Introduction to “Will Cryptocurrency be the Money of the Future?”
History has an interesting way of repeating itself. While many people believe that Cryptocurrency is new and will be the money of the future, more than 150 years ago there was a surprisingly similar monetary system in the United States. Between 1837 and 1862 there were as many as 8,370 different currencies in use with […]
The Laws of Currency
To begin to understand the history of money, we have to go back to ancient times between 710 and 995 AD in the Chinese province of Sichuan where they used iron coins. This is known as species currency. Species means the money’s value is derived from the value of the material it is made out of. […]
Isaac Newton’s Great Idea
Luckily, the English had a really bright gentleman called Sir Isaac Newton who was Master of the Mint in 1699 (yes he was the guy who helped us understand gravity!). He made it high treason to debase currency, which meant that anyone caught could be severally punished. As part of his job, he disguised himself […]
Before the Dollar was Green
Interestingly, there were problems with the gold standard. To make it work, it was necessary to have a lot of gold, which colonial America didn’t have. There was also a large trade imbalance, with more money going out of the colonies than coming in. For the most part, it was illegal for the colonies to […]
The First and Second Bank of the United States
Pine tree money and tobacco receipts were the exception not the rule. In 1791 when the administration of George Washington established a national bank called The Bank of the United States, it had some $10 million in gold or notes backed in gold. Like most banks, it issued more notes than it had gold or […]
The Free Banking Era
This system worked well in America until the election of Andrew Jackson, the hero of the Battle of New Orleans after the War of 1812. Jackson believed that the Second Bank of the United States had backed his political opponent, John Quincy Adams, and that this financial backing resulted in his loss of the 1824 […]
Goldbugs and Free Silver
By this time, most Americans had experience with different types of currency. There was an understanding that currency could be many different things. Despite this realization, in 1873 the country went back on the gold standard and many people like this policy decision. Supporters of gold at this time were called goldbugs. They argued that […]
Challenging the Gold Standard
So, there were goldbugs, greenbacks, and also a third group called the free silver advocates. They were kind of a mix between the two other camps. These people, who were typically farmers, were convinced by the arguments of the goldbugs that a species back currency was important. They also agreed with the Greenbacks, arguing that […]
Collective Faith in Currency
Today we are in a place similar to where we have been many times before. Our economy depends on trading pieces of paper that are both valueless and tremendously valuable at the same time. So, if there is nothing backing the dollar, why does everyone in the world still desperately want it? Remember, a currency […]
A Digital System of Currency
There are problems with our current system of using receipts. People lose receipts and others forge receipts for stolen goods so they can return them for cash. But what if the receipt was impossible to forge or lose? What if every transaction that happened across the entire economy had a receipt and everyone in the economy […]