Bitcoin and blockchain 101: Why the future will be decentralized | Big Think
WENCES CASARES: It's hard to have a rigorous discussion about Bitcoin without understanding money. And the best way to understand money is to understand the history of money. Anthropologists agree that there is no tribe, much less a civilization, that ever based its commerce on barter. There's no evidence; barter never happened. And that's counterintuitive to most of us, because we are taught in school that we first bartered and then we made money because barter was too complicated. Well, barter never happened, and that's one of the key sort of myths about money.
So then, you would ask the anthropologists, like, "Okay, so how did we do commerce before money if there was no barter?" There was no commerce? No, there was plenty of commerce. And the way that commerce would happen is that, let's say someone in our tribe had killed a big buffalo, and I would go up to a person and say, "Hey, can I have a little bit of meat?" And that person would say, "No," or "Yes, Wences, here's your meat." And then you would go up to the person and say, "Hey, can I have a little bit of meat?" And that person would say, "Yes, here's your meat."
And basically, we all had to keep track in our heads of what we owed other people, or what other people owed us. And then someone would come to me and say, "Hey, Wences, can I have a little bit of firewood?" And I would say, "Sure, here's your firewood." And now, I have to remember that I owe that person a little, that this person owes me a little. And we all went about our business with these ledgers in our minds of who owes us what, and what do we owe to whom. It was a very subjective system. Often, these debts didn't clear, or cleared in ways that were not satisfactory to both parties.
Until about 25,000 years ago, someone very, very intelligent came up with a new technology that really took off. They came to me and said, "Hey, can I have a little bit of firewood?" And I said, "Sure, here's your firewood." This person said, "This time, we're gonna try something different. Here are some beads for you." And I said, "I don't want beads; I don't care for beads, I don't need beads." He said, "It's not about that. We're gonna use beads as the objective ledger of our tribe. Instead of each of us having to remember what we're owed, the beads are gonna keep track for us, an objective ledger to keep track of debts."
And it was such a successful technology that it took off. In a couple thousand years, it became impossible to find a tribe or civilization that didn't have some form of objective ledger. In some cases, it was one-point shells. In other places, it was salt; in other places, rocks or beads. But this form of keeping track of debts, with an objective ledger, took off. Anthropologists go as far as saying that if you describe a tribe's environment in detail, they can predict what's going to emerge as an objective ledger, as money.
Because it's always something that has six qualities, the most important of which is that it be scarce. And it makes sense, because if it's not scarce, we can create, you know, if we were to use tree leaves, for example, we could create debts that are owed to us out of thin air, and that wouldn't be good; that wouldn't be a good ledger. But it also has to be durable. If it's something that decays or corrodes, it doesn't store the information well. It has to be divisible, transportable, recognizable, and fungible.
And this system really worked until about 5,000 years ago when trade began to extend a lot geographically, and we began to trade with other tribes. Different tribes were using different ledgers, so they couldn't trade with each other. And what happened then, about 5,000 years ago, is that gold emerged as the first universal ledger to keep track of debt. And it was gold because it was universally scarce. That was the most important consideration. But also, it was very, very durable; fairly divisible, transportable, recognizable, and fungible. And that's why for 5,000 years, gold has been...