What is Money?

15 minutes 📝 Quiz included Interactive

The Island

50 people. One island. No rescue coming.

You're a fisherman. Every morning, you wade into the water and catch fish. On a good day, you bring back 10 fish.

Others have different skills. There's a farmer growing vegetables, a builder constructing shelters, a doctor who can treat injuries, a toolmaker crafting fishing spears and knives.

Everyone needs to eat. Nobody can do everything. Trade is essential for survival.

Day 1: Simple

You catch fish. The builder needs food. You trade 3 fish for help building your shelter. Easy.

Day 7: Problem

You've been fishing all week. You now have 70 fish total. But fish rot quickly in the tropical heat. By Day 3, the fish you caught on Day 1 are already spoiling. Your work from earlier in the week is becoming worthless.

Day 30: Bigger Problem

The doctor just saved the farmer's life after a snake bite. Everyone agrees she deserves payment. But the doctor only works when people get sick or injured. She might go weeks without providing a service. How does she eat during those 29 days when nobody needs her?

You've just discovered the problem every human civilization has faced:
How do you save your work for later?

This is what money solves. Not just trading. Storing work across time.

On our island, people tried everything. Seashells. Carved stones. Dried fish. Some worked better than others. Over thousands of years of trial and error, humanity figured out what makes money actually work.

Money: Your Time Capsule for Work

Money isn't value itself. It's the tool that captures your work and lets you use it later. Here's how this works.

Money: Your Time Capsule for Work
See how money captures your work and lets you use it anytime, anywhere
1
💪 Work Creates Value
Click to work and earn money
👤

You

→

Work

$0

Your time and effort turn into money you can save.
2
Save Across Time
Your work waits for you
📅

2024

$500 saved

📅

2025

Good money preserves your work so you can use it later. Next week, next year, or decades from now.
3
Trade Across Space
Exchange your work with anyone, anywhere
🍕
$100

Pizza

$200

Books

✈️
$500

Travel

Your Balance: $500

Money lets you trade your work for anyone else's work, even across continents.

💭 Reflection Question

You've seen how money captures your work and lets you use it across time and space.
But what makes some forms of money work better than others?

The Human Pattern

Back on our island, people experimented with different forms of money.
Shells. Stones. Dried fish. Metal beads. None, flawless.
Zoom out a few thousand years. Accross continents and generations, people repeated the same cycle: test, fail, improve. In time, it became clear that the best money always shared the same traits.

The Evolution of Money

Money has evolved over thousands of years. From barter systems to digital currencies transferred globally in seconds. Each era tried to solve the same problem: how do you save work across time without it rotting, breaking, or losing value?

Click each era to explore what worked and what didn't:

🤝 Barter System
10,000 BCE - 3000 BCE
You grow wheat. Your neighbor makes pottery. You need a pot, she needs grain. Simple trade. But what if she doesn't want wheat today? You wait. Or you find someone who does, trade for something else, then trade again. Three trades just to get a pot.

What Worked:

  • Simple and direct when wants align
  • No middleman taking a cut
  • Builds trust in small communities

What Broke:

  • Both people must want what the other has (rare)
  • How many pots equal one cow? Nobody agrees
  • Can't save your wheat for next year (it rots)
  • Can't split a cow to buy bread
🐚 Commodity Money
3000 BCE - 600 BCE
People discovered something clever: use items everyone values. Salt preserves food. Cattle provide milk and labor. Shells are rare and beautiful. Everyone will accept these. Now you can trade wheat for salt today, and use that salt to buy tools next month. Progress.

What Worked:

  • Useful beyond being money (eat the grain, use the salt)
  • Everyone agrees these things have value
  • Shells last longer than fish
  • Small shells easier to carry than cows

What Broke:

  • Grain still rots. Your savings spoil
  • Where do you store 100 cattle?
  • Walking a cow 50 miles costs energy
  • That shell is prettier than mine. Which is worth more?
  • Can't make exact change with a cow
Metal Coins
600 BCE - 1000 CE
The breakthrough. Someone melted gold into identical circles and stamped them with a king's seal. Every coin weighs the same. Every coin is pure gold. No arguing about which is better. You can melt one coin into ten smaller ones for change. Gold doesn't rust or rot. Your great-grandchildren can spend coins you save today.

What Worked:

  • Every 1oz coin = exactly 1oz gold. No disputes
  • Lasts 1000+ years without degrading
  • Melt one big coin into 10 small ones perfectly
  • King's stamp means it's real (government guarantee)
  • Gold itself is valuable (jewelry, doesn't corrode)

What Broke:

  • $1 million in gold weighs 50 pounds. Try traveling with that
  • Robbers know you're carrying wealth
  • Sneaky people shave edges off, melt the shavings (free gold!)
  • Mix in cheap metal, coat with gold. Looks real, isn't
📜 Paper Money
1000 CE - 1971 CE
People and banks had a problem: storing everyone's gold was dangerous and expensive. The fix was paper receipts redeemable for gold. The receipt is lighter, easier to trade. When you want your gold back, return the paper. Genius. Until rulers realized they could print more receipts than they had gold.

