What is Currency?
The idea of money and the forms it undertakes are constantly evolving with us as a society. No human in this world can truly say they understand the idea of currency as there is no specific form in which currency needs to undertake. As history has shown, currency can come in the form of something as simple as stone or paper, just as long as society has an understanding of what that stone or piece of paper is worth and how it can be used to act as a form of currency amongst civilization. Due to the advancements of today’s society, currency is becoming incrementally more digitized rather than a physical presence amongst society. At the current rate of evolution society is undergoing, soon there will be no real physical form of currency within the next century of life.
Milton Friedman’s novel “The Island of Stone Money” references a story about the population of the Caroline Islands in Micronesia and their use of stone as the currency being used amongst the population. The book Friedman discusses is that of Anthropologist William Henry Furness who visited the Islands in the year 1903. Furness writes “After concluding a bargain which involves the price of fei (stone coin) too large to be conveniently moved, its new owner is quite content to accept the bare acknowledgement of ownership and without so much as a mark to indicate the exchange, the coin remains undisturbed on the former owner’s premises.” The idea presented in that statement, in today’s world seems absolutely ludicrous as we as a people today consider it a necessity to be in possession of the currency being given in order to acknowledge an exchange has taken place. Friedman’s response shares the same view as today’s society, however he recalls an instance of the same method being used in a transaction of gold between France and the US in the early 1930s of having gold being simply marked as invaluable to the US labeling the gold to be the property of the French out of simple acknowledgement. To me that seems like a simple concept in theory, however in today’s world with the many forms currency now exists in, this would not be a feasible option to regulate the many transactions which take place among society.
In NPR’s podcast “The Invention of Money”, the true value of money is called into question in regards to the financial crisis of 2008. The guest of the podcast and producer of Planet Money, Jacob Goldstein, reveals a result that many of us today are not able to fully wrap our heads around, “Money is Fiction.” What he means by this is through his investigation of the 2008 financial crisis, there was no physical money lost during the crash, only the value of objects was lost simply because, as Goldstein states, “that’s what everyone now agreed.” I believe this is an accurate representation of what currency has become as well as how the concept has changed throughout history as the belief that if the people of a society agree on how a currency works, it is a viable method of the evolution of currency in the world.
Goldstein later in the podcast states about the value of currency “You don’t have to see it. It’s just information.” This statement refers to the idea of currency in the 21st century as now rather than being physically handed something, we can simply have it electronically deposited in our bank accounts or have it transferred through various phone applications such as Venmo and take it at face value rather than having physical proof of what you have received. Personally, I had never thought of currency in this way as I prefer to use cash for my transactions, but I am just as guilty as every other person in today’s society when it comes to believing digital currency is the same as physical currency. When I receive my paycheck from work, I usually receive it through direct deposit and think I have received something of value when really what I have received is nothing at all, much less something of value. As society evolves more and more into the digital age of monetary transactions, humans continue to further lose touch and cloud their judgement on what it truly means to receive money due to the introduction of digital currency.
As previously stated, there are many different types of electronic currency being used in today’s world. One of those currencies is a program called Bitcoin. However, in 2013 the usage of this electronic currency presented more problems than benefits. The app allows currency, in this case, bitcoins, to bypass banks and go straight to another person offering the transactions to be able to take place in a “high degree of anonymity” as stated in the Yahoo News article “The bubble bursts on e-currency Bitcoin” by Anne Renault. I personally do not believe that e-currencies such as Bitcoin are the best way to make transactions with other people due to the cyber risks presented in Renault’s article, however, as Renault states “…that risk has failed to sway many.” The existence of platforms such as Bitcoin has, as Renault quotes from the European Central Bank that these platforms can be a “monetary alternative for drug dealing and money laundering.” The introduction of these platforms into today’s society has further proved the claim of Jonothan Goldstein that money is just simply fiction and it is becoming more like “information” rather than currency. I find it fascinating that we are at the point where currency is a gateway for crime which to me confirms the hypothesis of Jonathan Goldstein of money simply being “fiction.”
The abstract idea or illusion of money throughout history has been a difficult concept for people today to fully understand. The way the world has evolved currency from simple pieces of stone to electronic lines of code has further confirmed the concept of money to be exactly that, a concept and nothing more.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Glass, I. (2018, February 19). The Invention of Money. Retrieved September 21, 2020, from https://www.thisamericanlife.org/423/the-invention-of-money
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