In today’s society, money is the most essential factor in our everyday lives. Although money can not physically give life to an individual, it can provide all the things that are needed to survive. If you were to ask a group of people what is money according to them, they would all probably give similar responses. One might say it is a measure of wealth, or they would say it is a method of payment. But the concept of money is more abstract than just that. While money is only paper, a birth certificate is also only a piece of paper, as is a high school or college diploma. So that makes my wonder; why is a piece of paper so important? What gives money so much value and power?
Growing up, I remember receiving money in birthday and holiday cards, sometimes I would even be given a gift card with a limited balance on it that could be spent at a particular store. Being so young and not even really needing paper money, I never knew what to do with it so I would put it away in a piggy bank. I knew the money was important enough to save but I didn’t really know why. However, I understood the purpose of a gift card well enough to know to put it in my wallet and carry it with me next time I went shopping. As I got older, I began to realize that money takes on many forms, other than just a green, rectangular piece of paper. Now being a student in college, the value of money has became greater to me.
While reading, “The Island of Stone Money”, by Milton Friedman, I was introduced to a new idea of currency. Yap currency consisted of large pieces of limestone, that was also known as fei, and were sometimes too large to even move. I initially thought it was strange because limestone isn’t something that an individual can keep safe at a bank or to even carry in their wallet. The people of Yap would make purchases with the stone, however the stone did not have to be physically exchanged or even present in order for the new owner to accept the possession. Before passing judgement too quickly, I began to think about the society we live in today. Funds can be transferred or exchanged without physically changing hands. For example, going into a grocery store and swiping a credit card, resulting in the purchase of the grocery items. No physical money was present or even visible, but the transaction was still able to be completed. Despite the similarities we may have to the people of Yap, it is almost assumed that today, if you do not have physical money in your possession, then you are not as wealthy as someone who does. If someone does not have physical possession of the money, or an item that was bought with their money, it is not considered to be theirs. A fei at the bottom of the ocean near the Yap islands still has value and can still be used as an exchange, but if you were to drop a dollar in the street, that dollar is no longer yours and has no value to you.
Next, I was introduced to the Bitcoin. I was never aware that this existed until recently. I quickly became familiar with the concept. A Bitcoin is a digital currency, and has also gained a great amount of power. The value of Bitcoin changes almost everyday. It can range from zero dollars, to millions of dollars. With this virtual currency, users are able to keep their Bitcoins in a virtual wallet and can use those Bitcoins to make exchanges of products. However, Bitcoins do have a down side, including the anonymity of the users can lead to potential illegal activity and the vulnerability of the virtual currency makes an easy target for online hackers.
After reading these articles and gaining insight to different forms of currency, “money” is still a very broad term. Money is not just paper or plastic, but it is whatever holds value. This money can be a 10 foot limestone that is not physically transferable, a virtual form that exists but is not visible, or a green sheet of rectangular paper that can be folded into a wallet. I personally believe any form of currency has to be handled and exchanged with trust. For the people of Yap, they had to trust one another when an individual wanted to purchase land and said that their 10 foot limestone was now exchanged for that spot of land. Now, it is still about having trust in each other that the money we claim to have is in fact accurate and can be used to physically exchange goods and products.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
“Bitcoin has no place in your – or any – portfolio.” Marketwatch.com. 31 Jan. 2015
Renaut, Anne. “The bubble bursts on e-currency Bitcoin.” Yahoo.com. 13 Apr. 2013