In Lyn Alden’s fantastic new book Broken Money, she talks about the natural arc of money towards increasing “hardness”. Any time there’s a new form of money — say, like rare pearls — the ingenuity and incentive of humanity is to find a way to “break” that money by, for instance, developing new ways to harvest and grow the oysters, or manufacture fake replicas, or travel far distances to collect more for less effort. In her (and others’) estimation, this is perhaps the primary reason gold has remained the hardest money for thousands of years. It still hasn’t been broken — but that could change in the future if, for example, we developed asteroid mining or found massive new gold mines.
Anyway, it got me thinking that perhaps new technology is what really drives the development of new money. Gold is an outlier, and we just haven’t yet developed the technology to enable cost-effective gold production or scalable asteroid mining.
The question I’m asking myself is something like — do powerful new technologies almost inevitably lead to the creation of new monies? I use the word “technology” in the broad sense, to quote one of my favorite simple definitions, “technology is anything that breaks a constraint”.
A brief and incomplete history of money follows:
Nature’s commodities eg, shells, teeth, shiny rocks – these required the (then novel) technologies of finding, harvesting, cleaning, storing
Metal coinage – the technologies of mining, smelting, minting, verification
Paper money – the technologies of paper making, writing, printing press (printing @ scale), counterfeit methods
Fiat money – the technologies of nation states (that could organize, distribute, and track it at great scale), distribution networks, telecommunications networks
Bitcoin / Ethereum – the technologies of the internet, cryptography, encryption, digital mining, distributed systems
All of these new monies were the products of new technologies, which both enabled their creation, while also rendering older forms of money either “broken” or inferior.
**On a somewhat related note, think about in-game currencies like Robux in Roblox. The game of Roblox is not a new general purpose technology, but rather an application of many technologies, yet it is cutting edge, and though Roblox the game doesn’t *require* Robux the money to function, it feels like a natural moving forward, in much the same way that humans evolved to prefer burgers and bagels though we could technically eat nuts and plants
Alright I’ve rambled enough. Just wanted to get some thoughts down on blog.
I ask the question because for me, the above conclusion implies that as powerful new technologies are developed, they may inevitably lead to the development of new kinds of money. On the horizon I see technologies like AI, VR / metaverse, bioengineering, and many others (known and unknown). And aliens, of course. Hopefully wise and peaceful ones.
🤔🤔🤔