What Money System Worked?

[worldtraveller321]

I know this is not exactly in relation to Bitcoin. I may be in the wrong forum.
Considering with all the failures of the money systems in the past. That only benefit the government and wealthy.
I know there were systems that did benefit the people. At least were more systems that offered a fairer playing field. I know those systems did get shot down by the "powers that be"

What systems, would you all know of, that did work or could have worked better in the past? More less the non digital era of anything more less?

[Artemis3]

I know this is not exactly in relation to Bitcoin. I may be in the wrong forum.
Considering with all the failures of the money systems in the past. That only benefit the government and wealthy.
I know there were systems that did benefit the people. At least were more systems that offered a fairer playing field. I know those systems did get shot down by the "powers that be"

What systems, would you all know of, that did work or could have worked better in the past? More less the non digital era of anything more less?

The closest that worked were precious metal based coins. Not bank notes with the promise of the precious metals, but when the coins were actually made from the very precious metals.

In other words, things like gold and silver. Because no matter what is engraved in them, you could always melt them.

But the physical realm is not immune to scam. Suppose you have 100 gram coins, someone could start "chipping" them so they each lose 1 gr, after chipping 100 coins you get 1 "free" coin right? actually you just stole that from others. Sometimes they add back the lost gram but using a cheaper metal, and sometimes the practice was done by the State. Indeed in the Roman empire it was done that way

This cannot be done in the digital world, not with something as secure as bitcoin, where every little satoshi is accounted for. With physical coins you would have to carefully check each coin, this is unscalable and unpractical. If if you get a "certificate", you its different than trusting a bank "to keep it stored...". You trust whoever certified it, and besides the physical good could always be tampered with after certification.

Therefore Bitcoin is more secure than gold.

But in the event that you have an artificially honest society that would absolutely never tamper with your gold coins, then yes.

Gold production is not controlled by the government and is worldwide recognized (by weight). Your country might collapse and the gold keeps its purchasing power, unlike fiat. But its physical, it can be found, seized, tampered... keeping it protected costs money, and its heavy too!

As for successful monetary systems, the key difference is removing the government from the equation. You could look at countries that use another country money without their permission (such as many countries using the USD). In those they moved their local control to foreign control, but the risk is too high, should the USD collapse they would collapse too. But until that happens, they in their territory can experience handling a money their own local politicians can't manipulate. If their budget doesn't fit, they cannot print more to cover it, they have to reduce expenses etc (transparency).

Pegging doesn't work because its a promise they almost always break, because they can. That is the point, CAN or CANNOT do. CAN your gov. make you poor overnight or not?

[Gozie51]

Anyway, I'm going to talk about trade by barter because this could be the area you think or other people think too that favoured the masses. But trade by barter involves also be rich and wealthy in material, farm produce and landed properties to be able to exchange as much as you want or to have adequate purchasing power.
Further, during trade by barter, your ability to acquire more gives you an edge, therefore we also had people who were far above others in material wealth and otherwise including slavery or feudal system. So, I don't think trade by barter would be considered favourable.

My view is even that this digital age is working more and beneficial to almost everybody if you have a little knowledge or education to do just very little task from the computer, android or smart phones, ATM etc. I'm sure the level of education both formal lately is increasing, so many more people are having the opportunity to make money including digital, cryptocurrency, forex etc.

[Ucy]

Better not to say now in my opinion. I think when the time comes many people will rely on them. And i think such "money system" will do great when combined with decentralized technologies. They can be used in place of gold when it becomes necessary to back some cryptocoins with physical assets

[avikz]

The closest that worked were precious metal based coins. Not bank notes with the promise of the precious metals, but when the coins were actually made from the very precious metals.

In other words, things like gold and silver. Because no matter what is engraved in them, you could always melt them.

I have similar opinion here! Majority of the monetary systems are based on promise. That's why we can call a fiat currency note as promissory note. A central bank promises the value of the currency note that they prints and circulates in the economy. So the common people like you are me has to rely on the government and their policies. In one way, we have to submit to the government and depend on their rule.

