“Money is nothing but the representation of labour and commodities, and serves only as a method of rating or estimating them. Where coin is in greater plenty; as a greater quantity of it is required to represent the same quantity of goods; it can have no effect, either good or bad.”
(David Hume, 1752)
Money matters, that much is clear. However, its characteristics and essence are distinct subjects, essential for anyone interested in material welfare or the financial system. As such, a historical exploration is both necessary and revealing, not only for understanding money’s role in the past and present but, more importantly, for shaping how we think about it in the future.
Money's foundational role in society was succinctly captured by William Stanley Jevons in Money and the Mechanism of Exchange (1875), where he distilled its essence into four functions, later immortalized in the 1919 couplet:
"Money’s a matter of functions four, A Medium, a Measure, a Standard, a Store.”
Modern economists have since consolidated these into three core functions, though their essence remains unchanged:
Money as a Store of Value
A common standard for measuring value which, if taken to its strict conclusion, would render many national currencies as something other than money. Today, over 1.6 billion people face double-digit inflation, which partially explains why 75% of all physical $100 bills, which amounts to over $1.5trillion, circulate outside the United States’ borders. While these paper dollars serve as a financial lifeline, the systemic dependence for financial stability on a single node in the system, the United States, is deeply worrying and indicative of crises. In the absence of change, the system may break under the weight of its own contradictions and pressures.
Money as a Medium of Exchange
A facilitator of transactions, yet in 2024, moving money internationally remains slow and costly despite instant global communication. Financial infrastructure remains bound by banking hours, an outdated constraint in a world that operates continuously. Bank and Automated Clearing House (ACH) cutoff times introduce additional inefficiencies, as transactions submitted after these deadlines are deferred to the early morning queue for batch processing the following day. These delays slow the availability of funds and the completion of transactions, effectively pausing electronic payments until the next processing window.
Additionally, CLS plays a central and near-monopolistic role in FX settlement, mitigating settlement risk but also reinforcing a system where global currency transactions depend on a single dominant infrastructure. As Lyn Alden notes in their book, The Bitcoin Standard, with over 160 national currencies in existence today, the modern world effectively functions as a sophisticated barter system - one where artificial barriers, currency conversions, and reliance on intermediaries continue to impede economic efficiency.
Money as a Unit of Account
As a unit of account, money standardizes value, allowing prices, debts, and financial statements to be expressed in a common measure. The United States dollar dominates this role, underpinning over 80% of global trade, with most commodities priced and settled in dollars. However, its supremacy depends on infrastructure designed for a previous age, and its reserve currency status is neither guaranteed nor unchallenged. While the dollar's global role provides stability, the sustainability of its dominance hinges on continued monetary credibility, regulatory bravery and technological adaptation so as to ensure that financial infrastructure evolves alongside broader technological advances.
Digital money is already here…or so it seems. We live in an era where bank balances appear as numbers on a screen, yet the financial system beneath them remains bound by physical constraints. The illusion of money persists: your bank app may display instant transactions, but the underlying infrastructure is built on outdated legacy systems. Every weekend, trillions of dollars in transactions grind to a halt simply because "the bank is closed", a notion as absurd as the internet shutting down on Sundays.
This is more than an inconvenience. It is a structural inefficiency; a tax on global commerce; a brake on innovation, and a barrier to financial inclusion. The world needs money built for the digital era: Programmable, borderless, and always on. Stablecoins represent the first true evolution of money for the internet age. They fulfill all three classical functions of money, but with the added power of digital technology:
Store of Value: Digital dollars accessible at any time, immune to local currency instability.
Medium of Exchange: Instant settlement, programmable transfers, and near-zero fees.
Unit of Account: A stable digital benchmark that functions seamlessly across borders and platforms.
Yet their most significant breakthrough is not technological but philosophical. Stablecoins unbundle money from banks, transforming it into a native protocol for value transfer. Just as TCP/IP established a universal standard for information exchange, stablecoins create a universal standard for economic transactions.
The implications are profound. When money functions as pure software, entirely new possibilities emerge. Smart contracts can automate financial agreements, assets can move across borders without friction, and financial services can reach anyone with a smartphone. The digital economy is no longer just a frontier, it is becoming the foundation. The shift is already underway. Call it what you will, but some have put it best: In Code We Trust.
Sources:
Hume, D. (1752). Of Money. In Essays, Moral, Political, and Literary.
Ammous, S. (2018). The Bitcoin Standard: The Decentralized Alternative to Central Banking. Wiley.
Alden, L. (2023). Broken Money: Why Our Financial System is Failing Us and How We Can Make it Better. Timestamp Press.
Jevons, W. S. (1875). Money and the mechanism of exchange.
