Money is nothing but bookkeeping. It is a measure what you owe to the community and the community owes to you. Money is a circulation of information and in itself has no value, money is an abstraction. The relationship of money to wealth is that of words to meaning in the physical world, it is just a label.
Exactly, what we really want is “un-forge-ability”. Because it is accounting nobody should be messing up with the ledger: Getting money in “unjust” ways. You get money, only when you do something valuable for the community. We as a community can decide whether to give you some of our money or to forge new money for you.
Fixed and known supply gives you a simpler mental model to reason which share of the total wealth you receive & when to consider yourself paid. Fixed supply also pushes power to the edges, convincing all the community to issue new money when I want to pay you is out of the question, I must directly give you my money and that trade ensures that you consider yourself paid and equally I consider myself served. That dynamic saves us from “power proxies”, like the government, deciding for us what might not be in our best interest.
Exactly, we must reward people in our community. Rewards come in many ways too. There is money, there is fame, there is prestige, whatever you like. And best of all, none of those are scarce, we can always create more, that is the hallmark of human ingenuity. As a community we must be smart enough to recognize that and reward what we want to see in our community. If someone created value, we can create the reward. Zero-sum just helps with the accounting.
I believe the biggest innovation of cryptocurrencies is not the fixed supply, but that we can achieve 100% democracy. You volunteer to join a community and its money, the one that reflects your values or at least the values you want to strive for. Some communities will have fantastic ideas and those will foster the wealth and well being of their members, others will drive themselves to oblivion. Today you are “captured”, you must use the money they give you, you must pay they taxes they impose you(After covid I don’t even understand why taxes if they will just print money). Voting with ballots do not fix the problem, especially if you don’t get a vote on monetary policy. The only true votes are with your wallet and your feet, and governments are working to take those options from you.
The reality of economic reality is that when something works everybody copies. When a business starts doing well, it sprouts more of those business, competition is best for the customer in the long run but very confusing on the short term. Some copy-cat business are never worth it. Same with cryptocurrencies, they offer a tremendous amount of value and so there are good projects and outright scams. We’ll have to find out what works best in the long run yet. And we must work to keep that possibility alive, because no government wants 100% democracy, they want 100% compliance. Just take covid, we could have copied Sweden that kept everything open, yet every government copied the most authoritative regime of China and locked everybody down. As I said, if something works everybody copies. Whether it is good for you or not is a different problem.
Yes!! All human ingenuity is geared towards giving us more for less, to save labor and to produce goods and services. In a prosperous economy we grow wealthy, prices go down and we need to work less. Your work today and you should be able to save for the future where your money will give you more and free you from work, that is in general the reward of society. Passing the post, let new generations work. We don’t want money, we want what money buys. Money is boring, you can’t do anything with it, what you want is to trade it for something else that is truly valuable to you. People wont hoard their fixed supply crypto forever, something that they truly want will come their way and they’ll seize that opportunity.
What crypto brings to the table is a better savings technology. You can save in something that can capture the aggregate effort of society. Just make sure you build a better society and your money will be worth more. You don’t need to worry about your stock portfolio, investing, or other things. Just be a good person and save.
Now to the question of this post. Is store of value incompatible with medium of exchange? I don’t think at all, it is in fact what you want to have because it frees up your mental space, focus is extremely valuable. In fact we are at the point in technology where store of value and medium of exchange can be unified.
However, life is not certain, thus nothing fixed works long term. Because something works today, it doesn’t mean it will work tomorrow. I said crypto currencies give you 100% democracy, yet if you have ever interacted with other people you’ll soon realize that conflict arises all the time. Just read this thread, we are “arguing”, even if it is constructive and will leave more knowledgeable, there will be some hard feelings and frustration along the way. There are always “timescales” at play. We start with our preconceptions, then we confront them to those of others, we get hurt and defensive, maybe even become stubborn or maybe we relax and open to learn or to teach others. And an agreement will take time to consolidate. If money was on the line, how would you stabilize the entire turmoil?
Our economy is precisely that. Is a place where every participant has their own opinion, and values things differently. Maybe you love Coca-Cola and would even pay twice its price, I don’t drink it even when its free. Maybe you would accept a payment in Coca-Cola because you like it and on top of that it saves you the time to going to the store, I would be worried about how am I going to get rid of it thus I would never take it. Thus we invented money, to solve the problem of the coincidence of wants. Money is a technology that grows inside a community because it is able to keep the accounting clear (there is a saying: clear accounting makes friendships last). As I said, we don’t really want money, we want what we want, money is a shared social believe system that allows people to transact. If you don’t want to transact today, you want a store of value. If you want to transact, you want a medium of exchange. For store of value you want something you can defend, for medium of exchange you want to be able to move it. Digital currencies solve those problems at once for the first time. You can defend your crypto at close to no cost, it doesn’t rot, it can’t be confiscated and you can send it to any place in the network with final settlement at quite a high speed. They are an open permission-less system, anybody that wants to receive crypto can do it.
What is left is the unit of account, there is where you need people to agree and people have different opinions all the time. Units of measure are not a technological problem, they are a social one. Meters are no better than yards, yet both are better than a stone’s throw of distance. Standardized units of measure are the biggest foundation for human progress. We have not yet invented a unit of measure for money, because money is an abstraction it does not exist in objective reality, it is a collective believe system and we don’t have any idea how to measure. However, don’t let the perfect be enemy of the good and we still have a lot of innovation to see in the space.
Cryptocurrencies give you today: store of value, medium of exchange, global auditability, immutability + impossible to counterfeit. You just need to solve the unit of account, which is a social problem. That means as long as you get a community to back you up is good enough, because that is the point, you want your peers to have your back, you want to live in community with them, you want to reward them for the value they bring to your life.
Maybe we do need a 3 tier system. The network base money, where everybody can save and capture the collective increase in human productivity over the long term(think ADA). A credit issuance system or security issuance system where you individually capture the value of your individual work and risk taking(think other native-tokens of the network). A financial insurance system that hedges you against targeted volatility(this innovation does not yet fully exist, but it would be like a flat coin, a constant purchasing power). As you read the last 2 are actually systems, that means they need to be adaptive, the second one needs a legal framework(which we already have), you want to buy securities that make their issuer accountable. The third one already exists as well as futures contracts, they are like vouchers for large purchases. They are financial contracts, you buy the option to buy or sell something at a given price by a given date. This contract shields you from volatility in a specific asset, we need to bring it down from a tool for large finance players to everybody. From valid for the purchase of 10 Tons of copper in 6 months, to valid for 1 gallon of milk within 12 months(they also exist they are called coupons and merchants issue them directly because they know their production rate).