Precious metal coins are actually better because you hold the value with the coin while no other centralized authorities have to certify its value! That's the reason why people buy gold bars to hedge against the economy makes complete sense!

[davis196]

I know this is not exactly in relation to Bitcoin. I may be in the wrong forum.
Considering with all the failures of the money systems in the past. That only benefit the government and wealthy.
I know there were systems that did benefit the people. At least were more systems that offered a fairer playing field. I know those systems did get shot down by the "powers that be"

What systems, would you all know of, that did work or could have worked better in the past? More less the non digital era of anything more less?

I good money system is the system that's preserving the value of money for long time,thus there's no inflation.Inflation is what's redistributing wealth from the poor all the way up to the rich elite and the government.Only the precious metal coin system was meeting that requirement.However,there was inflation in
the Roman Empire,even when precious metal coins were the only monetary system.
So I think that no monetary system is perfect.Perhaps Bitcoin will come close to a perfect monetary system in the near future.

[passwordnow]

Yeah, this ain't related to bitcoin so IMO it must be on Economics. I think the system that I liked was during the ancient times, the barter system and I think you are familiar with that as it was learned during our elementary days in school.
Exchanging goods and services to stuffs that you want is where it all started until the gov't intervened and proclaimed and tell the people that they should be the one to assess how much things costs.

[Reid]

I could only think about gold and silver.
I guess I am not that old enough. 
Is there another type of money that worked before?

Bartering is also one of the option but it is trade from an item to another with with two group or two persons.
I don't think it can be called as money though. But they sure did work before. Only watched it in history channel and they are still doing it with events.

[Kuffy]

Actually the first paper money worked after a style. The wealthy left their bags of gold with a "banker", and when they wanted to pay someone, then they wrote a transfer instruction ( a cheque ), and the bank just made a book entry to register the change of ownership, This was fine as long as the bank actually had the gold in its vaults. Pretty soon they realised that they didn't need to have all the gold that moved between accounts, only the gold that was withdrawn from the bank. This looked like fun, so the governments started to get in on the act, and the pound Sterling was a note for a pound of silver that could be claimed from the government, The government got itself into trouble by writing too many notes, and eventually took the current off the gold standard, and thus blocked the exchange for precious metals.

[YuginKadoya]

In the vastest history of the Philippines, there are trading with other countries that near our country and that country will be with China, Cambodia, Borneo, India, Siam, and Japan, etc. and that trading system was using beads instead of golds, silver, and coins and I think back then there were no Government to control that policy in trading and buying of products and the manila was the center of commerce in the east after the Spaniards had occupied the country and the Galleon Trade was born due to the Government Monopoly and close all relation of trading except Mexico!

I really think that trading back then was successful if not controlled by someone and the trust in every country was there, so I think that the trading system successful back then.

[amishmanish]

I think if you look at what kind of money worked, you wouldn't find any options to choose from. It is barter, precious metal, currency and then Digital representation of currency in the form of online bank accounts with numbers whizzing around on the internet. (Is that why they call it a 'wire' transfer?).
What worked or didn't work should be chosen from the type of governments and the size of those governments. Historically the most prosperous empires were created with a central authority that set rules but did not directly own or control assets and the citizens themselves.
For example, consider the village economy that a country like India thrived on before the conquerors came in with their central authority of emperors and queens. India was a land of artisans villages and traders who carried this trade to places as far off as the middle east and South-east Asia.

Trade happened in kind in the form of exchange of spices, silk and gold. The choicest of textiles were produced hand-woven by artisans in their self-sufficient villages. Minimal govt control on the lives of people, self-sufficient production centres and trading posts enabled this.

