Nick Szabo on the past (and future) of money

Thursday 25 August 2016

On his blog, Unenumerated, Nick Szabo ponders how previous forms of ‘money’ were almost unrecognisable to the modern eye.

Nick Szabo, cryptographer and digital money expert, has taken an interesting foray into anthropology in a recent post post on his blog, Unenumerated

Caveman

Stores of value and media of exchange might also be usable objects

One of the things I’ve always appreciated about bitcoin is the fact that it tends to attract those with several different interests and areas of expertise; the nature of it is that it's at once a protocol, an economic system and an ideological movement, so perhaps that’s hardly surprising. In this post, Szabo takes a left turn from cryptography and considers the different forms of what we might now think of as money that existed in the era of early humans.

One of his chief points is that ‘money’ - as well as taking an incredibly diverse range of forms - didn’t fit neatly into the categories we have today back in our distant past. Consequently, it’s easy to miss what money was, or to put it a different way, what other objects - by modern categories - also functioned as money.

Collectibles

As culture and technology has grown more sophisticated, he argues, money has become more specialised. The chart above locates different forms of money within their functions as we typically understand money today - as a medium of transfer and unit of account, and store (and display, in this case) of wealth. Humans seem to have an innate desire to broadcast wealth and status. An implication is that as money becomes less tangible, it’s only natural that this desire would be expressed in other ways.

Stocks and bonds, futures and derivatives, the kind of money we are familiar with (coins, paper money, digital money, etc.), high art, and most other artifacts of wealth as we understand them did not exist in Paleolithic times, and even in Neolithic times, when some artifacts more closely approached these ideals, they were still far less developed and specialized than today. We are not talking about the highly evolved forms of collectibles, quite the opposite – we are talking about the most rudimentary of function, which nevertheless is quite a bit better than nothing (which is what other animals have when it comes to collectibles).

Modern money including bitcoin falls at the top left of the chart, because it is highly functional and has almost no display purpose whatsoever; whatever you think about the beauty of the mathematics underpinning cryptocurrency, you won’t often see it displayed as bling.


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