Currency is around the world, and has been since the beginning of time. Whether it was trading one thing for another, it is still a type of currency. The trading slowly changed from rocks to gold to paper money. Nowadays there is not a lot of money, most of it is electronic and not physical. That is where the question comes in what is money? There is no money, there is the idea of money and currency. In Yap they used giant livestock rocks from an island about 400 miles away. They could not physically move the giant rocks, so the people of Yam would keep them in the same place, but everybody knew whos rock was whose. When somebody would sell one of the rocks or trade them for something else, the rock would stay in the same place and the people would just know that the ownership of the rock changed. This all is very shocking to what most people are used to nowadays, how do the people trust other people not to say that the rock is actually theirs and lie. Even more so there is a story of a rock falling into the ocean and still being used as currency (Friedman). How do the people even know it is actually there? That is where the idea of money comes in, in all of this the people of Yam do not actually have their money in their possession physically, it is just an idea that they have a certain amount. Just like how nowadays we do not physically hold most of our money, it is in the banks electronically, it is the same idea with the rocks, except now it is a bank. Money is a crazy concept that is hard to wrap the mind around.
Another amazing idea about the idea of money is inflation, and how that changes the value of money, today’s dollar is not the same as the dollar from the 1930s in the way of value. In Brazil they had a huge issue with inflation, literally everyday inflation went up, every month inflation went up eighty percent. Literally everyday the prices changed and went up, they even had a job where all you did was change the prices each day. The way that the Brazilian government fixed this major issue of inflation, was to trick their whole country into thinking their money was real, and that it had value again and change the way it is used. Whether their money actually had value again or not the people of Brazil will probably never figure it out, but it did help the problem. They changed the way people buy things and how their money works. Now instead of going into the mall and buying a pair of sunglasses in one payment, you would have six installments, or six payments every month. Now the United States already does this, on big expensive things, not five dollar sunglasses. So why do this, why make these payments that span over months? Wouldn’t the business owners want their cash immediately? This was the only thing that worked for the Brazilian economy. They have tried everything, they put a hold on raising prices, that failed. They then tried putting a hold on everybodys money, if you had money in the bank you could not use it during that time period. That of course did not go over well, it would never go over well in any place, people started committing suicide. The president that put that into place was soon impeached and the rule was gone. Now when nothing else worked they put the trust of their government into four guys, who would gossip around bars and came up with this idea. The idea that they came up with is still being used today (ThisAmericanLife).
It is crazy how the world views money and how fast it can change, it can change from limestone to gold to physical cash to invisible cash that are just numbers. In 1933 there was a banking panic and all of the money and gold was worth almost nothing, the U.S. gold reserves were extremely down. The issue that came with this other than our economic situation being bad is that we had some of France’s gold in our banks. Our cost of gold was down but theirs was going up. So the question came into play of whether the gold from France on United States soil was worth what the United States gold cost or what France’s gold was worth. France was extremely worried that the United States would change the cost down to what their costs were, which makes sense, because why would they pay more for the something that costs a less amount in their country (Friedman). That is another crazy way how the idea of money works, and it boggles minds.
Investing and putting money into nothing sounds strange right? But that is exactly what people are doing with bitcoin. Bitcoin is a new way of transactions on the computer, also known as digital transactions. Bitcoin is nothing, it is not a physical thing you could hold or touch, like gold or rocks or papercash. It is a new type of currency in a way, you buy it with U.S. dollars and sell it for U.S. dollars. It is a weird and still very new concept, it only came out in 2013, and is like the stock market but at the same time very different. In the stock market you are investing into different companies and when they do good you make money, when they do bad you lose money. Easy system to understand and makes sense. Bitcoin you are investing into nothing, no companies, just a digital website. Bitcoin is very confusing on how it works and how the money can go up and down, one day it could be one hundred seventy-six dollars and the next day it is worth only a hundred. But what makes it change? It brings in a whole new idea about the money concept, that boggles my mind (Reeves).
Friedman, M. (1991, February). The Island of Stone Money. Retrieved February 6, 2018, from https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf
Reeves, J. (2015, January 31). Bitcoin has no place in your – or any – portfolio. Retrieved February 06, 2018, from https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28
The Invention of Money. (2018, January 31). Retrieved February 06, 2018, from https://www.thisamericanlife.org/423/the-invention-of-money