For better and for worse, governments assert their participation in the language of commerce. Recently, an intriguing undercurrent has begun shifting the very substance of currency. As consumers, employers and taxpayers, I believe that we should be paying attention to recent evolutions. For context, let’s first visit the concept of money.
Money is stored value. It may represent work performed, products built or property sold. It may be earned, inherited, accumulated or stolen. But regardless of its source, money is the generally accepted units of measure that symbolize the abstraction of worth. The greatest utility of money is its ability to transfer the possession of value between people or organizations.
With voluntary purchase transactions, the buyer values the product or service more than the money that he/she has agreed to pay. Concurrently, the seller values the money being received more than the product or service that he/she is delivering. In the natural law of commercial negotiations, the buyer and the seller both come out ahead. This is the basis for a free market economy.
The idea of money seems to have arrived naturally enough among humans in every culture. Early on, precious metals were used because of their intrinsic value. A rancher may barter four pounds of vegetables from the farmer in exchange for one pound of meat. A painter also needs food, but the farmer and rancher may have no desire for artwork. So if the artist sells one painting to a physician for five silver coins, she would have the capacity to exchange one coin with the farmer for one pound of vegetables and four coins with the rancher for one pound of meat.
Silver and gold have been globally popular as the raw material for coins. Both are attractive, useful, and noble elements in limited supply. Other metals have been assigned value as coins. But their value comes as declared by the government that issued them. And that may only be recognized within the borders of the issuing country.