What is the Value of Money

What is the value of money, is it a chocolate bar, is it a gold coin, or it is the money sitting in an institution with your name on it? The real value of money is unknown, as everyone has a different perspective on it. A child can take a piece of candy to school to trade with a friend for a different piece of candy, technically that could be a form of currency. When gold was in high demand, you could use the gold that you found and use it to buy cattle or even a house, which is technically a form of currency. The form of currency society in the US today is most familiar with is either cash or the money just sitting in your bank account, both of which are a form of currency. Money is a status symbol to people all over the world, it I an opportunity to show off how successful you are in life. What is the true value of money, and what does it really mean to have money?

In the Pacific Ocean there is an island called Yap, on this island they use a form or currency we are not exactly familiar with. They use stones as currency in their daily life. A researcher Milton Friedman described the way the currency first took form “Consists of large solid, thick, stone wheels, ranging in diameter from a foot to twelve feet, having in the centre a hole varying in size with the diameter of the stone” (Friedman, page 1). The size varies in the stone because the larger the stone the larger the value. When stones such as these are traded, at times they were so large they could not be moved, in this case, everyone would know that the stone was transferred to another person. Imagine having a rock that you have never seen before that has an unbeknownst value somewhere on your island, it sounds crazy because it is. However, this is how most of us live today. We have a card that holds all of our virtual money, but we have never physically seen the money only the number that the government determines it is valued at. In a way, we have a very similar form of money. 

Bitcoin is a form of currency in which is new, yet no one really knows the value of it. An article from Market Watch seems to have a good idea of whether Bitcoin is really something worth giving a shot. “Proponents like to talk about how bitcoin has no central bank or authority behind it as a net positive, but the fact also means a lack of true value” (Market Value).  Why should we buy into something that we really don’t know the value of?  If money has no value what is the true use of it? If there is no authority behind the banking aspect of it, how it is controlled, and how are we supposed to know that our money is protected?  

When it comes to in-game currencies I don’t view them as actual transactional money.  For the most part, when you are using in-game currencies you are using something that has been rewarded to you, something you earn for doing a task. However, this money cannot be taken out of the game it can only be used in the game you earn it in When you are choosing to purchase in-game currencies you are using your money you have in the real world for something generally of lesser value in a virtual gaming world.  I don’t think this is a big enough problem today to be concerned that it is going to take over the currency aspect of life. I think when you compare it to Bitcoin money, Bitcoin is more of an investment such as stocks, whereas in-game money is like putting yourself into an alternate reality and using the money you bring with you from the real world or what you earn in the virtual world. 

The transactions in which money is passed from one another are so similar yet so different than those on the island of Yap. An article published by Yahoo News explains some of the risks associated with Bitcoin/virtual money. “Once mined, Bitcoins are stored on a user’s hard drive in a virtual wallet, and can be sent directly to another person, bypassing banks and remaining largely anonymous” (Yahoo News).  You can see how this is so similar to the stone money from Yap, as some people don’t even see their money on the island. Once they are given the money from someone, and due to the large size, it can’t be moved they just know it is their money to use. This is similar to the money produced by Bitcoin; people may never see their money which allows a problem to arise of how legitimate their money is. If you are to never see a penny of the money you are receiving from Bitcoin in person, how do you know it is real? This is why we will never know the real value of money today. 

After reading through the sources and listening to the podcast I do think my opinion of money has slightly changed.  When you really sit down and think about it anything can be used as currency, we could have adapted the value of stone money, or we could use a chocolate bar as a form of currency. The value of money is simply unknown. From a young age when you are given cash, you are told it is worth a lot and that it has value. As you get older your cash diminishes and you are introduced into virtual money such as what you have in your bank account. My question is what is the value of something that you cannot see? How can something have value when you don’t even know what it is, the money you have in your bank account is just a combination of numbers. I don’t think we will ever find out the true value of money, every day we are evolving as a society, and new methods of living are rising. The only thing we can do is try to understand the right and wrong ways to spend our money.

References

Reeves, J. (2015, January 31). Opinion: Bitcoin has no place in your – or any – portfolio. MarketWatch. https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28 

Yahoo! (n.d.). The bubble bursts on e-currency bitcoin. Yahoo! News. https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html 

Friedman, Milton. (1991, February).  Island of Stone Moneyhttps://counterintuitive.blog/wp-content/uploads/2015/01/stonemoneyessay.pdf