Money That Matters

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Picture Credits: Josh Appel@joshappel

This is not a course on what money is. We start from simple facts. Let me know if I missed something.

FACT NO.1

We can use money to buy things. Things that we use in everyday life, like food, cloth, travel tickets, medicine, etc.

FACT NO.2

We can hold/keep money to spend it later. If I have 20 Euros in my pocket, I can keep it for a year and use it to buy me stuff. We can hold it longer, maybe for a decade, unless the country asks its citizens to submit their money to the central reserve and receive a bank assurance to redeem the money later.

FACT NO.3

We can lend money to someone and do not have to worry about as it would be paid back in the same money we lent it to someone, or someone can claim your assets like your house, or your valuables ( like Gold Ornaments, or your piece of Land )as the collateral in exchange of the money you received as a loan. That is how banks loan, or create money, they got some heavy loads of collateral behind them but now and then, bad actors game this system too.



Do we know such money? Do we not?

In my country, often the definition of the money by many people is what they see, the paper money and the coins, and the digital money that we can use through our debit cards issued by our banks. We can also submit the Gold (24 Carats) to our banks and get some loans, keeping the gold as collateral. Land and House are also kept as collateral by banks in my country whenever someone needs a loan.


The Case for Cryptocurrencies

Where do cryptocurrencies fit in countries like mine ( Nepal)?
NOWHERE. The government here does not accept payments in Bitcoins or any other cryptocurrency.

So, is cryptocurrency money in my country yet? No, because you can not use it to buy things in my country. You can, however, receive the local money in exchange for fiat from foreign countries, or by simply swiping your Credit Cards at the local Automatic Teller Machines.

What works as money in a country does not necessarily work as money in other countries. We do not accept bitcoins, Switzerland probably does accept Bitcoins, Canada does.

Cryptocurrencies have a long road to go, and personally, I believe it won’t be a universally accepted money anytime soon, but there is a big hope in the crypto-space. I do have hopes for a cryptocurrency that is without borders and makes a substantial means of exchange of values.


The Gold Argument

Anyone who believes Gold is not a valuable thing is either stupid or is acting to be like one. Gold is a very useful Element. Gold is a shiny metal used as Ornaments, in Computers, Smartphones. Here is a good list.

Gold, after all its valuable uses, is not good money. Why?

Gold resources are limited, bulky for a large sum of money, and not secure enough.

Gold is a good store of value.

The Libra

I’ve been reading a lot of texts on what is Libra and what it is not. Well, if we take them for their words, the project is going to have a big impact on the world as the people who do not yet have access to the global economy would have a chance to enter the market, and this is a big opportunity for the world. What seems fishy is the difficulty to be able to host the technology that powers Libra, because the entry point is bit expensive and it all seems that an alliance of Technology Giants and Startups have gathered together to run the global finance show all by themselves and since it seems to be an “Association” and not a “Foundation”, eyebrows are raised.

The Case For Money

  1. TIME
  2. PHYSICAL RESOURCES
  3. PEOPLE AND SKILLS

Basically, these entities are the most important elements of our life and existence. Nothing exists beyond these basic elements, and that’s all the world is comprised of. These elements are valuable, they are gems of the existence. I call them money, remember the old cliche of “time is money”? It can be interpreted in many ways but the point is universal, never waste your time doing something that is not going on a productive direction, whether that be working for a company, or learning to code, or learning some new skills. Time is a resource, and we do not know how much of it we really got in our lives. Physical resources are required to produce goods and services, and we need skilled people to mobilize these resources effectively. We can not imagine an economy without skilled people, without physical resources for the production of goods and services, hence they form the very basics of every economy.

