One of the prominent buzzwords in the cryptocurrency and bitcoin space is “disruption.” We all constantly hear how bitcoin and other cryptocurrencies will disrupt government. How it will disrupt finance. How it will disrupt this and that. However, we do not often hear how crypto will disrupt our own psychology — how it will change our perception, augment our behavior, and make us more compassionate.
When I was growing up, I never received a financial education. I never considered how money effected me personally. I quickly learned that money topics are taboo outside of the bromide: “make it, spend it, and save it.” Real financial conversations were unheard of, and I did not develop any financial acumen. I was never even taught how the hell to define money and make sense of it.
Before delving into the psychology of money and cryptocurrency, it is thus necessary to clarify misconceptions about money, especially since most people’s monetary education has been similar to mine. I will start with giving “money” a coherent definition and then elaborate on its nature.
Definition and Nature of Money
Money is a tool, invention, and technology — it is a medium of exchange.
However, that doesn’t really illuminate the concept. It’s still somewhat vague. In reality, money is merely the perception of value for the purposes of accounting and ledger-maintenance. It is a measure of value exchanged collectively. Yet it is also a collective fantasy, or “collective hallucination,” as Andreas M. Antonopoulos put it.
This makes understanding money as confusing as grasping quantum physics. The particle physicists are experts who admit to not understanding quantum mechanics à la Richard Feynman. Similarly, the money economists are experts who don’t really understand money. Money is sort of a paradox in this manner. It is something valuable only as long as people assign value to it.
Money has properties that make it useful for exchanging value, though. Good money is generally divisible, scarce, fungible, durable, malleable, and stable. All of these properties provide people with the perception that money has value, can store value, and be exchanged for goods and services in a market environment.
However, regardless of the nature of money, it has huge implications for our psychology. It impacts us behaviorally, emotionally, and cognitively. Now that we have some understanding of what money is, we should know how it affects the human mind.