Feb 10, 2020
Celo and the Promise of Beautiful Money
Rai stones are donut-shaped, carved disks ranging from less than 4cm in diameter, to huge rocks as large as 8 feet in diameter. There are around 6000 of these large stones carved out of limestone on the Micronesian islands. Despite their huge size, these stones served as the monetary system of the ancient Yap community. This is a clear elaboration of how money has changed in both form and function over the centuries.
Money has no fixed form. It takes forms such as a shell, a metal coin, an ounce of salt, a piece of paper with the image of a renowned or even a deceased leader, and now digital bits on a mobile phone. Money derives its value from the fact that it is a medium of exchange, a unit of measurement, and a store of value. When the technological and social infrastructure underlying a particular monetary system changes, the form that money takes changes.
In this article, we’ll take a look at where money has been, where it is today, and explore how the Celo platform is shaping the future of money.
The history of money
Before the advent of money, trade was dependent on a very delicate system of exchange based on mutual benefit that was barely replicable — barter. It is generally accepted that livestock and plants were used as forms of money between 9000 and 6000 BC. Being the period of the Agrarian revolution, agricultural products had the greatest utility, and therefore the greatest value. Later, in Asia and Africa, cowry shells gained prominence as money due to their scarcity and fairly homogenous nature. It was not until the Bronze Age that metals gained prominence as money. Metals such as gold, silver, and bronze gained popularity for their durability, divisibility, and portability in comparison to agricultural commodities which posed the challenge of possessing exactly the opposite traits, being perishable, not easily divisible, and bulky.
Paper money emerged with the Tang and Song Chinese dynasties of the 7th-11th centuries. Paper money evolved with the advent of commercial banknotes in Europe in the 13th century and became receipts for stores of gold, formally introducing the gold standard that was widely used in the 19th and 20th century economies. The world adopted the gold standard after the Bretton Woods conference of 1944 which tied other world currencies to the dollar and the dollar itself staying pegged to gold.
The gold standard system was abandoned in 1971, severing the tie that fiat currencies had to gold.
Money today
The 21st century gave rise to two disruptive forms of currency, mobile payments, and cryptocurrency. Today, the global money supply is estimated at over $75 Trillion. A recent IMF report shows that there now exists 5 main types of money: central bank money; crypto-currency; b-money, which currently is issued by banks; electronic money, or e-money, offered by new private sector providers; and i-money, short for investment money, issued by private investment funds. All these forms of money co-exist today, although central bank money is the most familiar to most people.
From ancient days, money has held symbolic meaning including value, power, and history. Money today embodies many things; luxury, good living, and success, amongst other good things. Unfortunately, money today has also come to embody negative traits such as inequality, scarcity, greed, and stress. Despite the growing global money supply, inequality has risen to its highest level since the 1930s according to an Oxfam report
Celo and the future of money
Today’s money does not seem to work for everyone. Blockchain technology has brought a novel technological and social infrastructure on which to build a new kind of monetary system with a different set of values, functions, and interaction.
Celo’s open platform offers great promise as a launchpad for the new money paradigm. In a world of multiple, competing monetary systems and a growing world population estimated to reach 9 Billion by 2050, new monetary systems will emerge. These include global stable currencies like Libra, commodity-based stablecoins, cryptocurrencies, and regional currencies.
Celo’s platform solves several challenges experienced by users of current blockchain protocols. Data constraints lock out a significant proportion of the world’s population. Celo implements novel cryptographic techniques that ensure minimal data requirements for users of the platform. Celo also solves for price volatility through a stability reserve mechanism ensuring that users transfer and store value without fear of depreciation. The platform’s mobile-first approach weeds out the complexity of private and public key management associated with most other blockchains. The ethos behind Celo of sacred economics, community building and empowerment of personal pursuit enables new forms of interaction and embodies a new form of money.
Change is constant. Based on how far money has evolved, Celo presents a promising future for money, a beautiful form of money.
Hope you enjoyed the article. See you soon for another awesome read!
If you are interested in joining the movement that is transforming money visit celo.org or contact us at: hello[at]kotanipay[dot].com
Regards,
Kotani Pay Editorial Team
