It is rather eerie to know that the money that sits in people’s bank accounts is not really there. That the number projected on a mobile screen or an ATM machine will indicate how much money is in a certain account, but it is not just is not sitting there waiting for someone to come along and pick it up. A lecture was once taught to me and before I even knew that it was about the abstract value of money, I understood that the piece of paper just promises a person a certain amount of money, but that was not always the case in any society.
On the Island of Yap the inhabitants had their own way of currency. They would cross over 400 miles of rough waters to mine their Fei. Fei, according to the essay The Island of Stone Money by Milton Friedman, were these large circular lime stones that had a hole going through them so that the miners would easily stick a rod through the hole in order to transport it onto the boat. These Fei could always range in size depending on the amount of the wealth the person had. On a NPR broadcast, the broadcasters called the Fei a “Financial Innovation”. If they were large enough, the Fei would remain in one area and if the title ship of the owner changed for any reason such as but not limited to, a dowry, to build something, or if a battle was lost. Everyone in town knew which stone belonged to which islander and understood how much wealth they had. There once was a ship that crossed the river and on its way back with the biggest Fei anyone would ever see, the boat faced a storm and cut the rope that the Fei was on. When they got back they described the Fei to everyone in town so that everyone knew how much wealth this one islander had and if he needed to get anything that owner ship of the sunken Fei would transfer.
Now times have changed since Fei and while the value still holds, the size is different with this currency. The new type is titled Bitcoin. According to Bobby lee in an article titled Bitcoin: What to Expect in 2015, that “it has a small circulation value now, but theoretically, with wide adaption, the circulation value should be 100x or 1,000x what it is today”. That would mean that Bitcoin is here to stay and may take over the standard dollar in my view. It was backed by 100 million dollars so faith must be in the system for it start taking over.In another article Bitcoin has no place in your- or any- portfolio, the author flat out states that “Bitcoin should not be on your radar” The author says that the idea has lost profit over the years and is not worth anyone’s attention.
So after learning about the Yap and more on the Bitcoin, I think it is safe to say that even through the lecture I haven’t changed my views on the abstract idea of money. I have faith that the money I put in the bank is always there and backed up when I need it and the stock market will not have a crash like before.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University, 1991.
“The Invention of Money | This American Life.” This American Life. N.p., 7 Jan. 2011. Web. 06 Sept. 2015.
Phillips, John. “Bitcoin: What to Expect in 2015.” CNBC. N.p., 15 Dec. 2014. Web. 07 Sept. 2015.
Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.”MarketWatch. CNBC, 31 Jan. 2015. Web. 6 Sept. 2015.