Recently I asked AI to explain to me the evolution of money. I promptly received a descriptive flow from ancient coins, to bank notes to credit cards, to electronic wallets ending in crypto currency. I generally felt this was accurate (noting I asked about money and didn’t make reference to the barter system).
A common thread exists in this evolution though, and it has been valid long before the creation of money. It can easily be stated that it was this common thread that lead to the creation of money as a currency.
This common thread is centred in two qualities. It is these two qualities which I teach to my children. These two qualities are VALUE and TIME.
Money facilitates the exchange of goods and services by being an easily exchanged central unit of VALUE. It allows for an ease of trade, thereby enabling specialisation within an economy, whether this is thought leadership, scientific or manufacturing advancements.
The second quality TIME, I find is such a central feature of money, yet a feature that few people comprehend to a level that is worthy of its impact. In its simplest form, money allows VALUE to be stored over TIME. By way of examples money can be stored in a money box in the form of notes and coin or a bank account. It allows for VALUE earnt to received, stored and accumulated for a later TIME. Further it allows VALUE to be borrowed now and repaid over TIME.
However it is the subsequent layers of the TIME characteristic of money which I teach my children and find the most fascinating. To me it is within the TIME characteristic where the potential for money to be constructive or destructive exists.
I will discuss one of these central characteristics of TIME, being compounding interest, in a future article, so stay tuned.
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