Are all currencies “tokens”?

Can “tokens” replace money? Will currencies be replaced?

In blockchain technology applications, there are so-called Tokens, which are translated as “tokens” and are also called “tokens”. As a result, some people argue that since “tokens” replace currency, they should not be “currency” and should not be regulated by currency; from the regulator’s standpoint, the tokens should be regulated by the currency they replace. From the regulator’s point of view, the token should be regulated. In fact, innovation and regulatory activities, each treating “tokens” as “currencies”, are becoming increasingly regulated.

Can “tokens” replace currencies? Will currencies be replaced?

First of all, will any specific currency be replaced?

In monetary practice, there are various forms of money and multiple sources of technology, and the resulting monetary system is becoming increasingly complex. Not only are specific types of money interconnected and interchangeable, but they are also in fact in competition with each other, or even replaced by a specific currency. The norm of monetary history, that is, the old and the new alternate, is like a long song. During this time, any type or form of money changes with the socio-economic changes, and is not irreplaceable or irreplaceable, which is the inevitable evolution of money.

Second, all currencies will be replaced, the history of money will be the end?

In human society and economy, there are many examples of monetary failure, where the monetary economy is in full regression, or even replaced by the so-called “physical economy”, and money is in fact ended. Such a situation is a reversal of monetary history, local or temporary, not the norm of socio-economic development, which the whole economy and society is trying to avoid and effectively overcome, and is not the goal or destination of monetary historical development. There is no evidence yet that the occurrence, development and evolution of thousands of years of monetary history of human economy and society is towards self-replacement and end, unless the socio-economic system itself does not need money.

Third, can technology, especially digital technology, fundamentally end the monetary system?

As the economy digitizes, digital technology seems to be fully and completely replacing all existing types and forms of money, and thus the monetary system as a whole becomes digital and develops, does digital money mean the end of money? Technology is part of the monetary problem, not the whole, let alone the essence. Just as metal smelting, paper making or printing dramatically changed the effectiveness and existence of money, digital technology still only changes the form, not the essence, of money. Based on technology, especially digital technology, the monetary system has or will renew itself rather than end itself.

The monetary identity crisis brought about by technology is not uncommon in the history of money and has occurred in almost any major monetary historical change. For example, while the economy was terrified of paper money or bank money, and the fear that “money will not be money” was widespread, some paper money innovators or bank money issuers were overjoyed to be free of all monetary constraints and to use “tokens” to to create endless wealth at will. Yes, metal coins, paper money, bank money, etc., are all so-called “tokens”. Digital tokens are a new type of token that has emerged under the condition of digital technology, and they are not the origin of tokens. Those who believe that “tokens” will completely rewrite or even end the history of money will be disillusioned and return to peace after the ecstasy.

The “tokens”, which are common in the history of money, are just a common thing.

Chinese monetary history of “salt citation”, “tea citation”, “wine citation”, and so on, is related to the trade and circulation of tokens, which is also known as ” tokens”. In addition to these physical tokens, the currency itself also existed as “tokens”, i.e., “money tokens”. In the era of planned economy, “tickets” and “certificates”, including “foreign exchange coupons” and even “approval documents” under the dual-track system, existed. “The “tokens” are the so-called “tokens”. Whether these tokens are advanced or backward is some kind of external or post-evaluation. In the specific and realistic economic and social environment in which they are located, they are all powerful and incomparable, and are the most thorough understanding and mastery of the essence of money and its use. In fact, monetary diversity is the norm, and the use of an absolute single currency is not only unprecedented in monetary history, but is also extremely rare today.

The issuance, management and operation and maintenance of the currency was an extremely large, complex, cumbersome and even inefficient system that almost no one could fully control. At the beginning of the market-oriented reform, the planning authorities created conditions to gradually abolish “tickets” for the household sector as “tokens”, as well as “targets” and “instructions” for the enterprise sector. “As a result, China’s economic reform was able to “progressively” unfold between urban and rural areas, workers and peasants, households and enterprises, and so on, embarking on the path of gradual reform.

