Simple analysis of currency theory

Issuing time:2019-04-05 00:00

Among all the software systems, the block chainprobably generates the intersection between the value brought by the softwareand currency at the first time. No matter how the national governments of each countryto define it, and no matter how the people in the community treat it,positively or negatively, now it’s no longer possible to get rid of digitalcurrency, block chain economy and all the other concepts, when we mention blockchain. For thousands of years, except the government and financial institutescare about such affairs like the release of currency, value circulation, mostof the people don’t want to consider such questions spectacularly in theirlife. Everybody grew up with a concept that you have to work then you get theincomings to live because you can purchase the daily uses with theearnings.  But there are not many peopleto consider the essential meaning.

Why the people need currency, need the valuecirculation?  The reason is simple.  It’s very hard to live well by yourselfalone, and even you can’t live normally. Even if the minimum living requirements, like food, clothing, house andmeans of traveling , it’s impossible to settle all of the above by yourself.  So the people have to exchange and do somedivision labor in production. You can imagine what would happen if everyonelived on their own and didn’t have to trade with anyone else.  The directly result is that no mental workcan be liberated. It’s very difficult for people to consider and research thescience if we have to spend a lot of time in our daily affairs, which leads tothe huge difficulty to make great progress of human society’s development.  So it’s necessary to exchange the resourcesbetween each other.  We knew through thehistory that it was an inevitable progress to develop the money in order toexchange more easily.  After all, it’shard to estimate a value on what you exchange if you don’t use money.  Can we exchange a computer by a cow?  Or can I trade the future eggs of the hen forthe present pork with 1kg. If they need sesame but I only have apples, can theyaccept the exchange with what I want? Obviously we have to find something that is acceptable to everyone,preferably something that you can carry around and that is less likely to beworn out. Stones, shells, gold, silver etc., have allbeen used as money.  Even now, someislands in the Pacific are said to be using some kind of stones as currency.

After metal appears, especially the gold and silversuch kind of precious metals, they were used as money for a long time.

They can be made in a certain shape, not easy to beworn, not easy to be faked (ignore impurity),and in small quantities. This natural resource has become a tool for people toexchange resources.  But the human beingis good at thinking.  The essentialdifference between human being and animal is here.

People can generate some kind of cognition, some kindof virtual cognition.  As long as mostpeople in group agree with this cognition, this cognition has value itself.

For example, we all agree on the value of gold, thevalue of land, and we all agree on a system, and so on. Finally we realized thetruth.  In fact, whether something is valuableor not, it depends on whether the others agree on it or not.  For instance, what’s the value of the paper moneyhow can webuy all those things and service by a $10,000 paper money. Do they trustthe paper money?  Of course not, this ismainly because they government provides credit endorsements behind the papermoney. And through strong social management, the government has reached aconsensus with everyone that we can buy something by printing some kind ofpaper moneys.  In modern economy society,even paper money can be omitted. Sometimes money is just a number, lying on the bank’s servers.  People use it thoroughly on the basis of aconsensus of credit.

The birth of block chain has brought new imagination room tothe futures forms of currency, new form of credit endorsement, new form ofdelivering value, new way of resource exchange. If we look at the millennial history, block chain is probably a new additionalform of money.

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