13 ms·

Shelling Out: The Origins of Money (2002)

66 points by mgdo 9y ago

jsykfyi 9y ago
The Origins of Cryptocurrencies, with Bitcoin or Ethereum in particular are really important for people to be aware of. These "coins" were produced simply by running some software. If you look at the math under the hood, you'll notice the algorithm distributed most of the coins essentially for free to a very very small group of people. Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy. The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the US’ wealth distribution look like that of a workers’ paradise http://www.businessinsider.com/bitcoin-inequality-2014-1 http://www.businessinsider.com/bitcoin-inequality-2014-1 It's essentially a penny stock deception, where the early users who generated the coins for low cost, or free, control the majority of the supply to manipulate the market spot price and than launch marketing campaigns and propaganda in an attempt to convince the uninformed public to buy their software coins. While there may be issues with fiat systems, it's far better than purchasing any of these crypto beanie baby schemes.
- jsykfyi 9y ago
  Case study in cryptocoin market manipulation: https://pastebin.com/RdRAULtT https://pastebin.com/RdRAULtT https://pastebin.com/1NTTBCXM https://pastebin.com/1NTTBCXM https://news.ycombinator.com/item?id=7126153 https://news.ycombinator.com/item?id=7126153
Wildgoose 9y ago
I highly recommend that people read "Debt: The First 5,000 years" by David Graeber which is a fascinating and erudite exploration of the development of money.
- dalbasal 9y ago
  I've made that recommendation, with mixed results. I think it has less impact unless you studied/read a little classic economics. Most economics "schools" start from a standard Smithian narrative for the invention of money. Spot traded goods, durable goods as values stores and eventually some sort of money. The money supply narrative is completely separate. It's explained via the "money multiplier" effect, which turns 1X amount of money into nX via lending. Generally, it's taught via the lens of central bank policies, monetarism and macroeconomics. Graeber merges these narratives. Debt predates money, and is the primordial money. All through history nearly all money has been debt and actual money (eg gold) just got used to quantify debt. Gold rarely exchanged hands or even made it to the hands of most people. Once you start with debt instead of money, the picture changes. Familial, religious or cultural obligations form the basis of well obligations, debt. That's the origin of money. Graeber is also politically eccentric and that appeals to people with sympathies to his views, but for an average reader... It's not revolutionary unless you already know/care about the mainstream ideas.
  - xchaotic 9y ago
    Yeah, the biggest value in the the "history of debt" is the unlearning and debunking myths that are taught as 'science' in economics schools. There were no 'barter' economies, money did not 'evolve' from barter etc. Even otherwise respectable names in economics built their theories on top of these ideas which are in fact pure, convenient fantasy.
    - dsimms 9y ago
      so much this, and it's repeated over and over ...and over in the book.
  - novalis78 9y ago
nosuchthing 9y ago
The author of the main article is Nick Szabo, who some theorize as the most likely candidate for being Satoshi Nakamoto. Szabo developed an early cryptocurrency called Bit Gold, which was never implemented, but has been called "a direct precursor to the Bitcoin architecture.". https://en.wikipedia.org/wiki/Nick_Szabo https://en.wikipedia.org/wiki/Nick_Szabo Was there a reason this comment was flagged? It seemed very relevant given the topic and recent trends in cryptocurrencies. Please discuss if there's critique; the comment: The Origins of Cryptocurrencies, with Bitcoin or Ethereum in particular are really important for people to be aware of. These "coins" were produced simply by running some software. If you look at the math under the hood, you'll notice the algorithm distributed most of the coins essentially for free to a very very small group of people. Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy. The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the US’ wealth distribution look like that of a workers’ paradise http://www.businessinsider.com/bitcoin-inequality-2014-1 http://www.businessinsider.com/bitcoin-inequality-2014-1 It's essentially a penny stock deception, where the early users who generated the coins for low cost, or free, control the majority of the supply to manipulate the market spot price and than launch marketing campaigns and propaganda in an attempt to convince the uninformed public to buy their software coins. While there may be issues with fiat systems, it's far better than purchasing any of these crypto beanie baby schemes. Case study in cryptocoin market manipulation: https://pastebin.com/RdRAULtT https://pastebin.com/RdRAULtT https://pastebin.com/1NTTBCXM https://pastebin.com/1NTTBCXM https://news.ycombinator.com/item?id=7126153 https://news.ycombinator.com/item?id=7126153
