The question “what is money?” is one that seems to have stumped everybody, which is fine but is also funny because the answer is very simple: Money in its platonic form is simply measurement of energy expended. Of course, human representations of platonic forms are imperfect, and this can be seen in the way money is imperfect. This is still very vague to those who do not yet understand what I mean when I say money in its platonic form is simply measurement of energy expended, so I will spend this essay doing my best to elaborate and make this understanding more concrete.
In order to understand money, or rather what human money is attempting to be, it is useful to understand barter and notational systems, or analog ledgers that were/are used before or in concert with money. The reason it is useful to understand is that people who don’t have a solid grasp on money will say “money is not a representation of energy expended, because before money we had barter and ledgers” which doesn’t really mean anything except for exposing them for not understanding what money is.
Barter, the exchange of one good or service for another good or service, is a very analog and clunky interface with money. Both sides of the bartering are essentially offering up some representation of energy expended, in some unique form. If I offer to trade you 100 chickens for 1 cow, I am essentially stating that the energy that went into procuring/maintaining those 100 chickens is equivalent to or less than the energy that it took to procure/maintain your cow. If you agree to this trade, then you have a similar view of the exchange. There are complications to this, as sometimes to trade my chickens for a cow is something forward looking in nature, and for that reason I might give you more chickens than I think the cow is worth, if you have a monopoly on cows and I can put a cow to use in extracting from and applying its “energy” more than I could do so with my chickens. This is still essentially just trading measurements of energy for energy, although in this case the trade takes the future into account, as this barter involves yield bearing assets.
Old fashioned, non-cryptocurrency ledger systems that were/are used in concert with (and before) currency are just another form of exchanging measurements of energy expended, just with an authority or intermediary in the process. It is essentially barter -- but with a bit more complex system and a bit more abstracted. As it is more abstracted than pure barter, it allows for more precise calculations and more precise planning by humans. Still, it is imperfect as the ledgers which record assets such as livestock or property or slaves or anything else are partially static in nature (not accurately representing the value of the morphing quality of assets over time) and still linked to imperfect physical representations of the platonic form of money. Also, needing to trust a centralized authority to keep a ledger opens up the interface with money to all forms of fraud and human greed/imperfection which warps and interferes with proper incentives.
Gold was/is an extension of barter, as it was/is useful for more standardized abstraction towards the platonic form of money. There is a fairly predictable “emissions” rate for gold, as it is mined and not made from other materials. As it is more “stable” and mutually understandable in a way that chicken farmers and cow farmers don’t have mutual understanding, it was a more feasible interface tool for a system of trading energy expended.
Before we get too ahead of ourselves, it’s important to understand “trading energy expended”, which is a vague concept. Essentially, money in its working form is a tool for measuring energy expended, and being able to transfer that measurement across time. The better the form of money, the better energy expended can be measured and preserved across time, the better human participants can develop psychic and social systems, the more complex those systems can become. The reason these psychic and social systems can become increasingly complex with increasingly sound money is because if you can trust some form of money, you can plan into the future, store up “expended energy” units, and escape local maxima for immediate planning. This is why inflation is so pernicious, why central planning for currency is so pernicious, because the less trustworthy and less integrity based your money is, the more natural incentives and complex systems based on incentives become warped and dysfunctional over time, as the “expended energy” units are warping and changing in representation as time goes on.
Money is an invisible concept, it is a psychic organism of sorts that humans have “invented” to better structure more complex systems that work back and forth across time. Gold, bartering, ledgers, fiat, or anything else are not really money, they are interfaces with money. They are tools we use to interact with the platonic form of money, and as they are imperfect tools, our interaction with the platonic form of money is also imperfect. There are positives and negatives to each imperfect tool, as imperfections allow for organisms and structures that wouldn’t thrive to thrive in certain contexts, but these imperfections are malignant and harmful in other contexts. It’s really a matter of perspective and scale.
Zooming out, what you see is money is a sort of vague measurement of energy expended, that humans have been working towards interfacing with via increasingly efficient methods. We had barter, we had old fashioned ledgers, we had gold, we had fiat, and now we are starting to get crypto-currency. Each of these things are essentially humanity abstracting our understanding of money closer and closer to the platonic form of money, what money really is. Where we had cows and gold and paper issued by centralized, monopolized banks, we are starting to have decentralized psychic networks (enabled by the internet) that are sucking in the “value” of less efficient and less abstracted interfaces with money.
Just like time isn’t real (it’s a measurement of iterations of now rather than a “force”) but most people think it is, we have personified money into some real thing instead of a measurement of energy expended that can be carried across time and traded for increased efficiency in human relations and operations. This, I suspect, is because if you understand money you free yourself from debt slavery and other forms of servitude, but whatever the reason is, is kind of irrelevant. Through understanding money as an abstract energy pool and human money as not money at all but rather interfaces with money, you can better understand how everything works. This essay is pretty basic and clear, but it is still abstract and vague in a way that might be hard for most people to understand. This is OK, I will be writing more on this topic in the future. Just know that if you can wrap your head around human forms of economy being imperfect attempts to interface with energy expended and carry measurements of that energy expended across time, the world will open up to you in a seemingly magical way and your understanding of pretty much everything will be enriched.