Cardano Founder Charles Hoskinson Helps you Deconstruct and Understand Fungibility of MoneyMay 18, 2020
Charles Hoskinson clarified foundational principles making money and then spoke about the level 2 stuff. He spoke about the quality parameters ruling money. So, the quality side of things is like it is easy to move and transport. It is a kind of a silly concept, but Imagine gold as money. Well, if Gold is money, it is heavy, it is very difficult to move around, it is difficult to store, and it certainly invites people who try to rob you and these types of things.
Sydney Ifergan, the crypto expert, tweeted: “Deconstructing the different facets of money with Charles Hoskinson is worth knowing to truly understand the importance of the cryptocurrency space.”
The transportability of money is super important and special when we talk about large transactions across borders. Could you imagine a system where people have to pay in gold for things that were occurring across the sea? So, for example, let us say purchase from the United States to the European Union, let’s say Germany. And, you had to mail the gold to the person waiting for it to arrive. So, transport is certainly a huge and important component.
Durability is another. Good money should be somewhat durable. For example, let us see paper money, and that paper money is poorly printed over time it tends to wear down quickly to the extent that the bills are actually destroyed, and you consider that to be not a very good money (or) whether if your money rots or has the properties that makes it deteriorate very quickly.
Charles Hoskinson on Coinage, Fungibility
So, we would like the money to be durable. So, this is why most of the monetary systems started with coinage, building things from metal as metal is so durable. I certainly have coins that were issued in the Roman Empire. So, this gives you a sense that you can have durability over a long period of time.
There is also things like fungibility. This is probably one of those terms that you have never heard before. Or you cannot remember the definition of a pretty simple idea. Basically, you cannot distinguish, or you don’t care to distinguish between two units of a currency.
So, if I have a coin and you have a coin, and they both say a dollar on them, you don’t particularly care or hold one on higher esteem. This is not true for all things. This is really the case, for example in cases of coinage that has been in property, a collector’s item or perhaps maybe your coin belonged to somebody special, but in general, fungibility is an extremely important point of money.
Because you don’t want the money itself to get in the way of commerce the means of exchange, you want each unit to be identical from the avenues. And, this is certainly true with digital money, the digital dollar that lives on Paypal, indistinguishable from the JP Morgan Chase Account, or something like that.
So, we have the ability to transport, the durability of the asset, the fungibility, and can you divide it. So, divisibility is a very important property as well. Imagine going to a gross sale. You only have a 20 dollar bill, and the person at the gross sale does not have the change. How would you actually conduct commerce when you want to buy something that is 11 dollars.
So, divisibility is one of those things, can we break it into sufficiently small pieces. So that we get very specific about the pricing of items. So, certain currencies have enabled us quite well, like digital currencies. Other currencies are at the mercy of both parties of how you break this down.
There has been many discussion throughout the years, for example, getting into the penny, which is the fundamental unit of account.
So, these are some of the properties which go into the quality of money: the ability to transport, the durability, the fungibility, the visibility of it. And, then you can even go a little further, and you can talk about concepts like inflation, deflation.
You can talk about concepts like credit and debt. We’re all interconnected with each other and ideas about supply.