Sep 7, 2021 • 6M

Letter #40: On the Origins of Money

Read now to learn why Bitcoin is a superior form of money.

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Joshua Guest
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Dear Readers,

Human history has been defined by a large number of monumental developments. The wheel allowed civilization to transport goods and people across long distances. The printing press allowed knowledge to be recorded and widely disseminated. The automobile gave people more freedom and improved the reliability of travel. However, perhaps none of these developments, or the countless others we didn’t mention, have had a greater impact on society than money.

The importance of money cannot be overstated. Prior to the invention of money our world largely operated on a barter system, wherein individuals traded the goods and services they produced for one another directly rather than using a uniform medium of exchange. However, the barter system was wholly reliant on satisfying what is called the “coincidence of wants”. If I were a chicken farmer wanting to acquire some flour, I would have to hope that the people producing flour wanted to give it to me in exchange for my chickens. Sometimes bartering worked out, but oftentimes it did not.

The invention of money eliminated the “coincidence of wants” to a large degree. Money was established as a medium of exchange that all people were willing to utilize in order to buy and sell the goods and services that they produced. Almost everyone could be trusted to accept a society’s chosen money, improving the flow of large economies and allowing trade and civilization to flourish.

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