[franky1]

even back in the days of gold coins. it was not perfect.
back then they used to have a head of household that carried the moneybag and it had to be the spouse/children that had to ask the head of household for things.

as for the government. back then the government were not even offering 'public services' to the same extent they are now. so the taxes back then were more for security (police/army)

but the real question should not be what money worked(past) but what money will work(future)

and the solution is that people should have like a 20% tax. but vote using that tax. EG those against wars would send coins to domestic social services like medical, school, police.. where as the patriotic army lovers will probably want to donate to the military

why return to the past. when we can try something new.

[figmentofmyass]

But the physical realm is not immune to scam. Suppose you have 100 gram coins, someone could start "chipping" them so they each lose 1 gr, after chipping 100 coins you get 1 "free" coin right? actually you just stole that from others. Sometimes they add back the lost gram but using a cheaper metal, and sometimes the practice was done by the State. Indeed in the Roman empire it was done that way

This cannot be done in the digital world, not with something as secure as bitcoin, where every little satoshi is accounted for. With physical coins you would have to carefully check each coin, this is unscalable and unpractical. If if you get a "certificate", you its different than trusting a bank "to keep it stored...". You trust whoever certified it, and besides the physical good could always be tampered with after certification.

Therefore Bitcoin is more secure than gold.

in the sense of counterfeiting, yes. there are other considerations, however. for example, if quantum computers were to break ECDSA tomorrow, it would irreparably harm bitcoin. gold is not vulnerable to such cryptographic vulnerabilities nor power grid/internet failures. in those senses, gold is more secure.

in the end, bitcoin may have superior monetary properties and potential utility, but i believe both will stand side by side as store-of-value assets in the future.

[franky1]

But the physical realm is not immune to scam. Suppose you have 100 gram coins, someone could start "chipping" them so they each lose 1 gr, after chipping 100 coins you get 1 "free" coin right? actually you just stole that from others. Sometimes they add back the lost gram but using a cheaper metal, and sometimes the practice was done by the State. Indeed in the Roman empire it was done that way

This cannot be done in the digital world, not with something as secure as bitcoin, where every little satoshi is accounted for. With physical coins you would have to carefully check each coin, this is unscalable and unpractical. If if you get a "certificate", you its different than trusting a bank "to keep it stored...". You trust whoever certified it, and besides the physical good could always be tampered with after certification.

Therefore Bitcoin is more secure than gold.

in the sense of counterfeiting, yes. there are other considerations, however. for example, if quantum computers were to break ECDSA tomorrow, it would irreparably harm bitcoin. gold is not vulnerable to such cryptographic vulnerabilities nor power grid/internet failures. in those senses, gold is more secure.

in the end, bitcoin may have superior monetary properties and potential utility, but i believe both will stand side by side as store-of-value assets in the future.

technical sidenote. dont worry about quantum
it will never break ecdsa by tomorrow. it will just reduce brute forcing to be from millions of years to thousands of years.

[South Park]

I know this is not exactly in relation to Bitcoin. I may be in the wrong forum.
Considering with all the failures of the money systems in the past. That only benefit the government and wealthy.
I know there were systems that did benefit the people. At least were more systems that offered a fairer playing field. I know those systems did get shot down by the "powers that be"

What systems, would you all know of, that did work or could have worked better in the past? More less the non digital era of anything more less?

The truth is that all systems have some flaws and you have no way but to try to get around them.



The barter system was very slow and you depended on the other person needing what you had.

Commodity money was better but most of the commodities did not had all the characteristics of money.

The coinage of precious metals was important in history since it was the first time we had real money, but it was subject to fraud by people modifying the coins in some way or form.

Representative money is money in which a piece of paper is backed by something, like precious metals, this is good but it gives governments the power to defraud us and they have abused this power through history.

Fiat Money is the current paradigm, a bunch of paper notes and numbers in a computer screen which are backed by nothing and that the government can print at will with no limit and when you add fractional reserve banking on top of that then this is not going to end well.

