The Evolution of Money

This post was originally made on March 12th, 2021.

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For this first edition of The Bloch Letter, I wanted to start off with a topic that affects everyone in the world — money. Money is a concept that everyone seems to understand intuitively, but relatively few seem to understand literally and historically. One thing everyone seems to understand about money is that most people want more of it.

In the context of current events, the discussion of the Evolution of Money naturally leads to Bitcoin and, by extension Ethereum. If you aren’t familiar with these emerging cryptocurrencies which rely on blockchain technology, don’t worry — it is pretty new and technical and most people don’t get it either. But that doesn’t mean that it is too complicated to learn. And it also doesn’t mean it is not worth learning.

The basic history is as follows:

• 9000 BCE — People Barter for Goods and Services
• 600 BCE — The first official currency is minted in Kingdom of Lydia
• 960 CE — First paper currency in China
• 1200 CE — The Troy Ounce is a common unit of measure of metal coins
• 1506 CE — British Shilling first minted
• 1794 CE — Silver US Dollars first minted
• 1946 CE — Bretton Woods systems adopted globally (Gold Standard) and first credit cards
• 1967 CE — First ATM machine installed in the UK
• 1971 CE — Fiat monetary standard adopted (US Leaves the Gold Standard)
• TRANSITION TO ELECTRONIC FIAT BANK MONEY
• 1999 CE — The first version of Paypal is launched
• 2007 CE — First contactless Payment Near Field Communication (NFC) devices
• 2009 CE — First Bitcoin mined
• 2020 CE — S&P 500 companies adding Bitcoin to balance sheets

This week JP Morgan announced they are launching a new investment product: a “Cryptocurrency Exposure Basket” of Bitcoin proxy stocks including MicroStrategy, Square, and Riot Blockchain. These companies are industry-leading in blockchain and bitcoin adoption and corporate strategy. The banks are coming around. Tesla will soon accept Bitcoin for cars; as other companies do the same this solves a huge double-tax issue for crypto holders. More on that in a later edition.

The point I’ll leave you with is this: money is simply a store of value and a medium of exchange. If other people will take it, and in return they will give you stuff or do stuff for you, it is money. It doesn’t matter if the government says it is or not. This is why gold is money. This is why US Dollars are money. Because other people will take them in exchange for goods and services. Full stop. Bitcoin is no different. Anyone who says otherwise is either intellectually lazy or they are straight up lying to you.

Until next time.

Bloch