BLOGDIAL : We are the best

Currency is based on the value 'we' place on precious metals: GOLD. Now why would we want to do something like that? After all, gold is, in practical terms, worthless.

All the gold ever mined would form a cube measuring only 19m on each side.

There is nothing of practical value that can be made of gold that could not be made of another metal with better inherent properties (conductivity, tensile strength and so on).

Gold is rare. Its rarity is very well understood, by just about everyone. It is practically immutable, extremely durable. This is why it, over the other precious metals (which are named that for a reason) has served as currency for thousands of years.

So we all go around (literally, until quite recently) with bits of paper that say "I am worth 10 pounds and if you take me to the bank of England they'll give you about 1.3 grams of gold for me" and it is the trust that there is an intrinsic value associated with the paper that gives it worth. More or less.

The first paper money was issued by the Bank of England in the 1690s. But it was not widely used or trusted. Banknotes began to be issued in quantity in 1797 when an economic crisis stopped the Bank making payments in coins for more than £1. It issued the first £1 notes in March that year. Notes for £2, £5, £10, and £15 are also known. These notes continued until 1828 and values up to £1000 were issued in small numbers. They were all very simple, hand-signed and until 1808 numbered by hand as well. From 1817, after the troubles of the wars against Napoleon and France were over, the gold sovereign became used and trusted as the common unit for £1. For most people, who weekly wages were less than £1, the sovereign more than fulfilled their needs. Wealthy people though needed higher value currency and from 1829, when the Bank stopped issuing £1 and £2 notes, it continued with the £5 note.

The concept of legal tender is often misunderstood. Contrary to popular opinion, legal tender is not a means of payment that must be accepted by the parties to a transaction, but rather a legally defined means of payment that should not be refused by a creditor in satisfaction of a debt. This makes legal tender a rather narrow legal concept that has little to do with the way in which most payments are made. In practice, people are often willing to accept payment by cheque, standing order, debit or credit card - in fact by any instrument that they are confident will deliver value.

In 1759, gold shortages caused by the Seven Years War forced the Bank to issue a £10 note for the first time. The first £5 notes followed in 1793 at the start of the war against Revolutionary France. This remained the lowest denomination until 1797, when a series of runs on the Bank, caused by the uncertainty of the war, drained its bullion reserve to the point where it was forced to stop paying out gold for its notes. Instead, it issued £1 and £2 notes.
The Restriction Period, as it was known, lasted until 1821 after which gold sovereigns took the place of the £1 and £2 notes. The Restriction Period prompted the Irish playwright and MP, Richard Brinsley Sheridan, to refer angrily to the Bank as "... an elderly lady in the City". This was quickly changed by cartoonist, James Gillray, to the Old Lady of Threadneedle Street, a name that has stuck ever since.

The first fully printed notes were issued in 1855, an event that brought relief to the Bank's team of cashiers, who no longer had to sign each note individually. The practice of writing the name of the Chief Cashier as the payee on notes was halted in favour of the anonymous "I promise to pay the bearer on demand the sum of ...", which has remained unchanged on notes to this day. The printed signature on the note continued to be that of one of three cashiers until 1870, since when it has always been that of the Chief Cashier.

The First World War saw the link with gold broken once again; the Government needed to preserve its stock of bullion and the Bank ceased to pay out gold for its notes. In 1914 the Treasury printed and issued 10 shilling and £1 notes, a task which the Bank took over in 1928. The gold standard was partially restored in 1925 and the Bank was again obliged to exchange its notes for gold, but only in multiples of 400 ounces or more. Britain finally left the gold standard in 1931 and the note issue became entirely
fiduciary, that is wholly backed by securities instead of gold.

Anyway, this bizarre collective illusion keeps society running in a capitalist way with exchange of goods being a darn sight easier than bartering.

Some people have been trying to bring back the gold standard. This and the superb e-cash, invented by Dr Chaum, are excellent, but the sheeple are just too STUPID to understand how they work, and the incredible benefits that would be had from useing them. Paypal is a slim shadow of what a true e-cash economy could be like.

But. Why gold? The idea should be that there is only a finite amount, so nobody can 'make' gold and get rich quick.

That isnt just the idea, thats the reality this is why Alchemists tried so hard for centuries to synthesise it.

But why not something that is relevant to the current society?

Because different people assigne a different value to the same non-rare things. You might have a china plate that you think is worth my electric bycycle; it may be the case that the value of the two things are comparable, but how do I know this? Currency, whose value is well understood solves this problem. We both know how much a pound coin is worth, and from that, we can extrapolate the value of almost anything. Currency is a point of intersection between strangers, so that negociation can be made, whilst minimizing the risk that you will be cheated.

I know this is all abstract from the start so it may as well be based on... salt or granite or comet fragments or moon rock or penguins.

None of these things has a value like currency, because you cannot easily take them somewhere and exchange them for something else. They are not "fluid". Currency as an intermediary, solves this problem. You can carry it around with you, and unlike Penguins, you dont have to feed it. Currency does have something in common with comet fragments however, in that it burns a hole in your pocket.

Har Har.

Soon cash will become extinct and everything will be electronic. So the basis for currency will change.

like it says above, the basis of currency right now is fiduciary, and it is not based on Gold, so nothing will change there. Electronic money will not take over any time soon. The Nat West MONDEX project failed utterly, so did ecash. The former because your last 300 transactions were exposed to whoever want to see them, and there were arbitrary limits to how much you could spend, the latter because of the sheer stupidity of the unwashed 10^th.

There may only be one currency with any luck.

that would be a disaster.

But will it still be based on an abstract irrelevant impractical metal? Or maybe RAM, for example, will be the basis.

as long as its not volatile RAM....har!

Nice bottle of wine?

perishable. useless as currency

New hovermobile?

segway? :]

24,000 Megs please.

Paying in chips for egg & chips?

Fuggedabhatit®

Danish slappers in da Nightlife

Adapt or die.

Why the metric system is wrong

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