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The money/electricity metaphor has one very fatal flaw. Electricity, as a natural entity, must conform with all the conservation laws of nature. Not so for mo
by sunstone 7y ago
The money/electricity metaphor has one very fatal flaw. Electricity, as a natural entity, must conform with all the conservation laws of nature. Not so for money.
The key attribute of money is that it's much more efficient than the next best alternative, which is trading my pigs for your shovels and that's why it continues to work even in extreme (eg hyperinflation) contexts.
- muzani 7y agoI'd disagree with the last bit - the next best alternative could be Bitcoin, ETH, gold, Euro, e-wallet money, stocks, bonds, or even debt. You can trade dollars for an imaginary dollar-backed value in PayPal's database. You can use something like HelloGold if you prefer something gold-backed instead. You're probably right - that could be money's key attribute. So what happens when someone else does it better?
- x220 7y agoThat's still money, it's just different currencies. Money (or currency) is something that is widely accepted to have value not from its inherent properties but because it is accepted everywhere in a transaction. If something is difficult to exchange quickly with most exchange partners (e.g. taking days to transfer stocks from you to a gas station) then it's either not a currency or its a bad currency. Bitcoin and other cryptocoins are "sort-of-currencies" because you can't practically use bitcoin and stop using USD. This is why the SEC is starting to treat crypto like a security.