happily do anything I ask them to do, or give me stuff.

But why do they value money? Probably for the same reason I do. If they earn my magical green paper, then they have something that they can use to get whatever stuff or services they want.

So: money is basically a promise to give the holder of the money some stuff or services at a later time.

If you’re with me so far, then we’ve uncovered that the “power” of money has nothing to do with the actual physical green paper (or data in a computer system), but the fact that everyone we interact with believes in a “promise” that the green paper represents.

Said another way: Money is a story that we all believe.

But if money is just a story we “believe”, then is is Money even Real? Well, it depends on what you mean by “Real.” You might wanna sit down for this one…

One book that helped me better understand money is called Sapiens***. In it, the author explains that everything humans experience falls into 3 categories.

1) Objective Reality: These are things that actually exist in the physical world. A lion 🦁, a couch 🛋 , an ocean 🌊, a mountain🏔. We can see and touch them.

2) Subjective Reality: These are things that don’t exist in the physical world, but exist in the mind of a person. My love for the color blue 🔵, my imaginary friend 👤, or my belief that Taylor Swift is the best musician of all time. If I stop believing these things in my mind, then they cease to exist.

Now here’s where it gets interesting 🕵️‍♀️

3) Intersubjective Reality: These are things that don’t exist in the physical world, but exist in the minds of many people simultaneously. They are “stories” that we collectively believe. Things like Religions, Countries, and, you guessed it, Money.

And here’s the kicker with things in this category: “If one person stops believing, it doesn’t really matter. However, if most people change their beliefs, the intersubjective thing will mutate or disappear.

So if Alex Hardy decides to opt out of capitalism, and boldly stop believing in the promise that the US Dollar represents, congratulations to me, but it doesn’t really matter at all. The world will continue to turn, and money will march on. However, if enough of us stop believing, then the story hits a tipping point, and ceases to exist.

So, are things like money Real? According to Sapiens, yes.

None of these things exists in the natural world, BUT, because enough humans agree they exist, they are as real as mountains.

To summarize: Money is worthless pieces of green paper that represent promises for stuff or services at a later time. These promises are part of an imaginary story that almost every human happens to believe. If we all stopped believing the story, then “Money” would cease to exist. But since enough of us believe the imaginary story, Money is as real as a Mountain.

I’ll stop here before our heads explode 🤯.

Hopefully, this sparks a follow-up question:

Money represents a promise, but why should I actually trust the promise that money represents?

We’ll tackle that one next time…

Thank you for reading! Did you love the issue? Please share it on social media. Did you hate the issue? Please share it on social media, condescendingly dunk on me, and tell me why I’m wrong. Let’s continue the conversation: the best way to reach me is on Twitter — I’m @CantHardyWait

*The Bitcoin Whitepaper

**Yes, this is a vast oversimplification of “money.” In this case, I’m assuming all money is simply physical greenback US Dollar bills. There are many more currencies in the world, and most dollars aren’t even physical green paper anymore, but entries in a database.

****Sapiens & Takeaways from Sapiens

Final note: I’ve spent a *lot* of time thinking about money, and have barely scratched the surface. Some resources that got me started:

The Writings & Podcastings of Nick Szabo

David Graeber’s Debt

Podcasts like Tales from the Crypt

And discussions on twitter and IRL with people like @arjunblj and @taylorpearsonme