What Worked:

  • Fits in your pocket. $1 million weighs 2 pounds, not 50
  • Count 100 bills faster than 100 coins
  • Each bill is a promise: "We'll give you this much gold"
  • $1, $5, $20 bills make exact change easy
  • Counterfeiting laws built trust

What Broke:

  • Perfect fakes can fool anyone. Good luck spotting them
  • Get wet? Burns? Torn? Your money is gone
  • Government collapses? Your paper is worthless
  • Everyone wants gold at once? Bank doesn't have enough
  • The paper isn't valuable. Only the promise behind it matters
Fiat Currency
1971 CE - Present
August 15, 1971. President Nixon makes an announcement: "We're closing the gold window." Translation: those paper receipts? They no longer represent gold. The promise is broken. Now money is worth whatever the government says it's worth. They call it "fiat" (Latin for "let it be done"). By decree. Because we said so.

What Worked:

  • Government can create money when economy needs it (or they claim it does)
  • Not limited by how much gold exists in the Earth
  • Everyone still accepts it (out of habit and laws)
  • Can be sent digitally through banks

What Broke:

  • Government prints more whenever convenient. Your savings buy less each year
  • One group controls the money supply. You trust them, or else
  • Dilute the money pool. Same dollars, less value per dollar
  • Election coming? Print money. War? Print money. Crisis? Print money
  • A 1971 dollar buys what 15 cents buys today
  • The paper has zero inherent value. It's a promise with no backing
💳 Digital Fiat (Extension)
1990s - Present
The internet arrives. Banks put everything online. You can now send money from your phone instead of writing checks. Convenient? Absolutely. But look closer. It's still the same fiat dollars the government prints. Just pixels on a screen instead of paper in your wallet. The system didn't change. Only the interface did.

What Got Better:

  • Pay bills at 2 AM in your pajamas
  • Send money across the country in seconds instead of mailing checks
  • Check your balance anytime without calling the bank
  • No more driving to the ATM or bank branch

What Got Worse:

  • Your money only exists as numbers in a bank's database. If they say you have zero, you have zero.
  • Banks can freeze your account instantly. Wrong political donation? Account locked.
  • Every transaction is tracked, recorded, sold to advertisers, reported to governments.
  • Server goes down? You can't access your money. Bank gets hacked? Your identity is stolen.
  • Still inflating. Your digital dollars lose value just like paper ones.
  • Payment processor doesn't like you? They can ban you from the financial system.

What Made Some Money Better Than Others?

You just explored thousands of years of monetary evolution.
Gold worked better than shells. Coins worked better than cattle. Paper was more convenient than metal.
Throughout history, the best money always shared the same core qualities.

The 6 Properties of Good Money

Tap each property to see concrete examples:

1. Durability

Money needs to last. ✅ Gold: A 1000-year-old coin still works. ❌ Fish: Rots in 3 days. ❌ Paper: Burns, tears, fades.

2. Portability

Can you move your savings? ✅ Digital Fiat: Today's payments can be sent instantly anywhere.❌ Cattle: 1 cow = hard to walk 100 miles. ❌ Stone: Yap islanders used 12-foot rocks.

3. Divisibility

Can you make change? ✅ Fiat: 1 USD=100 cents. ✅ Gold: Standardized denominations. ❌ Cow: Can't split for small purchases.

4. Fungibility

Is every unit identical? ✅ Gold coins: Each 1oz coin = same value. ❌ Shells: Each shell unique, hard to agree on value. ❌ Diamonds: Quality varies wildly.

5. Scarcity

Can supply be controlled? ✅ Gold: Hard to mine, limited on Earth. ❌ Shells: Beach has millions. ❌ Paper: Government can print more anytime.

6. Verifiability

Can you verify it's real? ✅ Gold: Bite test, density test, reliable methods. ❌ Paper money: Sophisticated counterfeits exist. ❌ Shells: Painted rocks can fool people.

The Story So Far

For thousands of years, humans improved money step by step.
Barter → Commodity → Coins → Paper → Digital.
Each upgrade fixed problems of the past.

But...

What if one of those "upgrades" wasn't an upgrade at all?
What if it broke one of the six properties and created a leak in your time capsule?

(A slow leak begins...)

Next: When did your time capsule start leaking?
And can it be sealed again?

Lock in What You Learned

Arrange the Evolution of Money

Drag the cards into the correct historical order:

    Recall: Money Properties

    Think of the answer first, then tap to reveal:

    What does fungibility mean?
    What does portability mean?
    What does scarcity mean?
    What problem does money solve?

    Test Your Understanding

    "The barter system fails because it requires a double coincidence of wants. You need to find someone who has what you want AND wants what you have."

    How confident are you that you understand this concept?

    Not sure 50% Very confident