The Natural Order of Money and Why Abstract Currencies Fail
Roy Sebag
5421

Thanks for posting such a well researched article Roy — lots of food for thought.

Your arguments pertaining to weight are interesting but if money is ultimately a human construct and a “memory technology” of our own making, can it not be argued that it would only be natural for us to want to make advancements with “money technology” as we have with all other forms?

One could argue that, if we managed to destroy ourselves and lose the knowledge for harnessing electricity, then all of our electronic methods for keeping records of information that we have come to trust and rely upon would be lost without a trace whilst ancient stone or clay tablets could still survive to be found by the next iteration of intelligent life on earth.

In that context, why would we not want to explore the advancement of our “money technologies” in the same way. After all, it did take thousands of years of trial and error for humans to globally reach consensus that gold was the ideal base upon which we could imbue the various other qualities required to turn a dumb rock into a useful and independent global ledger. These not only include abstract social constructs such as “store of value” but also encompass our greatest technical innovations such as our mastery and control of fire (to reform metal) along with our ability to define units of measurement, including weight, into ever-more precise units.

These qualities have always fluctuated over time to a point where some of them are simply no longer fit to serve their desired purpose.

It could be argued that weight is exactly the factor that became gold’s Achilles Heal as our communities and trading relationships expanded to become the global networks that they are today.

Weight was exactly what caused gold’s quality of “portability” to start losing its muster hundreds of years ago, becoming less and less suitable for speedy transnational settlement. Furthermore, the limitations it presents in terms of “divisibility” caused similar problems in terms of local trade as its value became too great to serve small-value exchange.

Both of these issues were key factors that lead to the rise of specie substitutes, enforcing the need for trusted custodians (banks in modern times replacing the elders of the temples at Uruk and Jemdet Nasr in ancient times).

Some of Bitcoin’s monetary qualities may currently fall far short of gold’s but as far as portability and divisibility go it wins hands down.

I very much agree with your final argument that even the tiniest measure of doubt in our ability to trust pure mathematics will ensure that it may be impossible for us to ever globally accept a public blockchain as our most trusted monetary base.

But we allowed gold thousands of years to earn our trust so should we not at least allow a digital analogue more time before casting judgement? After all, time is the prerequisite component to building trust. Time, along with our own incredible skill for innovation, has enabled us to build trust in the digital transfer and storage of information to an indispensable degree over a very short span of time.

Whether it’s information, money or time we will always have the opportunity to regress to their most reliable base-measurement technologies if we need to.

If we lost all knowledge of atomic, digital or clockwork time keeping we could still regress to using the sun and a stick in the ground.

As you maintain, universal laws delivered gold and time long before we existed. They’ve only had any meaning at all since organic life evolved to observe them and they’ll always be here as and when we need them, however we or our ancestor choose or need to utilise and measure them.

I’d be keen to hear your thoughts as mine are the basis of a long unfinished blog piece of my own so you might spur me on to finishing it:)

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