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Characteristics of 'good' money

AraiBob

New member
Hi,

I just 'joined' the adventure of money vs currency, real vs fiat, etc.

I looked for a list of characteristics of money and found only general hints, incomplete...

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First written 20150525 in email.


I began this list with the 'recognized' Seven characteristics of good money...


1) It must be durable, which is why we don’t use wheat or corn or rice.


2) It must be divisible, which is why we don’t use art work.


3) It must be convenient, which is why we don’t use lead or copper.


4) It must be consistent, which is why we don’t use real estate.


5) It must possess value in itself, which is why we don’t use paper.


6) It must be limited in the quantity that is available, which is why we don’t use aluminum or iron.


7) It should have a long history of acceptance, which is why we don’t use molybdenum or rhodium.


What is missing from this list? How about...


Portable - the money must be portable, easy to carry around the amounts you need.


Uniformity or Consistency. You want the process to be 'similar' regardless of where you 'spend' or 'deposit' the money.


When I began looking at Crypto-currency, I looked for the list of desirable characteristics, and did not find one. I found different 'details' for each kind / type of digital money, which means they are 'pushing' their strengths, and hiding their weaknesses.


I considered this a warning sign. So, I went 'back' and decided I would list the issues with today's money that I think a cryptocoin could help solve. Once I have that, I can compare each kind of money and see how many of them satisfy the set of 'ideal' or 'preferred' characterstics...


A. Bank Fees. Anytime you want to pay online, the bank gets a fee. Anytime you want to send money they get a fee. Any time you remit between nations, you pay a fee. If you want to exchange Euros for USD, you pay a fee.


The fees are based on 'ancient history'. The effort it took to move money around in the 1960s was substantial, and the fees today still reflect those difficulties. There are exceptions, but they are not the norm. We know the costs of moving money between nations is much less today, yet the fees are still too high.


Nation to nation transfer fees. Anywhere from 5 percent to 40 percent. This weighs heavily on a Filipino Maid in Hong Kong wanting to send USD50 to her family in Cebu. If she is paid in Hong Kong Dollar, there is a fee to make it USD, then another fee to make it Philippine Peso later. This is not longer necessary, if you had a way for her to use an atm that connects, as needed, via internet anywhere in the world.


B. Traceable? - Cash vrs debit and credit cards. Real cash has no audit trail, and no tracking. Debit and Credit cards make it easy for police, or CIA to determine you, and who you paid.


C. Anonymous, by default? Most anything you do, other than cash, means you are not anonymous. Nor is the person you are paying. Cryptocurrencies could return us to being anonymous.


D. Secure. There was a time when bank accounts were secure. Today, not so. Among the 'thieves' taking money out of your account? The bank, state and local govts, the Federal Govt via its many financial arms. And the ever present boogie man, the hacker.


Cryptocurrencies should make theft in this manner extremely difficult.


E. Privacy protections. A bank can easily know who banks with them, and which of them have the highest balance. Cryptocurrencies should make this another impossible task. If the bank does not know, they cannot report it to the govt. Nor can they report 'suspicious financial activity'.


F. Protections from Govt foolishness. Printing 4 trillion USD over the last 4 years? In cryptocurrencies, not possible. Most financial activity done by Govts are also based on decades (or hundreds of years) notions and history. Cryptocurrencies should neutralize those things, too.


G. Regulation – Has governments attempted to over-regulate the use, and the companies?


H. Taxable – if the 'value' of the money increases, is that increase taxable? If the value decreases, can you use that loss on your taxes?


I. Stock-like – Is the normal usage of the money like a stock or security?


J. How to Access? - cash in my pocket (from the bank). ApplePay? Android Phone? Card swiper at the merchant?


K. Speed of Use – How quickly can the money be used to make a purchase?


L. How many users?


- - - - -


Those are the positive things. How about a few negatives?


1) If you lose your cryptowallet, what happens? If your password into your 'wallet was your fingerprint, and it becomes scarred, or you loose that finger in an accident, what happens?


2) can you remember a password? Can the bad guys force you to divulge that password?


3) 'statements'? do you want statements to remind you of where you spent money? Can you prove to a retailer you paid for something, when it has not been delivered? I don't know this is an issue, but I have heard NOTHING on this kind of thing.


4) if cryptocurrencies can be 'gamed', how do you protect yourself?



First: Money is a store of value. If I work today and earn 25 dollars, I can hold on to the money before I spend it because it will hold its value until tomorrow, next week, or even next year. In fact, holding money is a more effective way of storing value than holding other items of value such as corn, which might rot. Although it is an efficient store of value, money is not a perfect store of value. Inflation slowly erodes the purchasing power of money over time.

Second: Money is a unit of account. You can think of money as a yardstick-the device we use to measure value in economic transactions. If you are shopping for a new computer, the price could be quoted in terms of t-shirts, bicycles, or corn. So, for instance, your new computer might cost you 100 to 150 bushels of corn at today's prices, but you would find it most helpful if the price were set in terms of money because it is a common measure of value across the economy.

Third: Money is a medium of exchange. This means that money is widely accepted as a method of payment. When I go to the grocery store, I am confident that the cashier will accept my payment of money. In fact, U.S. paper money carries this statement: "This note is legal tender for all debts, public and private." This means that the U.S. government protects my right to pay with U.S. dollars.


I assume there are characteristics I have not thought of, help me, please?



Ok, now to make a table from which I could begin to do comparisons...


Feature


USD Cash


Checks


Credit Cards


BitCoin


Au and Ag

Durable











Divisible











Convenient











Consistent











Possess Value











Limited Quantity











Acceptance











Usage Fees?











