History of Money
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Introduction to the History of Money by Blockchain Workspace
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History of Money
- 1. Blockchain Workspace www.blockchainworkspace.com History of Money Bas Wisselink 12-04-2017
- 2. Blockchain Workspace www.blockchainworkspace.com Functions of Money Medium of Exchange Unit of Account $ $ $ Store of Value
- 3. Blockchain Workspace www.blockchainworkspace.com Barter (ruilhandel) Cattle were considered more valuable than sheep or pigs One calf was worth two sheep
- 7. Blockchain Workspace www.blockchainworkspace.com Forms of Money Forms of Money Ledger Money (Paper or Digital) $ Cash Source: https://www.boundless.com/economics/textbooks/boundless-economics-textbook/the-monetary-system-27/introducing-money-114/other-measurements-of-the-money-supply-448-12545/
- 8. Blockchain Workspace www.blockchainworkspace.com Why Stop There? What is value? Contracts Private information (address, likes etc) Goods and commodities Codes ETC…
- 9. Blockchain Workspace www.blockchainworkspace.com Problems with Digital Value? Who Proves: That it is real and not counterfeit? That it hasn’t been spent before and therefore is mine?
- 10. Blockchain Workspace www.blockchainworkspace.com Solutions for Digital Value Pros: 1. Easy solution to “double spending problem” 2. Known form of contract Cons: 1. Single point of Failure 2. Corruption possible (ledger tampering) Centralised Systems: Ecash, Paypal, Apple Pay etc.
- 11. Blockchain Workspace www.blockchainworkspace.com Solutions for Digital Value Pros: 1. Many checks and balances in the system 2. No top-down structure Cons: 1. Responsibility reverts to the user (usability) 2. Counter-intuitive and this hard to understand (at first) Decentralised Systems: Bitcoin and all true blockchains
- 12. Blockchain Workspace www.blockchainworkspace.com License This work is licensed under a Creative Commons Attribution-Share Alike 4.0 license https://creativecommons.org/licenses/by-sa/4.0/
- 13. Blockchain Workspace www.blockchainworkspace.com Thank You Bas Wisselink 12-04-2017
Editor's Notes
- <Grab: Who here uses money? Who here likes money? Who is sure of the value of his money? Who is convinced his money is completely safe?> <Preframe: After this segment, you will have an idea of how control over our money evolved and what solution blockchain offers” <connect: Money is about trust: where do you place trust?” Interactive section Q&A: <Who can list the most important functions of money?> Medium of Exchange: Durability, Transportability, Divisibility, Non-counterfeitability, Fungibility Unit of Account: Stability of the value of the unit of account makes it more useful as a unit of account. Store of Value: • Current expectations of stable or predictably knowable future demand for the asset • Current expectations of stable or predictably knowable future supply of the asset (Taken from MOOC Nicosia)
- <reconnect: what kind of trust do you need in this system? Do you need another person in this model?> A brief description of Barter as a method of exchange. Discussion about the pros and cons of barter and whether it is still in existence and underwhat circumstances.
- <Commodities often come into being in situations where other forms of money are not available or not trusted.> Examples: Prison Pioneer countries with no strong central government (Wild West) During wars in war zones <Q: who is in control over commodity money? Who do you need to trust to feel comfortable?> Explanation of Commodity Money and it’s overlap with barter. Discussion of pros and cons (not exchaustive, but the group needs to get experience thinking about money this way) Coinage also discussed in this part.
- < A claim on a commodity, for example gold certificates or silver certificates.[1][2][3] In this sense it may be called "commodity-backed money". Any type of money that has face value greater than its value as material substance. Used in this sense, fiat money is a type of representative money> <Q: Familiar question by now: who do you need to trust? Do you know of representative money that is not issued by a government?> <Loyalty points are backed by goods from specific companies> Brief history of representative money with reference to China’s first bills moving through Europe. Emphasis on the balance between usefulness and control over personal value.
- <reconnect: there is now more trust needed than ever. You are forced to use this, as the concept of Legal Tender is also introduced) Fiat money explained in historical context. Short history in how the Gold standard was let go in the 20th century.
- <Who uses online banking? Who uses cash and why?> Brief overview of forms of money and discussion of money supply.
- This section is meant to open up people to the fact that value does not equal money and leads up to the fact that blockchain is about value, not just money. The basic form is by asking people whether they’d leave these things unguarded in public places. This is a very crude litmus test of value which leads to further discussion.
- <How do we solve these problems without giving up control?> Moving towards bitcoin, we pose these central questions in digital money, and in the next slides provide a very crude overview of solutions, both centralised and decentralised.
- <These options are by giving up a certain amount of control in exchange for convenience. The balance is always “More convenience means more loss of control”
- These systems let you keep control. Again, the biggest problem here is that we lose convenience and are responsible for what we have.
- End of first part.