- CryptoPunk 9y ago
  >>It's essentially a penny stock deception, where the early users who generated the coins for low cost, or free, control the majority of the supply to manipulate the market spot price and than launch marketing campaigns and propaganda in an attempt to convince the uninformed public to buy their software coins. While I welcome a debate on the public welfare effects of cryptocurrencies vs fiat, and disagree with your broad brushing of it as a "deception", this is really off-topic.
taw55 9y ago
Obligatory reminder that money != coinage != barter != banking
- zaphod4prez 9y ago
  Hm. I have to say I think this isn't quite right. I guess it is, strictly speaking, true that these concepts are "!=". However, I think that the vast, vast majority of people err on the side of thinking that they're far more separate than they actually are. Money, coinage, banking, and debt (I'm ignoring barter here and adding debt) are so intimately related that, really, none of them exist in anything resembling their current iterations without all the others. And talking about "money" in the sense of exclusively a medium of exchange is really hard for people these days to wrap their heads around...none of us have had any experience with such a thing whatsoever. All that said, I'd be curious to hear you expand on your original comment. How are you defining each of these things? What are you trying to say by noting that they're not equal? What are the implications?
jokoon 9y ago
I'm still curious about what are alternatives to using money. Surely there might be politics and some philosophy involved about how you manage and organize society. Aren't local currencies a part of the solution? Money is great because it lets individuals manage their own selves, but I'm still a little worried about how fraud, abuse and mismanagement can wreak havoc in society when money is abused. Regulating money and everything involved around money seems to be a hard thing, and at some point moving away from money or finding other ways to do things could make sense... Although I'm curious. Don't economists write some philosophy about those things?
- jsykfyi 9y ago
  The same problem exists, regardless if its a fiat central bank or open source decentralized software token system: how is the money distributed and created? https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Liberty_Reserve https://en.wikipedia.org/wiki/Liberty_Reserve Even given the Cryptocurrency ecosystem, there's threats of fraud like Tether (theory: https://hackernoon.com/the-curious-tale-of-tethers-6b0031eead87 https://hackernoon.com/the-curious-tale-of-tethers-6b0031eea...), or the inherent history and math behind Bitcoin and many proof of work cryptocurrencies distributing the supply to only a small group of users and cutting off the ease of producing more coins as easily to later users who use the software. Deflationary systems (or systems which skew how labor is rewarded, i.e. PoW with changing rewards for work) run the risk of creating a class of slaves from new generations, or users who simply arrive days too late: Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy.
  - 9y ago
deleted 9y ago
[deleted]
CryptoPunk 9y ago
How poetic that the author invented some of the key concepts behind Bitcoin and Ethereum (a proof of work based blockchain, the smart contract, etc) which introduced a new paradigm for money, and could potentially change how humans trade into the future.
- 45h34jh53k4j 9y ago
  Poetic, or maybe he is the real Satoshi :-)
ThomPete 9y ago
Best book I have read on money is "The End of Alchemy: Money, Banking, and the Future of the Global Economy" by Mervyn King (former CEO of Bank of England) He has a real knack for putting everything into context and explores the sub-prime crisis without pointing fingers. Highly informative.
dpflan 9y ago
I thought Niall Ferguson's The Ascent of Money to be an informative book the history of money if you're looking for more topical reading. > https://en.wikipedia.org/wiki/The_Ascent_of_Money https://en.wikipedia.org/wiki/The_Ascent_of_Money
- stuxnet79 9y ago
  I would recommend watching the documentary instead as it is the same content, but nicely summarized. I only discovered the documentary after reading the book however.
  - dpflan 9y ago
    (Good call; I haven't watched the documentary. I'll check it out ;))

