What makes good money? Compare shells, gold, fiat, and Bitcoin
Throughout history, humans have used many things as money: shells, salt, gold, paper, and now Bitcoin. But what properties make something good money? Let's compare!
Money is a technology that evolved to solve the double coincidence of wants problem in barter systems. Good money must balance multiple properties: scarcity, durability, divisibility, portability, verifiability, and fungibility.
Sound money represents optimized information transmission across space and time. Each monetary property addresses specific coordination problems: scarcity (supply manipulation), durability (value preservation), divisibility (transaction granularity), portability (spatial transfer), verifiability (counterfeit resistance), and fungibility (unit equivalence). Bitcoin attempts to maximize all properties simultaneously through cryptographic proof.
Select different forms of money to see how they score across the 6 key properties:
Easy to find more shells on beaches
Break easily, degrade over time
Can't split a shell into smaller pieces
Light but bulky in large amounts
Hard to distinguish from fakes
All shells are different sizes/shapes
Click on each era to learn about how money evolved over time: