Isn’t it funny when you are walking down the street or just sitting at home, doing nothing special, and a thought that you had come across a long time ago, or even repeatedly at different points in your life, but that you didn’t think too much about simply hits you like lightening and creates a searing awareness?
Well, a few days ago I had just one such experience. I was reading an article about bitcoin and this image materialized with such force in my thinking. Not only bitcoin money but most of our money today is nothing but little bits, little electronic signals that someone has fed into a big machine. It can light up on your screen and this glitzy machine can say that you have X amount of money, but in the end, all that is is a little light signal, completely immaterial. Should someone turn the machine off, poof! There goes all your “money.” And it’s not that this wasn’t just as true for currency bills, because as it often happened at certain chaotic times in history, bundles of what were valuable bills turned into worthless pieces of paper from one day to the next.
This is the thought that really struck home to me: money can only function on the basis of a profound convention between all involved. Should one party say “All you have is a bunch of little papers or electronic signals,” the other party is really left with nothing.
I remember watching a Galbraith documentary on money eons ago, sitting in our living room where he discussed the history of money. And I remember finding it quite interesting. But then it just subsided among so many others things to think about. I can’t remember today what he said then although I am pretty sure he did talk about how money came into existence, first bartering, then finding a common substitute that symbolized bartered goods. And I can still see the image in my mind of us sitting around the living room watching this most interesting documentary on the history of money (having more than one part?).
And now, so many moons later, this thought about the frailty of the concept of money and the whole system just struck me with such force. It’s all based on a very intriguing way to establish a convention that many people don’t think about at all or give very little thought.