The Purpose of Money

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If you ask someone what the purpose of money is, they might say money is for storing your wealth, or that it’s what you use to pay for goods and services, or how we determine the prices of the things we buy and sell. And while all of that may be true, I say that money is also what motivates us. Maybe not all of us, or some might say not the best of us, but for the rest of us, money is what pushes us to get out of bed and go to work every morning, it’s what drives us to learn new skills, and hone our talents, or reach beyond our capabilities.

But what fascinates me isn’t so much that money can motivates us as individuals, but the way it can organize entire societies. In an interview last year, Amaury S├ęchet, the founder of the eCash project, compared how humans use money to the way ants use pheromones. It’s way ants share information with the other ants around them to effect their behavior. Isn’t that what money does for humans?

Basically, money helps humans coordinate our behavior to optimize for the things we want more of in the world. For example, if there’s a high demand for something but not enough supply, the price will go up and lead to more people working to meet the demand until the price eventually comes down. Another way of looking at it is that money acts as a signaling mechanism to help us make the best use of our precious resources rather than waste them on things no one needs or wants.

While some people think money is the root of all evil, I tend to believe money is what makes the world go round. Maybe there are those who would have preferred to live in simpler times, a time when we didn’t all walk around with portable computers in our pockets that allow us to record every moment, or listen to any song, or access any piece of information with just a few taps of our fingers. But I, for one, enjoy living in a world of abundance. A world where I can eat what I want, when I want. A world that gives me shelter, and clothes, and shoes that are comfortable to walk in. I don’t know where we’d be without money, but I’m guessing we’d all be worse off.

But I also think there’s much room for our money to improve. Throughout the course of my life, I have witnessed so many things change for the better. Everything from cars, to TVs, to phones, have all come such a long way. These improvements have made our lives dramatically better in the process, which begs the question, why hasn’t our money improved like other technologies?

Sure we have Venmo, Cashapp, and ApplePay, but those are merely different platforms that help us use our money, not money itself. No, the money we currently use is essentially the same form of money humans have used for hundreds of years. Money that gets printed by a central bank and is backed by a nation state. Maybe you think that’s the only kind of money there can ever be, which is what I used to think, but as with those other technologies I mentioned above, I believe our money can also evolve into something that’s more useful, more reliable, and more valuable. Only now we’re not talking about something that merely helps us get around, or what we use to watch movies on, but the main technological tool that arguably runs our societies.

Because I believe that’s the purpose of money. Just as the pheromones of ants help them survive, I believe our money serves the same function, and there is no doubt in my mind that without it, the world would be a much darker place for humanity. But like I said, I believe our money can be so much better at performing that function if we can just improve the technology and take advantage of the benefits, and that’s exactly what the eCash project is all about: solving the problem of money.

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