“Money is nothing but the representation of labour and commodities, and serves only as a method of rating or estimating them. Where coin is in greater plenty; as a greater quantity of it is required to represent the same quantity of goods; it can have no effect, either good or bad.”
(David Hume, 1752)
Money matters, that much is clear. However, its characteristics and essence are distinct subjects, essential for anyone interested in material welfare or the financial system. As such, a historical exploration is both necessary and revealing, not only for understanding money’s role in the past and present but, more importantly, for shaping how we think about it in the future.
Money's foundational role in society was succinctly captured by William Stanley Jevons in Money and the Mechanism of Exchange (1875), where he distilled its essence into four functions, later immortalized in the 1919 couplet:
"Money’s a matter of functions four, A Medium, a Measure, a Standard, a Store.”
Modern economists have since consolidated these into three core functions, though their essence remains unchanged:
Money as a Store of Value
A common standard for measuring value which, if taken to its strict conclusion, would render many national currencies as something other than money. Today, over 1.6 billion people face double-digit inflation, which partially explains why 75% of all physical $100 bills, which amounts to over $1.5trillion, circulate outside the United States’ borders. While these paper dollars serve as a financial lifeline, the systemic dependence for financial stability on a single node in the system, the United States, is deeply worrying and indicative of crises. In the absence of change, the system may break under the weight of its own contradictions and pressures.
Money as a Medium of Exchange
A facilitator of transactions, yet in 2024, moving money internationally remains slow and costly despite instant global communication. Financial infrastructure remains bound by banking hours, an outdated constraint in a world that operates continuously. Bank and Automated Clearing House (ACH) cutoff times introduce additional inefficiencies, as transactions submitted after these deadlines are deferred to the early morning queue for batch processing the following day. These delays slow the availability of funds and the completion of transactions, effectively pausing electronic payments until the next processing window.
Additionally, CLS plays a central and near-monopolistic role in FX settlement, mitigating settlement risk but also reinforcing a system where global currency transactions depend on a single dominant infrastructure. As Lyn Alden notes in their book, The Bitcoin Standard, with over 160 national currencies in existence today, the modern world effectively functions as a sophisticated barter system - one where artificial barriers, currency conversions, and reliance on intermediaries continue to impede economic efficiency.
Money as a Unit of Account
As a unit of account, money standardizes value, allowing prices, debts, and financial statements to be expressed in a common measure. The United States dollar dominates this role, underpinning over 80% of global trade, with most commodities priced and settled in dollars. However, its supremacy depends on infrastructure designed for a previous age, and its reserve currency status is neither guaranteed nor unchallenged. While the dollar's global role provides stability, the sustainability of its dominance hinges on continued monetary credibility, regulatory bravery and technological adaptation so as to ensure that financial infrastructure evolves alongside broader technological advances.
Digital money is already here…or so it seems. We live in an era where bank balances appear as numbers on a screen, yet the financial system beneath them remains bound by physical constraints. The illusion of money persists: your bank app may display instant transactions, but the underlying infrastructure is built on outdated legacy systems. Every weekend, trillions of dollars in transactions grind to a halt simply because "the bank is closed", a notion as absurd as the internet shutting down on Sundays.
This is more than an inconvenience. It is a structural inefficiency; a tax on global commerce; a brake on innovation, and a barrier to financial inclusion. The world needs money built for the digital era: Programmable, borderless, and always on. Stablecoins represent the first true evolution of money for the internet age. They fulfill all three classical functions of money, but with the added power of digital technology:
Store of Value: Digital dollars accessible at any time, immune to local currency instability.
Medium of Exchange: Instant settlement, programmable transfers, and near-zero fees.
Unit of Account: A stable digital benchmark that functions seamlessly across borders and platforms.
Yet their most significant breakthrough is not technological but philosophical. Stablecoins unbundle money from banks, transforming it into a native protocol for value transfer. Just as TCP/IP established a universal standard for information exchange, stablecoins create a universal standard for economic transactions.
The implications are profound. When money functions as pure software, entirely new possibilities emerge. Smart contracts can automate financial agreements, assets can move across borders without friction, and financial services can reach anyone with a smartphone. The digital economy is no longer just a frontier, it is becoming the foundation. The shift is already underway. Call it what you will, but some have put it best: In Code We Trust.
Sources:
Hume, D. (1752). Of Money. In Essays, Moral, Political, and Literary.
Ammous, S. (2018). The Bitcoin Standard: The Decentralized Alternative to Central Banking. Wiley.
Alden, L. (2023). Broken Money: Why Our Financial System is Failing Us and How We Can Make it Better. Timestamp Press.
Jevons, W. S. (1875). Money and the mechanism of exchange.
