Why Don’t We Use Apples as Money?
The Ideal Characteristics of Money — Post #3
Because not everyone wants apples. Dollars, on the other hand, can be exchanged for almost anything. They are widely accepted as a way to buy whatever you want. You can buy food, pay rent, or go get drunk. Try doing all that with apples.
Dollars can also take many forms. Think about how many different combinations are possible to make $20, you can have (1) $20 bill or (4) $5 bills or (2000) pennies. But you can’t divide an apple into 2000 pieces. That would be silly.
People who use dollars trust that if they have (4) $5 bills they can (generally) be used the same way as a $20 bill. The opposite is also true.
Money also needs to be easy to send, receive, or otherwise move. Imagine if your rent was due in apples, and your landlord lived in Phoenix. You would have to transport 500 apples to Phoenix every month. This is not practical. Compared to dollars: I can send $500 in an envelope, or carry it in my pocket to the store.
Dollars are also decently durable, compared to apples (which have this annoying tendency to decompose). You can store dollars and coins in a safe and they will be there when you return.
If you want to expand your vocabulary, here is an informal summary of the last 2 posts.
- Acceptability — trust that I can buy things (with money) when & where I want
- Uniformity — my $1 = your $1
- Divisibility — $20 bill = $10 bill + $10 bill. And vice-versa.
- Portability — easy to take places
- Durability — lasts long enough to spend
This is post #3. The others are located here.
Want to be emailed these posts (or weekly/monthly summaries)? Sign up here.
Any comments, suggestions for improvement, or topic requests? Get in touch or email me at miketalksaboutbitcoin@gmail.com
