Why do humans need and use money?

While building our alternative economic system, we experimented with different features and models. We tried:

• social ecommerce
• barter
• ecommerce with barter
• moneyless gift system
• timebanking
• moneyless with ecommerce
• finally, moneyless with ecommerce and barter

Barter and moneyless is feasible but only for the small scale. We realized that the new system still needed money simply because it would be very difficult to mitigate the risk with long-distance barter and points transactions.

Money systems are easily scalable because they piggyback on the system of government in all countries as legal tender. If a payment amount is incorrect, the transaction does not push through.

In contrast, moneyless and barter transactions push through immediately and are cleared afterwards. Mistakes, disputes, or frauds therefore have a bigger chance of happening moneyless than in money-systems.

Real wealth is the quantity and quality of goods and services that can be procured by people in a society.

Basically, wealth is the produce of human work that has exchangeable value. Smith classifies it as:

• ‘productive’ labor if it produces goods or tangible improvements
• ‘unproductive’ labor if its effect vanishes, such as services (e.g. a teacher might teach yet no one might learn)

In Smith’s system:

• money is not wealth
• finance is unproductive work

This is because they merely facilitate the circulation of wealth as food, tools, supplies, equipment, etc.

For example, bitcoin is not wealth because it is merely a cryptographic hash in computer memory. This is even if it allows real goods to circulate.

Without that bitcoin, fewer goods and services would be experienced and so there would be less wealth.

Why do we need money or bitcoin? Why don’t we just have total fellow feeling for our fellow-creatures and give things for free and get things for free?

It’s because, according to David Hume, human minds have an infirmity called the ego or the feeling of the self which prevents such fellow feeling.

This makes us need physical tangible things like barter and money to act as tools to exchange our concept of valuation.

So money is just one workaround (out of many) to a problem imposed by Nature.

We solve this quirk of human nature by using points instead of money.

Points have the same objectivity as money, but is not controlled by any single entity.