Money is such an enigmatic concept that people who understand it, people who spend the majority of their lives studying it, still sometimes refer to it as “magic”. That isn’t very reassuring but you just have to trust them them on this one. Money and the concept of money is so elusive that most of it does not really exist, yet it is something that everyone from every culture interacts with daily. The value and the worth that is given to money is is based mostly on trust.
On the island of Yap, its people have a form of money that is made from stone. These stones are created so large sometimes that it is unnecessary to even move them or in some cases, actually have them in the owner’s possession. They are traded through the simple agreement that whoever is the current owner of the stone is known only by the trust of others. Although the idea of not actually possessing the money yet still having its value may sound ludicrous, it is no different than a gold exchange in the 1930s between the United States and France in which the labels on drawers were changed noting who the gold belonged to. These are two clear examples of the power of trust and its effect on money. Everyone in those groups, the Yap inhabitants and the US and France, agreed on what would happen and trusted that value was upheld. Money itself has no intrinsic value. Its value is what we decide to give to it and what everyone agrees upon. Because people can agree on money’s value and trust that it is mostly the same between everyone, we can conduct business much more fluidly than if we did not trust what our money is worth.
The fact that money, in any form, relies on trust is absolutely astonishing. The existence of money is ironic because so much of it is essentially fiction . The form of money that seems the most fictional is bitcoin. This is a form of electronic currency that relies totally on trust of those using as it has nothing but that trust denoting its value. With money in the United States, there is the Federal Reserve that one can trust to tell them how much their money is worth but with bitcoin the trust is entirely reliant on the ones giving the bitcoin and the ones receiving it. Because of that, bitcoin’s value has had tremendous leaps and falls in value over a short amount of time (Reeves). For bitcoin to really cement itself as a currency it needs “increased acceptance and usage” (Phillips). This means more trust in bitcoin. During our lifetime, we had been able to witness the birth of a currency and it allows us to see just how much trust is needed for money to be sustainable.
With all the additional information, all the research done on money and how it can change so easily, it starts to seem like just a bunch of numbers. But because it is so necessary to everyday life, we need to continue trusting that it will do what we need it to do or else it collapses along with society. Money is such a necessary part of society yet it is so difficult to understand.
Glass, Ira, and Chana Joffe-Walt. “The Invention of Money | This American Life.” This American Life. Planet Money, 17 Jan. 2011. Web. 07 Sept. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money>.
Phillips, John. “Bitcoin: What to Expect in 2015.” CNBC. N.p., 15 Dec. 2014. Web. 07 Sept. 2015. <http://www.cnbc.com/2014/12/15/bitcoin-what-to-expect-in-2015.html>.
Reeves, Jeff. “Bitcoin has no place in your—or any—portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 4 Sept. 2015. <http://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28;.