What is money?
It almost sounds like an existential question, like something which has been there since time immemorial. But believe it or not it has been around just for a few thousand years. Also we invented it as a concept many years ago to help us exchange things.
Now the rhetorical question is why are we looking at money in the same old way?
The answer is very simple: we have been conditioned by the establishment guys (people who make, hold or trade in money…. A bank is a good example) from our childhood days to do so. In reality, we cannot imagine life without money. But in my opinion, time has come to have a second look at money as we know it because its value has become questionable.
Let me explain this briefly….
To start with we invented money to get rid of the “barter system”, which essentially was a way of exchanging things you have for things you want. Since the holding pattern and perceived value of your “haves” and “wants” was not clear, we resorted to equating this to the most precious metal of that time, namely gold. So we said, let us see how much a measure of gold can buy and later translated that to minting gold coins. The exchange of goods and services for gold coins went on for a number of years until someone came up with a brilliant idea of that time the “symbolic money” or the money as we know it now. The idea here was, to make money using non-gold materials but hold its value in equivalent gold bullion. This went on for a few years at best. While there is no record of who or which country or group, started defaulting first (in the sense not holding enough gold reserves to back their currency), very soon pretty much everyone started not backing their currency to the full with gold bullion. As of now, we are just printing money. Some less, some more but everyone has joined the party now.
So what does it mean to you….
What is the real value of money you hold or plan to earn as time goes by? Sadly, the answer does not foretell anything good for you. You are just too far down the bread line to really bother the establishment to change their ways, so all they will do is keep printing money and every time take a little off it. So your money in the bank or wherever it is, in which ever form can be now equated to a water bottle with a small hole in it and even if you do not drink off the bottle the water inside is slowly becoming less and will eventually be empty. The hole right now is very small so you do not notice it, but with the kind of debt countries are amassing, the hole is getting bigger. A lot of things are responsible for this erosion in value but to name a few devaluations, spending more than one can afford and plain simple wastefulness caught up with it.
What can you do to change things for good….
Now that I have your attention, let us examine what it will take for us to push the reset button on everyone who have done this to you. First of all, let us see if it is possible to do this, you being a small guy in the big bad world of financial establishments.
As a starting point, let us see if we can devise a way to go back to our good old barter system. Where we exchange goods or services for things we want. For example, I will mow your lawn if you let me pluck some roses from your garden. Or for that matter another good example would be I will give you an Orange, I have, for the Apple you have. Now if you look at these transactions we have taken the actual value of these goods and services in terms of money out of the equation and replaced that with our perceived value for it. Something which both parties feel in their own way as acceptable to each other. But by doing so, you have done a very important thing, you have taken the establishment out of the equation. So yes, if we can come up with a worldwide exchange for barter system to flourish successfully once again, you can take care of many of your “haves” and “wants” without getting bothered by the diminishing value of money as we know it.
We at RTAP’s are discussing this with several thinkers both within and outside of the financial services industry to develop an algorithm which can look at equivalence of all things which can be traded effectively in such a platform. Like us, many people now believe that an alternative to money as we know it is not only possible but will definitely be there in the future. There are several companies who are already looking at different types of what is popularly called as “crypto currency” to handle buying and selling. Most however have resorted to once again bringing the base value back to money as we know it and simply call it with an in-house name and make it available in a digital fashion. That method does cut off a lot of intermediaries, but is still far away from some of the ideas I have brought up here.
The hope here is to cut the reliance on money as we know it as much as possible and still transact with each other for goods and services based on what we feel it is worth to each other. For example, let us consider a barter between two large enterprises; a personal computer manufacturer and a computer chip maker, where for a certain number of computer chips a certain number of computers are exchanged. We feel something like this can become possible in the future.
The Road Ahead….
On the flip side, it is important to mention here that already there are a number of tax and regulatory organizations who are setting up ground rules to do such a trade. The existing crypto-currency companies are facing a host of issues from these bodies, but like every beginning this is one also will eventually find an acceptable end. It will take time and a fresh look at money as we know it to bring about this change. We at RTAP are very optimistic that with this new realization about money we will be able to develop new technology platforms for exchanging goods and services at close to its true value for the person doing it in the future.
It will take many years for this system to be adopted universally, but until then we can keep our thinking caps on, collaborate with each other and see if we can get something without using money.