Let’s get trading! If someone produced a lot of Apples and someone else produced a lot of Vegetables, they could exchange their stuff with one another for quite a limited quantity and the rest would have not much of value to them unless they have a chance to exchange them with other stuff they need in life, for example, machinery, clothes, medicines, etc. Imagine you are a Fisherman, and your productivity is to catch 1000 fishes a day, but you can not make much use of those fishes unless you have a way to exchange them for something. Now you need a bigger boat, but you just know how to fish, but not how to build a boat. How are you going to buy a bigger boat with your fishes in a market where you just barter things? Not everyone is looking for fishes obviously. You need something, you need some representation for the value that fishes bring into one’s life. Imagine you have a gold coin as the medium of exchange now. You could sell fishes for gold and then spend your gold to buy something else. Everyone needs to agree on this, that gold would represent the store of value that you represent. A gold bar is now intrinsically valuable in many ways I have stated before. Now to treat the Gold as the money does not sound wise, as large lumps of gold would need to be traded for something that requires a lot of time and effort to build, for example, a big palace. The problem with gold is its volume, weight, and security, let alone its availability. I remember my Grandfather telling me stories when his parents used to receive some gold, and silver, along with rice, vegetables, oil, etc for the Astrological and Religious Ritual services they offered to strangers. Well, during those ages, gold was probably very precious, and it still is in my country. You still see people giving gold gifts here to priests, but not every day, only on special occasions like marriage or some important Hindu rituals. My point is, gold has been used since ages, and my Grandfather was a living example to tell me his experiences, and I will live to tell this story to my children or the new generations. Although there are some good uses for Gold, it is not a good representation of goods and services of values at this age.

Paper Money and Coins! What are They?

They represent money, they are collectively called a “currency”. Does it have a value on its own? For gold coins, yes, gold by itself is a valuable metal for many uses although the value drastically decreases when it comes to an Aluminum Coin ( Yes, they exist in my country!). What about your paper currency? Does it have a value on its own? It is just a printed paper with some shiny nice design that represents a consensus of “representation of a value” by the people of a country. US Dollar is a currency too, on a shiny paper with a Design that is unique. Does a hundred Dollar bill by itself (as a paper note) really has a value that it represents? No, it is just a pointer, a representation that can be used to claim something that is a resource, like a chair, or a car for example. It is a wise idea to use paper and coin currency in place of gold. Now one did not have to worry about the availability of currency, or its issues in fungible nature, or its portability as compared to gold. However, gold can not be produced out of thin air, it is an Element! Paper money can be, the more you print, the more you have it, that goes the same for your digital currency or the number that represents the money your bank owes you. Who controls how much money to print in the country? Who controls how much money you can have in your digital bank account? You know who has the controls in your country. If you believe your government or your central bank, whoever prints money, does its work fair enough, you do not have anything to worry about, but to face every outcome that comes as a result of bad policy or unfair game. If you look at history, governments around the world have done it, printed more paper money and flooded the market with large volumes of currencies.

A economy would have been considerably fair, if there were no double spending issues in paper money, and the coins, as printing them costs way less than using those printed papers to claim the value it represents. Unfortunately, it is not the truth.

The solution to double-spending and counterfeiting is solved by Cryptocurrencies like Bitcoin, but as of today, 2019, Bitcoin is not good enough to represent money globally, as it is also not accepted all over the world, maybe in near future countries realize its value. Cryptocurrencies are not money either.

For me, personally, money is time, people, and resources. These are the elements that makeup money, and to represent it in some form so that we could claim those goods and services in return, we invented cash or gold coins but they are not the best ones, we need something as liquid as bitcoin or digital cash, we need something that is fungible like Bitcoin which is free from double-spending, we need something that is more portable than gold or paper money (Bitcoin fits the agenda), we also need something that is more or less free from speculation as over-speculation is powerful enough to topple the economy.



Do you have any ideas on how to define such a money/currency which would be

  1. fungible
  2. portable
  3. free from double-spending
  4. automated
  5. transparent
  6. less prone to speculation

We do not have a perfect monetary policy yet, let alone the foreign policies or stuff that are affecting the monetary policy of a country, let alone the heavily funded wars, the heavily funded election campaigns, let alone the money laundering…. we do have serious problems. Sticking our heads into the mud like a stock and blaming it all to the monetary policy and making a contempt prior to investigation to understand the real drivers of a country’s economy is not a very wise thing to do by learned citizens of the world.

Have a different point of view? Feel free to respond. We might learn more things together.


Please feel free to use this article to spread the words, print it, do whatever you want to do with it, provided that you also allow others to do the same with the derived work. Thank you!

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