Traceable?











Secure











Anonymous











Privacy Controlled by User











Government Manipulation











Lost or stolen











Statements











Gameable?











Regulation











Taxable











Stock-Like?











How to Access











Speed of Use











How Many Users?






















Sorry for the length. Advice and opinion are all accepted...
 
Nice topic, watching :) Keeping quiet and seeing how it develops, just one point. Gold will be brought up at some stage and how long its been used for, however its only worked long term (ie. millenia) when there's been a means of circulating it from top to bottom such as the wealthy giving a percentage to the poor in Islam, without that the top grows exponentially and the bottom starves, fixed quantity cryptos have the same flaw. Fixing it needs a re-think of money, imho value is the first thing to consider before the means of transferring it otherwise we end up in the same situation as now, many times more money in the world than the total of real things to exchange it for.
 
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The text got messed up when I posted it. I tried to upload a pdf, which was prevented by the upload script.

Yes, I agree that Gold is an issue. The posting put USD cash, . . . Gold on the left, when they are actually to top of a column, against which the criteria are to be applied. For example, Gold is a good store of value, but very few are actually using it...

USD Cash is used by billions.... But Govt can expand how many, at will - violates the criteria of 'Limited Quantity'.

I won't attempt to fill in the details until I am satisfied I have a good list of criteria... Help is appreciated.

For Dash [ aka DarkCoin] such a list could be a guide. How to increase usage? More merchants? More ways to buy DashCoins. I just installed Dash Wallet on my PC, and it spent quite a while syncronizing over a year of 'backlog'. Since I don't even have an account, what 'backlog'? is there?
 
let's try this...
Characteristics of Money chart Part1.jpg

Characteristics of Money chart Part2.jpg
 
Nice table :) Deleted my last post as it was off topic. Quick suggestion, ever see the film 'In Time"? Might be worth adding the system from that to the table, its fictional but a very interesting thought experiment especially with the way health services are being carved up.

EDIT: Re. "Since I don't even have an account, what 'backlog'? is there?". Used the block explorers? Blockchain.info is the best known for Bitcoin but there's plenty of others, they've some nice tools to parse the history.
https://chainz.cryptoid.info/dash/
 
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Nice table :) Deleted my last post as it was off topic. Quick suggestion, ever see the film 'In Time"? Might be worth adding the system from that to the table, its fictional but a very interesting thought experiment especially with the way health services are being carved up.

Stan, I am familiar with the movie "In Time". What system are you proposing? The embedded into the arm? or the distribution system?
 
It'll be cool if your research will be finished in form of article (+video?) and published in mainstream and financial medias. :)

Alex.ru I am retired, and I am doing this research for myself, my family, and a few friends. However, I think it would be useful to any 'new' currency. If they need external guidance as to what to focus on, this kind of comparison might be helpful.

I have seen some videos in YouTube, and the focus of the 'coins seems to be on the 'miners' and the merchants. Ordinary users, like 'spenders' seem to be ignored. But without a LOT of spenders, you are wasting your time.
 
Stan, I am familiar with the movie "In Time". What system are you proposing? The embedded into the arm? or the distribution system?

Basically a time based currency, asking "what is money?" leads on to asking "what is value?" and so far I've only come up with two clear answers that fit with the way we naturally conceive value. Ideally an entirely open market where everything relates to everything else and there is no currency, just the relationship between what we have and what we want, that's more or less infeasible as it would mean a digital representation of everything down to every last grain of sand. The other is time, its the ultimate resource and that would co-relate to other resources. Its feasible, digital identity is an essential component to it and that's advancing fast but the first killer application of digital ID's is a web of trust and trust its self is a form of currency that's worked well in the past so who knows what way things will evolve.

Sorry for wandering off topic, I tend to ramble when this kind of thing comes up :/
 
Basically a time based currency, asking "what is money?" leads on to asking "what is value?" and so far I've only come up with two clear answers that fit with the way we naturally conceive value. Ideally an entirely open market where everything relates to everything else and there is no currency, just the relationship between what we have and what we want, that's more or less infeasible as it would mean a digital representation of everything down to every last grain of sand. The other is time, its the ultimate resource and that would co-relate to other resources. Its feasible, digital identity is an essential component to it and that's advancing fast but the first killer application of digital ID's is a web of trust and trust its self is a form of currency that's worked well in the past so who knows what way things will evolve. :/

Yes, the idea of time as a currency was unique. It drives home the notions related to 'what is money, really?' Does money represent time? However, details of the movie fail the 'reality test'. How to remain healthy, and looking like you are 25 years old, for 500 years? We are far from that possibility. I liked the story, but focused on the time as money aspect. The romance was also nice, but a familiar one.
 
Yes, the idea of time as a currency was unique. It drives home the notions related to 'what is money, really?' Does money represent time? However, details of the movie fail the 'reality test'. How to remain healthy, and looking like you are 25 years old, for 500 years? We are far from that possibility. I liked the story, but focused on the time as money aspect. The romance was also nice, but a familiar one.

Not so unique, it was part of how Hitler turned Germanys economy from total collapse to the strongest economy in the world in the space of 5 years ;) Kind of hard to find clear info on that as the economic war was on the same kind of scale as the military wars and as we all know the first casualty of any war is the truth. As far as I know it was based on labour and the work required for goods and resources, surprising there aren't more papers on it as its probably the most successful economic model in history.

EDIT: One article on it, worth checking a good number of them though as there are wildly different views:
http://www.webofdebt.com/articles/bankrupt-germany.php
 
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