The popular fallacy, repeated by economy textbooks, is that people invented money to replace burdensome barter (exchanging goods for other goods) with something simpler. This is not true, or not the whole story at least. The missing piece is debt.

Proto-money

At first, there were nice looking things that took some time to collect or process. Shells, metals, pretty stones.

Some thought ‘anyone can go pick up some shells, and we all want pretty necklaces, knives and sculptures, but this is pretty time-consuming and I had better grow some food; let me grow some extra to feed these kids who collect the pretty shells’.

They were never the point in itself, just an estimate of effort spent.

Debt

The next thing people invented was debt.

Oh I would totally give you a bag of rice, but I don’t have any on me at the moment. Come tomorrow and my son will serve you. Here, take this letter.

Dear Son,

give this gentleman 1 (one) bag of rice.

Love,

Dad.

As time passed by, merchants started trading all kinds of different things. How much were they really worth? How to keep track of all the debt they have in stock? They hired accountants. The debt was fragile, people who signed the IOUs could die or move out, the paper or clay could burn, go wet, and just instantly lose all its value. It was way better to diversify the assets, and keep something tangible. Just in case.

Money!

So most just decided to focus on something that all communities had, and it held roughly the same value in relation to local food, at the same time storing the most long-term value per kg: processed metal (for unaware freedom lovers kilogram is a unit of mass/weight).

Jewelry and knives are ubiquitous, metals are everywhere underground, and there is certainly no way to pull ready coins out of thin air.

Only now has money appeared.

Thieves

If you got too rich, you would inevitably be raided by some poor soul. Getting so much resources is so little time is just too tempting. There are also all kinds of natural disasters that just happen.

The debt and money needed to be stored securely.

Banks

All kinds of warehouses, castles on mountain tops with their vast cellars, and finally banks as we know them today, have always been very eager to lend what’s stored, provided the borrower returns more later. Debt has been established for a while and everybody knew it well.

Back then they did not need to lobby the duke to outlaw building new banks. Compound interest worked well enough for them. They have every incentive to just make the walls sturdy and take good care of whatever is inside.

Business machines

Did you know, IBM expands to International Business Machines. In 2026, all the accounting can be automatic, with hot failover, eventual consistency, worldwide sub-millisecond precision, and offsite backups.

The information storage problem has been solved already for tens of years now.

On your trading accounts you can trade metals for money for grain, all with single-digit spread (difference between bid and ask price) in seconds. We have all kinds of great algorithms for optimal routing (of barter) when we need to trade one asset for another.

The question

So, why do we still use money?

  • Why don’t we buy gold jewelry using… contracts for gold ounces?
  • Why don’t we buy breakfast cereals by paying with… contracts for grain?

Why?

Think about it for a second. We (can) have it all in our pockets.

In XXI century it is money that is inefficient. For individuals, the spread is amplified to 50% by taxes. For corporations, the spread is somehow negative, due to creative accounting and venture capital. And for farmers… boy do I have something to tell you about the spread. At least money made selling a truckful of beetroots to a merchant can still buy a couple beetroots.

We constantly need to price everything on a single scale. We all need to compare everything.

It has brought upon us a thing that we all need to care about, even though none of us want to. We want food, yachts, jets, housing, tools and services, not money.

My take

Imagine: if you worked as a locksmith, each customer in exchange for copying a key would pay you exactly one locksmith service of worth, the electricity used, the material, plus maybe some markup, and some tax, because we are all generating value.

All the ‘BS jobs’ - gone.

You could be in debt with yourself, pulling ’locksmith service at this place’ units out of thin air. Being an employee, you would get paid exactly what your work is worth, and the bonuses could be exactly what you need.

You could upfront accumulate wealth in what you might need in the future, or buy unexpected things at spot price. Maybe like inflation-based bonds, but you get to pick the basket, I don’t know.

You could maybe have ‘units of entertainment’ in your wallet, buying them when they are priced conveniently, not when you desperately need them. Subscription-based services? Each ‘one month of Netflix’ would cost exactly… one month of Netflix. No price hikes for those who already bought it. (Or I’m sure they would find a way. Your freedom nation should really go focus on containing your freedom-to-sue-for-competing.)

As you get older, you could gradually trade your wealth for some ‘units of medical care’ or whatever. Keep what you actually need. I myself only need what money can buy, not money itself. I need food, shelter, education, care, maybe some entertainment, and tools that can be used for profit. How about you, you do not need money, do you?

A nation’s budget would in fact be made of what the nation actually produces, and what the nation actually needs, not some foreign currency.

Reach out to me, dear reader, because I absolutely want to have a discussion on this topic. See the ‘contact’ section.