Tips for Change#
Bartering, Nüwa creating humans, Cangjie creating characters. Over the course of five thousand years of history, countless legends have been forged. From the Xia Dynasty onwards, people began using shell coins as currency for trade. With the development of human civilization, the use of metals, gold and silver, and paper money...
Tips, this artificially created currency, is so novel, but also so niche. Why is money valuable? Why does it have purchasing power? It's because it has the backing of a country and is recognized by everyone.
Merchants passing through small towns, scholars who come upon the news, journalists joining in the excitement, more and more people discussing the value generated by this train. When the first person tries to exchange tips for food, their value gradually becomes recognized by the world.
When it is recognized by people, it gains value. The more people recognize it, the more stable it becomes. This is the power of consensus. When it has enough value, it can be equated with fiat currency.
You can scorn the ignorance of "calling a deer a horse," but what you cannot deny is that what people saw at the time was indeed a "horse."
- Tips: BTC
- Fiat currency: Currency issued by a country, RMB, USD...
Value#
Every item only has value when it is recognized and trusted by people.
From the gift economy to bartering, the basic value of goods is maintained through consensus based on the environment and previous agreements among people. This fairness continues to the later use of shell coins, and even paper money and the gold standard, which is also a form of distrust.
Why is money valuable?#
Currency as a medium of paper, how consensus is reached
Distrusting the value of the other party's currency, people exchange it for gold at the local price. Because the consensus among people is the value of gold, this is the gold standard. Later, paper money became detached from the price of gold and became what is now known as "fiat currency." The floating exchange rate system based on the supply and demand relationship in the market is also the common understanding of exchange rates today.
- The exchange rate system is not entirely determined by the market; different countries have different strategies.
- BTC's transactions are based on the secondary market. Although it has a value system and exchanges with fiat currency in the secondary trading market, it is not recognized by most countries. (Many people say that BTC is a Ponzi scheme, which can also be understood as it lacking rules and endorsements with credibility, growing recklessly.)
- Various countries are attempting to promote orthodox digital currencies.