Ramen noodles replace cigarettes as preferred jail currency

Monday 29 August 2016

Money is whatever we agree is money, whether that’s dollars, bitcoins, gold or ramen noodles - and why we move from one to the other is informative.

Over the millennia, money has taken many, many different forms. Cryptographer Nick Szabo has taken a look at a few of them in one of his recent blog posts, concluding that ‘money’ in ancient times probably encompassed a broad set of purposes - as well as objects - that we wouldn’t necessarily even recognise today. Gold and silver are perennially popular, but that doesn’t stop people using other currencies. Ultimately, money is whatever it is most attractive and convenient to use as money in a given context.

Last week the BBC reported on a study that found ‘Ramen noodles have overtaken tobacco to become the most valuable commodity in some US prisons’. ‘Because it is cheap, tasty, and rich in calories, ramen has become so valuable that it is used to exchange for other goods.’

Ramen

Ramen offer something cigarettes do not: tasty calories

Tobacco has long been used as the preferred currency in prison. Tobacco is portable, divisible, fungible (i.e. relatively homogenous), easy to recognise, has sufficient scarcity and has a long shelf-life. It even comes pre-packaged in currency units, cigarettes. It’s a natural answer to the question of what to use when access to regular cash isn’t easy.

And so it’s particularly telling that ramen noodles are starting to replace cigarettes as the currency of choice. More interesting still is that this is not due to a ban on tobacco, or any shortcomings with tobacco as it is used as the default currency. Rather, finds the study, it is because spending has not kept up with the number of inmates, with serious impacts on the catering budget. ‘Prisoners are so unhappy with the quality and quantity of prison food that they receive that they have begun relying on ramen noodles - a cheap, durable food product - as a form of money in the underground economy. The form of money is not something that changes often or easily, even in the prison underground economy; it takes a major issue or shock to initiate such a change.’

And this insight, in a roundabout way, brings us to bitcoin and cryptocurrency. There has been a lot of talk about whether bitcoin/crypto will replace regular fiat money, and to what degree, and how this might occur. The tobacco-ramen shift illustrates that there are both push and pull factors at work when a monetary system changes. Cigarettes are great currency in prisons for the factors noted above. It takes something big to change the de facto form of money. In this instance, it’s not because there’s a deficiency in the existing currency; it’s because ramen offers something cigarettes do not: tasty calories.

The analogue for crypto adoption is that we should worry less about push factors, such as inflation or hyperinflation, or potential economic collapse. Instead, we should focus on the areas in which blockchain-based currencies offer something so strikingly attractive that fiat just can’t compete. Something as binary as the calories that exist in ramen but not cigarettes. In other words, something qualitatively, not merely quantitatively different. Like this.


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