Published in Citadel 21 Vol. 19
Translations: German 🇩🇪
Audio by @DelioPera
Money tends towards one. It’s true, and I’ll prove it using logic. It’s a recurring argument against shitcoiners so I’m putting it down in writing once and for all.
Human society must have begun in a state of barter before we had money. From that starting point, in the absence of a ruler who forces tokens on people (the norm), individuals will voluntarily trade with one another with goods and services they produce (barter).
Specialisation in a particular field of production/service would increase output and prosperity, but it is risky to initiate, as not all people will accept the particular output in trade.
Specialisation would magnify a “coincidence of wants” problem (see image). Here, Alice, Bob, and Carol cannot trade with each other:
But, if one party accepts a good (eg Alice accepting carrots) that is not directly wanted/needed, to be used later as payment, then a trade may occur. This is a risk, as it is unknown for sure if that good can be used later, but the risk is balanced with the value gained through increased trade (increased trade = increased prosperity).
No one needs to be forced into this for it to happen – It is completely voluntary, and it happens naturally because the incentives are there – Alice wants to get them apples!
When a participant in the market is uncertain of what they wish to buy in the future (and what might be accepted as payment in the future), the most suitable good to accept will be the one that has the best properties as money – that is the one that will be least risky. The risk is calculated by a combination of assessing the good’s suitability to be used in trade (scarcity, durability, divisibility, portability, recognisability etc.) and the chance of being accepted as payment (a function of the “money’s” network effect, i.e. the number of merchants accepting it as payment).
Those that choose poorly become poor. Those that choose wisely, will prosper.
Accepting goods for indirect trade will happen with many different items, but the problem of risk always remains until one universally accepted item prevails – when there is only one money, there is no risk in accepting that money, and the process of barter-to-money is complete.
When there is more than one money in society, accepting one or the other as payment always has some risk (because you don’t know if it will be accepted by the merchant of your choice in the future). And so, society is said to be in a state of partial barter (or a society with incomplete evolution towards one with money). The incentive to choose the best money remains, and that provides the perpetual natural drive toward one money.
When money enters a barter society, specialisation of trade becomes less risky. When individuals specialise in a trade (rather than doing every task themselves), they produce more (become more efficient), and society as a whole produces more. When society produces more, society as a whole becomes “wealthier”, or more prosperous. By improving the communication of value, money improves the wealth of EVERYONE in society (wealth being a product of natural prosperity to all, and your rank in society of your spending potential).
The natural state of people plonked onto the planet is what I call “baseline poverty”. People initially have to fend for themselves with the resources available on the planet, and prosperity increases with free-exchange. Can they become poorer? Yes: if a ruler steps in (with violence) and enslaves the people (with good intentions or not, that’s not relevant). This can take many forms, but working for pieces of paper that becomes worthless over time with no share (or reduced) of the planet’s resources is WORSE than baseline poverty. I’d call it a form of slavery. This is how many people in the world live today, and don’t realise.
Natural money that evolves from barter provides prosperity for society. When rulers step in and force worthless tokens on people (and assigns value), this can still facilitate trade and overcome barter, but it allows the ruler(s) to pillage the wealth/prosperity generated from human free-exchange. They either keep it for themselves or distribute it unevenly (to people that help keep them in power).
Ultimately the redistribution of prosperity, even if benevolent, can not be more efficient/accurate than what the free market will allow through the pricing mechanism (powered by supply and demand). Elaborating on this fully is outside the scope of this piece and I refer you to the study of Austrian Economics (well worth it!) – an excellent book to start with would be: “Choice: Cooperation, Enterprise, and Human Action” by Robert Murphy.
So currently, we are in a state of slavery with many rulers, many forced monies, a parallel system of free-market money that failed (gold/silver – which allowed fiat to exist in the first place), and an emerging new free-market money that will eventually dominate (here’s the logical proof), and eliminate the power rulers have over money.
Yes, it’s Biiiiiitcoiiiiin!
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