The cost of reform was not instantly magnified, and the price paid by the public was still affordable, while the welfare brought by the reform grew steadily, and the social acceptance of economic reform was more generally enhanced. The Soviet Eastern bloc, which is also a socialist economic system, did not adopt the “ticket” system and could not control the huge gap of goods and services through tickets, and after prices were locked, there was no ticket cushion, and the rush to buy was omnipresent and ever-present. Socio-economic contradictions and conflicts become visible and rigid, and once price control is released, monetary and economic and social collapse will occur instantly. So, instead of calling it a “cure”, “shock” should be seen as a “destiny”. Whether or not to choose “tickets” as a “token” prompted the two socialist powers to choose different paths of economic reform, which in turn determined the success or failure of each. In the Soviet era, Russia was trapped by its ideology and almost abolished its currency, so the historical cost of its economic transformation and the economic and social sacrifices were naturally far greater than those of China; while China’s planned economy was based on the total collapse of its currency at the end of the 1940s. With the ticket cushion, a gradual return to the normal operation of the monetary economy was made possible.

At the beginning of digitization, the economic change of track brought digital tokens, and digital payment platforms such as Alipay or WeChat Pay emerged. The digital payment tools or digital payment instructions run by digital payment platforms, although not using blockchain technology, are the “numbers” in their digital accounts, which are also the so-called “tokens The “numbers” in the digital account are the so-called “tokens”. It is just the right time and trend to strengthen monetary regulation on them.

Are all currencies "tokens"?

“Currency” is a “token” – but all currency is a “token”.

“What are the “tokens” for? In other words, what is the nature of money?

The Brazilian mathematics professor Júlio César de Mello e Souza, under the pseudonym Malba Tahan, tells the story of the equal division of camels in his book “Mathematical Fantasies”. Three brothers inherited 35 camels, and according to the will, the eldest son got half, the second son got a third, and the third son got a ninth, so the three brothers were at a loss. Samir, a clever mathematician, found a way to distribute the camels by bringing in one of his own camels and giving it to the three brothers, which gave them 36 camels. Samir claimed that one camel belonged to him and the other should be his reward for solving the problem. In fact, all three brothers received more than their share of the will, and everyone was happy.

If we try to “explain” the nature of money, this story is very appropriate. It doesn’t matter whose camel Samir brings, even if it’s a dog or a dead camel, it doesn’t matter, it’s going to be taken away anyway. In other words, it doesn’t matter if there is a camel from Samir, what matters is the method. The method solves the problem of distribution, which also solves the problem of circulation. There is no such thing as “money” in an economic society, but there are always difficulties in the distribution and flow of transactions, and this requires a mathematical “solution”, which in today’s terms is called “algorithm “.

Are all currencies "tokens"?

Money” is essentially an artificial “discovery” or “setting”, the “camel” that Samir brought in. “. Does money have a “value”? The question seems to be, is there really a camel? It doesn’t matter if it doesn’t, as long as the three brothers “decide” that it does, then is this “decision” the so-called “credit”? It doesn’t matter if they don’t, the result is just as valid. In his book “The Scourge of Money”, Friedman talks about the stone coins of the island of Yopu, which were carried by ship between the islands. So the elders met to discuss the aftermath and decided that the stone coins were still there, so they did not need to be transported by boat, but were recorded in the accounts. It is true that the “camel” of Samir is just a tool to keep accounts, and the “stone” of Yop Island is just a unit to keep accounts, whether it exists or not, whether it has value or credit, there is no difference. In ancient times, the Chinese loved jade, the European mercantilists loved gold and silver, the camels brought by Samir to settle accounts, and the stones used by the people of Yopu Island to keep accounts are, in today’s terms, “tokens”. In today’s terms, they are all “tokens”. When you look at them in the accounts, they are just monetary symbols. There is no need for value or credit, just “recognition”.

Money is just a symbol or a unit under the “consensus of recognition”, which is naturally inclined to measuring and calculating activities. It does not matter whether it is set in distribution or found in exchange, because a simple exchange can be understood mathematically as two reverse distributions, no difference in essence ……

Are all currencies "tokens"?

Image taken from Jerusalem Museum, Israel

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