Rocks, Paper, and Nothing?
Generally when talking about the word “worth”, you think about how much money is needed to obtain what you are searching for. Thinking deeper, what is money really worth? What we use today to get items to suit our needs has changed. We can have money while not having it at the same time nowadays, online stored somewhere we can’t even see it, or anyone else for that matter. Makes you think, is it really even there? As said by Jacob Goldstein in his book, Money: The True Story of a Made-Up Thing, money is a “shared fiction”. It isn’t actually there. Money is just an idea, and the people agree upon this.
Let’s travel back a century, from the paper written by Milton Friedman we learn about the Island of Yap, an island apart of the Caroline Islands in Micronesia. To them, wealth and money is just an idea as well, but a little different from what we think of today, and by a little different I mean 1 foot to 12 feet in diameter carved out limestone circles with holes in the center called Fei. A little something to add on is that these stones weren’t even made on Yap. They had to be transported from an island hundreds of miles away by boat. Having one of these stones to the people basically signified your “wealth”, and the Fei didn’t even have to be in your possession. In one instance, while a Fei was being transported, a massive storm hit as the boat was just in bound of the island, and the Fei fell into the water and was lost at sea, probably still sitting there to this day. The people on Yap had no issue with this because they knew of that Fei, and that someone owned it, even though it is not in their immediate possession. That was the thing that gave the Fei its wealth, the possession of it.
In 1898, Germany claimed ownership of the islands in which Yap rested on, and the idea of money was tested on the natives. On Yap, there were no functional roads or highways, and this needed to be fixed. The Germans told the chiefs of the island that this needed to be done, but for the people of Yap, this wasn’t necessary. The natives were completely content with the current state of the roads they had. So, the Germans decided they needed to be punished for disobeying their orders. The German government sent people who went and painted big black crosses on the most valuable Fei, claiming them. And thus, they were rendered almost worthless. The people on Yap stepped up and did what was needed and just like that, the black crosses were removed, and once again the people had their “wealth” back. Just like that. This happens today as well. Our money we hold so highly, is just as real as the stone currency used by these islanders.
Unlike the giant stones shown off in Yap, there are now forms of currency which aren’t really even there in physical possession, or ever were. I am talking about E-currency, but more specifically in this case bitcoin. Around the time of the financial crash in 2008, just a year after in fact, a programmer appeared anonymously and created a new form of currency not depending on a financial institution. There is a process to obtain this bitcoin which basically anyone with a computer could partake in called “mining”. What bitcoin actually is though is a system of super complex code that is cracked by computers by this “mining” process, and then sent to one’s virtual wallet. But here is the catch, where is the real value in this currency? Bitcoin essentially has no real value because there is no bank or financial institution behind it, so the worth of it generally just depends on what a person is willing to cough up for it. There is also the fact that it is not a safe investment and prices can change at any time drastically rising or lowering. In one instance we have seen the value of bitcoin go from $266 to just $54 in a matter of two days.
When the bitcoin drops in value, where does this money go to? That’s the thing. This “currency” is just an idea that people are buying into. There is nowhere that this money is or will be, it is just a floating number in your virtual bank account. That isn’t just all that could go wrong with this. The virtual currency is vulnerable to cyber attacks. People can hack into your wallet and completely take all of your “currency”. Even with all this happening we still learn, heads of massive corporations are buying into it. From an article from Yahoo News we learn that a pair, The Winklevoss Brothers , “had bought $11 million worth of Bitcoins”. As we may know today, bitcoin has surpassed its numbers from years ago. This article from 2009, really shows us how far the E-currency has come as well as a much deeper look into the idea of money. Or more on the case that money is an idea again, and the people are completely buying into it and ditching their old forms of currency. Out with the paper bills and giant stones, and in with the, in fact, nothing. Just some numbers online, telling you how much your valueless coins are worth.
It seems as if money is getting smaller and smaller, as the idea of it becomes bigger and bigger. We went from giant stones that identify your wealth, to paper bills, and now, nothing at all. It seems to appear from thin air, all this money is made, and yet nothing of actual possession is being used. This is what the people are agreeing on. The people’s idea of money has completely changed, and they are the reason behind it. These new forms of currency are fueled by the people believing in the ideas of them and continue to flourish because of it. As said by Jacob Goldstein, money is a “shared fiction”, and we are the ones backing this.
Friedman, M. (1991, February). The Island of Stone Money. Retrieved September 21, 2020, from https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf
Glass, I., Joffe-Walt, C., Blumberg, A., & Kestenbaum, D. (2018, February 19). The Invention of Money. Retrieved September 21, 2020, from https://www.thisamericanlife.org/423/the-invention-of-money
Reeves, J. (2015, January 31). Bitcoin has no place in your – or any – portfolio. Retrieved September 21, 2020, from https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28
Renaut, A. (2013, April 13). The bubble bursts on e-currency Bitcoin. Retrieved September 21, 2020, from https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html