66 points by mgdo 9y ago

The Origins of Cryptocurrencies, with Bitcoin or Ethereum in particular are really important for people to be aware of. These "coins" were produced simply by running some software. If you look at the math under the hood, you'll notice the algorithm distributed most of the coins essentially for free to a very very small group of people. Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy. The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the US’ wealth distribution look like that of a workers’ paradise http://www.businessinsider.com/bitcoin-inequality-2014-1 http://www.businessinsider.com/bitcoin-inequality-2014-1 It's essentially a penny stock deception, where the early users who generated the coins for low cost, or free, control the majority of the supply to manipulate the market spot price and than launch marketing campaigns and propaganda in an attempt to convince the uninformed public to buy their software coins. While there may be issues with fiat systems, it's far better than purchasing any of these crypto beanie baby schemes.

jsykfyi 9y ago
Case study in cryptocoin market manipulation: https://pastebin.com/RdRAULtT https://pastebin.com/RdRAULtT https://pastebin.com/1NTTBCXM https://pastebin.com/1NTTBCXM https://news.ycombinator.com/item?id=7126153 https://news.ycombinator.com/item?id=7126153

Wildgoose 9y ago

I highly recommend that people read "Debt: The First 5,000 years" by David Graeber which is a fascinating and erudite exploration of the development of money.

dalbasal 9y ago
I've made that recommendation, with mixed results. I think it has less impact unless you studied/read a little classic economics. Most economics "schools" start from a standard Smithian narrative for the invention of money. Spot traded goods, durable goods as values stores and eventually some sort of money. The money supply narrative is completely separate. It's explained via the "money multiplier" effect, which turns 1X amount of money into nX via lending. Generally, it's taught via the lens of central bank policies, monetarism and macroeconomics. Graeber merges these narratives. Debt predates money, and is the primordial money. All through history nearly all money has been debt and actual money (eg gold) just got used to quantify debt. Gold rarely exchanged hands or even made it to the hands of most people. Once you start with debt instead of money, the picture changes. Familial, religious or cultural obligations form the basis of well obligations, debt. That's the origin of money. Graeber is also politically eccentric and that appeals to people with sympathies to his views, but for an average reader... It's not revolutionary unless you already know/care about the mainstream ideas.
- xchaotic 9y ago
  Yeah, the biggest value in the the "history of debt" is the unlearning and debunking myths that are taught as 'science' in economics schools. There were no 'barter' economies, money did not 'evolve' from barter etc. Even otherwise respectable names in economics built their theories on top of these ideas which are in fact pure, convenient fantasy.
  - dsimms 9y ago
    so much this, and it's repeated over and over ...and over in the book.
- novalis78 9y ago

nosuchthing 9y ago

The author of the main article is Nick Szabo, who some theorize as the most likely candidate for being Satoshi Nakamoto. Szabo developed an early cryptocurrency called Bit Gold, which was never implemented, but has been called "a direct precursor to the Bitcoin architecture.". https://en.wikipedia.org/wiki/Nick_Szabo https://en.wikipedia.org/wiki/Nick_Szabo Was there a reason this comment was flagged? It seemed very relevant given the topic and recent trends in cryptocurrencies. Please discuss if there's critique; the comment: The Origins of Cryptocurrencies, with Bitcoin or Ethereum in particular are really important for people to be aware of. These "coins" were produced simply by running some software. If you look at the math under the hood, you'll notice the algorithm distributed most of the coins essentially for free to a very very small group of people. Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy. The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the US’ wealth distribution look like that of a workers’ paradise http://www.businessinsider.com/bitcoin-inequality-2014-1 http://www.businessinsider.com/bitcoin-inequality-2014-1 It's essentially a penny stock deception, where the early users who generated the coins for low cost, or free, control the majority of the supply to manipulate the market spot price and than launch marketing campaigns and propaganda in an attempt to convince the uninformed public to buy their software coins. While there may be issues with fiat systems, it's far better than purchasing any of these crypto beanie baby schemes. Case study in cryptocoin market manipulation: https://pastebin.com/RdRAULtT https://pastebin.com/RdRAULtT https://pastebin.com/1NTTBCXM https://pastebin.com/1NTTBCXM https://news.ycombinator.com/item?id=7126153 https://news.ycombinator.com/item?id=7126153

