correctly understand the origin of currency and the nature of digital currency
Leave a Comment / By WeishaZhu / October 31, 2023
——Reading “Money: The Unauthorised Biography” and answering Peter Pan
The following is the exchange between Peter Pan and me about the DW20 decentralized currency. He was the first reader to comment on my article on the chainless.hk website. The world makes friends through literature. He is a lawyer with a wide-ranging vision as a career need. He recommended a book, “Money: The Unauthorised Biography,” and attached his opinion on “a correct understanding of the origin and essence of currency.” Our discussion helps readers understand the DW20 currency.
Hello, teacher Zhu:
I especially want to share this alternative economic book with you – “Money: The Unauthorised Biography” (Felix Martin, CITIC Press), because this book has subverted my views on the origin and nature of money. Congratulations, teacher, for your recent creation and promotion of the DW20 project. This book will also be of great help to the people’s correct understanding of DW20.
The title of “Money: The Unauthorised Biography” is a bit informal, but the arguments are all quoted from classics, corroborated by facts, and logically supported. It is not a random unofficial history. In terms of argumentation quality, it is even better than official history. This book is fascinating and worth reading because it changed my view of currency. The monetary theory of the mainstream economy believes that money originates from commodities. Generally speaking, in primitive economies, everyone barters. This method is inconvenient and has low transaction efficiency. Slowly, shells, furs, etc., served as general equivalents instead of bartering. Commodities that serve as available equivalents need to be small in quantity and rare and be able to be stored for a long time and easily divided. Later, rare metals such as gold, silver, and copper won the competition among many commodities that served as general equivalents and became currencies. As Marx said: “Gold and silver are naturally not money, but money is naturally gold and silver.”
The book “Money: The Unauthorised Biography” tells us there has never been a barter society, and even the backward Yap Island has a developed monetary system. It did not slowly develop from commodities into currency. After reading this book, my understanding of currency changed, greatly impacting my original concepts. This is what currency is like, not what textbooks or mainstream economics discuss. The Austrian school of economics has also criticized the labor theory of value. I studied Marxist political economics in middle school and university. One concept I often take exams for is the definition of value. I can still recite it by heart – “Value is the undifferentiated human labor condensed in commodities.” The Austrian school of economics says that value is not like this. Value is very subjective. If you like a painting by a third-rate painter and are willing to pay $1 million, then the picture is worth $1 million. A bottle of water in the desert is the same as an everyday bottle of water, but its value is definitely not necessarily the same. In addition, labor values cannot explain interest and investment returns.
Money is not a commodity as a medium of exchange! Some people say that the source of the value of DW20 is wrong. DW20 does not require electricity to become a commodity like Bitcoin. Because money does not need to be a commodity, it does not need to have a source of value. The stone “Fee” of Yap Island, the English Tally, and the checks from Ireland when the banks were shut down in 1970 all illustrate that the essence of currency is transferable credit. Where does the value of the above currencies come from? None have original value, but that does not affect them becoming currencies.
Felix Martin explained and defined currency in “Money: The Unauthorised Biography.” Currency is a system composed of credit records and clearing mechanisms. Currency has three elements:
1. An abstract unit of value that measures monetary value;
2. Credit record and clearing and settlement mechanism;
3. Free transfer.
These can be used as theories to explain why DW20 is a currency. The DW20 currency serves as a unit to measure abstract value; the DW20 currency is recorded in the chainless system, and the ledger is uploaded to the Bitcoin system, serving as a credit record and clearing reconciliation; the DW20 currency can be transferred freely without restriction.
In short, the DW20 coin does not need to have an original value. It is a unit of monetary value, which perfectly answers the question of the value of DW20.
Of course, the overall value of the DW20 coin is reflected in the number of users and the receiving area. As a bystander, I hope the DW20 created by Teacher Zhu will touch every corner of the world and help everyone who loves freedom and justice.
By the way, I read the article “Zhou Xiaochuan: Payment System and Digital Currency” you recommended. From aspects such as digital currency classification and payment system evolution, Governor Zhou Xiaochuan keeps up with the trends of the times. He has a profound understanding and learned a lot. But position determines the point of view, and Zhou Xing supports the broad digital currency. The digitization of payment systems is a digital currency. The ones that are highly competitive and widely used under market conditions are probably WeChat Pay and Alipay. Why do you rate Zhou Xiaochuan’s article so highly?
Peter Pan
Written on 2023.8.2, edited on 2023.10.30
Zhu reply: