By Sishir Varghese |Company Relations Manager at injii Throughout history humans have used pelts, sticks, metals and paper as forms of money. and digital currency innovator, Nick Szabo, stated in his podcast with Tim Ferris and t that, “the Yurok Indians are serious about their shells, they would have tattoo marks on their arm to measure the length of shells and that told you the denomination, the value of how valuable that shell was, which corresponds to how scarce it was in nature.” Tribes used shells as a medium of exchange and store of value but what happens when you want to buy something equivalent to less than one shell? It isn’t divisible. What if one shell is more ornate or attractive than another? Does the value increase? The qualities of a desirable medium of exchange include fungibility, or the property of being interchangeable, scarcity, divisibility, transferability and durability. These same qualities helped gold become a form of money. Gold is rare and any two equal units are identical. Other commodities such as grains or beef don’t follow the same framework of value. Ordinary commodities are consumed (grains and beef) but gold is collected and hoarded. It’s this process and system of stockpiling that lead to its massive global market. Polymath Naval Ravikan As shells turned to gold which turned to fiat, the evolution of money still strikes many as far fetched. But what happens when the aforementioned criteria for a medium of exchange and store of value are upgraded? Enter a cryptographically secured medium of exchange. While gold is limited by the physical world and fiat is created by political maneuvers, the rules of minting crypto are explicitly written in code. Gold requires physical proximity for transference and fiat is burdened by regulations. Crypto is transported securely and cheaply across all borders. Fiat makes for a poor store of value as it loses its purchasing power every year through inflation. Crypto currencies introduce a new concept of programmable money. Protocols and prices can now be fully transparent and immutable. This programmability is being used today by companies that want to raise funds. Instead of restricting a fundraising round to accredited investors, projects can issue and sell tokens using cryptography and lines of code. Programmable money led to programmable business processes and in turn Smart Contracts burgeoned a token economy. For the first time in history, the risk of technological advancements that investors and venture capitalists traditionally gauged are now increasingly being assessed by the general public. One underappreciated result of this decentralization has been a democratization of risk and with it, a toleration of volatility. In this global cryptocurrency ecosystem, the product is priced in real time. Upcoming announcements, partnerships and alpha releases are considered. Roadmaps and Github commits are investigated thoroughly. Crowd sentiment is monitored on Telegram and Slack forums while Youtube personalities are the sell-side analysts. The entire future landscape of an asset has already been priced in. But what is actually driving the value of these tokens? Maximalists justify each asset by referencing the utility that it provides like tracking transactions, international payments or hedging inflation. While these utilities do hold true, they are part of a much larger proposition: a better form of money. This economy has yielded a competition to find the best form of new money. Through the evolution of transferring and storing value, a paradigm shift that is functionally superior has overtaken what started as a shell. This advantage will see international payments settled swiftly, peer to peer transactions uninterrupted, the internet of things will be seamless and data, file storage and identities will finally be secure. Try doing that with gold or fiat.