Finally cryptocurrencies, while cryptocurrencies have many advantages over all of those forms of money there are many flaws as well, there are thousands of coins, many do not have any limit on the amount of coins that will be created, and there is no guarantee governments will not take control of this market by creating representative cryptocurrencies and later fiat cryptocurrencies as they did in the past.

[figmentofmyass]

in the sense of counterfeiting, yes. there are other considerations, however. for example, if quantum computers were to break ECDSA tomorrow, it would irreparably harm bitcoin. gold is not vulnerable to such cryptographic vulnerabilities nor power grid/internet failures. in those senses, gold is more secure.

technical sidenote. dont worry about quantum
it will never break ecdsa by tomorrow. it will just reduce brute forcing to be from millions of years to thousands of years.

i don't expect QC to break bitcoin tomorrow, but i also think depending on current extrapolations of quantum computing progress is illogical. we fundamentally cannot know if/when huge technological leaps will occur in this field. even if we ignore that fact, reasonable extrapolations say ECDSA will be broken during the current decade. https://medium.com/@nopara73/stealing-satoshis-bitcoins-cc4d57919a2b

even if these threats are purely theoretical, they are threats that could never apply to the security of gold. that's the point i was making above.

[Ryker1]

Well, it is really interesting stuff, but the money system is a big scam. Knowledge is the only thing that will make you benefit from it. Financial literature really is the best thing to master. I would be more than happy to share my experience and knowledge about finance. Indeed, I was able to gain it in a hard way so I would choose to keep it myself. If you want to learn anything, you may want to consider learning it the hard way. But one thing is for sure when it comes to financing, --numbers are a strength.

[Artemis3]

in the sense of counterfeiting, yes. there are other considerations, however. for example, if quantum computers were to break ECDSA tomorrow, it would irreparably harm bitcoin. gold is not vulnerable to such cryptographic vulnerabilities nor power grid/internet failures. in those senses, gold is more secure.

technical sidenote. dont worry about quantum
it will never break ecdsa by tomorrow. it will just reduce brute forcing to be from millions of years to thousands of years.

i don't expect QC to break bitcoin tomorrow, but i also think depending on current extrapolations of quantum computing progress is illogical. we fundamentally cannot know if/when huge technological leaps will occur in this field. even if we ignore that fact, reasonable extrapolations say ECDSA will be broken during the current decade. https://medium.com/@nopara73/stealing-satoshis-bitcoins-cc4d57919a2b

even if these threats are purely theoretical, they are threats that could never apply to the security of gold. that's the point i was making above.

Bitcoin can be improved before that ever becomes an issue, and there are proposals to make it even more resistant. Eventually, when everyone has quantum computing capabilities, we could even migrate to a quantum crypto algorithm.

Do pay attention to the other thread that reminded us of the time when possession of gold was illegal in the USA (1933~1974).

[Heisenberg_Hunter]

Gold and other precious metals being used as a medium of exchange worked out in more broader and better way than the current banking system. Since they were really scarce, it became expensive and was really ineffective to use them as a day-to-day currency but was better to use them as a store of value. As amishmanish said, when the countries and states were being controlled by the Kings it was easier to trade with a medium of exchange which people tend to accept. Democracy and current governments tend to exert a pressure on the people along with influencing their interests and the right to use the money in their own way. Barter system was indeed a failure as people should like the products which other trader had with them and if there is a difference of opinion, we would more likely see a failure of trade there.

Initially gold was abundant in volume and was a common accepted commodity at the early days of coinage. Due to their global acceptance, it worked better than the flawed barter system. Governments tend to impose practices which will majorly earn a fair share of profits for them. Bitcoin tend to rule out the control which government has on the public and would regain a status which was being followed in the earlier days during the hereditary period. Gold can be traded globally as a precious metal, similarly bitcoin has gained the status of a global currency without the intervention of banks or governments! Implementation of post quantum cryptography will play a major role in the future of bitcoin and will pave a way for them being accepted as a global currency in a more secured way.

[TheNewAnon135246]

The gold standard was the closest we've been to a healthy functioning monetary system.