CryptoPunk 9y ago
>>It's essentially a penny stock deception, where the early users who generated the coins for low cost, or free, control the majority of the supply to manipulate the market spot price and than launch marketing campaigns and propaganda in an attempt to convince the uninformed public to buy their software coins. While I welcome a debate on the public welfare effects of cryptocurrencies vs fiat, and disagree with your broad brushing of it as a "deception", this is really off-topic.

taw55 9y ago

Obligatory reminder that money != coinage != barter != banking

zaphod4prez 9y ago
Hm. I have to say I think this isn't quite right. I guess it is, strictly speaking, true that these concepts are "!=". However, I think that the vast, vast majority of people err on the side of thinking that they're far more separate than they actually are. Money, coinage, banking, and debt (I'm ignoring barter here and adding debt) are so intimately related that, really, none of them exist in anything resembling their current iterations without all the others. And talking about "money" in the sense of exclusively a medium of exchange is really hard for people these days to wrap their heads around...none of us have had any experience with such a thing whatsoever. All that said, I'd be curious to hear you expand on your original comment. How are you defining each of these things? What are you trying to say by noting that they're not equal? What are the implications?

jokoon 9y ago

I'm still curious about what are alternatives to using money. Surely there might be politics and some philosophy involved about how you manage and organize society. Aren't local currencies a part of the solution? Money is great because it lets individuals manage their own selves, but I'm still a little worried about how fraud, abuse and mismanagement can wreak havoc in society when money is abused. Regulating money and everything involved around money seems to be a hard thing, and at some point moving away from money or finding other ways to do things could make sense... Although I'm curious. Don't economists write some philosophy about those things?

jsykfyi 9y ago
The same problem exists, regardless if its a fiat central bank or open source decentralized software token system: how is the money distributed and created? https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Private_currency https://en.wikipedia.org/wiki/Liberty_Reserve https://en.wikipedia.org/wiki/Liberty_Reserve Even given the Cryptocurrency ecosystem, there's threats of fraud like Tether (theory: https://hackernoon.com/the-curious-tale-of-tethers-6b0031eead87 https://hackernoon.com/the-curious-tale-of-tethers-6b0031eea...), or the inherent history and math behind Bitcoin and many proof of work cryptocurrencies distributing the supply to only a small group of users and cutting off the ease of producing more coins as easily to later users who use the software. Deflationary systems (or systems which skew how labor is rewarded, i.e. PoW with changing rewards for work) run the risk of creating a class of slaves from new generations, or users who simply arrive days too late: Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy.
- 9y ago

deleted 9y ago

[deleted]

CryptoPunk 9y ago

How poetic that the author invented some of the key concepts behind Bitcoin and Ethereum (a proof of work based blockchain, the smart contract, etc) which introduced a new paradigm for money, and could potentially change how humans trade into the future.

45h34jh53k4j 9y ago
Poetic, or maybe he is the real Satoshi :-)

ThomPete 9y ago

Best book I have read on money is "The End of Alchemy: Money, Banking, and the Future of the Global Economy" by Mervyn King (former CEO of Bank of England) He has a real knack for putting everything into context and explores the sub-prime crisis without pointing fingers. Highly informative.

dpflan 9y ago

I thought Niall Ferguson's The Ascent of Money to be an informative book the history of money if you're looking for more topical reading. > https://en.wikipedia.org/wiki/The_Ascent_of_Money https://en.wikipedia.org/wiki/The_Ascent_of_Money

stuxnet79 9y ago
I would recommend watching the documentary instead as it is the same content, but nicely summarized. I only discovered the documentary after reading the book however.
- dpflan 9y ago
  (Good call; I haven't watched the documentary. I'll check it out ;))