I collect world and some historic currency as a small side hobby and have maybe over a thousand pieces. Most of them are worthless in value but many of them are sources of interesting analysis about the societies that produced them.<p>What I find particularly interesting is the notion that most governments have maybe around a dozen different pieces of currency they issue, and have to decide what goes on them. Thus it's an interesting insight into the values the government wishes to promote to users of the money. For example, money in many developing nations shows images of large infrastructure projects to demonstrate and communicate some kind of progress and thus justify to the the citizens and users of the money that they should stay in a position of power.<p>In my collection are several orphaned currencies no longer used in any capacity like Japanese occupation Philippine Pesos that look almost exactly like U.S. dollars from the era. Why? I don't know all of the reasons, but it's interesting to contemplate how <i>quickly</i> after occupation these were produced, the decision to use Pesos instead of Dollars or Yen or some other alternative. [1]<p>Another interesting currency I have is a coin known as a Maria Theresa Thaler (MTT) [2] -- and for historic reasons that will become apparent, probably a counterfit, but was still traded. There's a long and interesting history about the coin, but the 1780 minting (or rather coins with the year of 1780 on them) became an important currency throughout many parts of the world long after the Austrian-Hungarian Empire was no longer in existence. In some areas, Merchants would not accept any other currency than 1780 MTTs and in a few areas is <i>still</i> used. However, due to this popularity it was often copied, counterfeited or otherwise minted by various groups and governments long after 1780. You can still by proof coins from the Austrian Mint to this day.<p>1 - <a href="https://en.wikipedia.org/wiki/Japanese_government-issued_Philippine_peso" rel="nofollow">https://en.wikipedia.org/wiki/Japanese_government-issued_Phi...</a><p>2 - <a href="https://en.wikipedia.org/wiki/Maria_Theresa_thaler" rel="nofollow">https://en.wikipedia.org/wiki/Maria_Theresa_thaler</a>
AFAIK historically people could use shells like money although there was no central bank, no taxes and some random people could occasionally "issue" new with the help of the sea. Any token that is reasonably convenient to be used as money and is not too easy to issue can be used as money. The idea that taxation is what makes them valuable looks pretty bizarre to me.
I propose a different explanation for the continued circulation of shillings after the central bank collapsed. Social need. Since there was no available currency of worth for Somalians to use as a medium of exchange, they simply kept using shillings. Had there already been an alternative currency, say euros or dollars, shillings would have reduced in value and most trades of value would be going through the legitimate currency.<p>Rather than government backing or historical precedent, simple supply and demand propped up the shilling. Currency, even fiat currency, is not intrinsically worthless, it's useful on its own merits as providing a convenient alternative to bartering. This also explains why the counterfeits were accepted, people simply saw the warlords as providing liquidity that the government couldn't.<p>Once a government steps in with an alternative, the existing tender will slowly stop circulating. Or perhaps a mobile network may get froggy and offer cheap connectivity along with a payments network. Currency is like any other asset class.
Thus proving that the closer you look at money the weirder it gets. A bit like religion in a way. Which, I suppose, is unremarkable given that belief/faith plays such a significant role in both.
This article is interesting... but confusing. It seems to be someone's organic journey to how we don't need to be on the gold standard anymore. Currency has always existed based on trust, at one point we thought that gold is really trustworthy (for some weird reason) then we thought that governments were really trustworthy (again, wat?) eventually we all settled on the idea that not all governments were trustworthy, but that the US government was _super_ trustworthy (REALLY WAT?).<p>Currency has value because we say it has value, and people will tend to default to the status quo. Your money is basically worth something because everyone is too lazy to actively consider it to be worthless.<p>If the society collapses, go and see if that farmer really wants to sell you a gallon of milk for a piece of paper - or even for an exquisitely printed bar of gold that you purchased because you were quite convinced the coming Armageddon would make all the silly paper money worthless.<p>(As an aside, I find one of the least believable parts of Fallout to be the fact that there is soda in the world and the bottle caps of that soda are a currency)
Other interesting currencies to look into:<p>- The new Belarusian ruble also known as the "third ruble" which was introduced in 2016. The first and second generation ruble never had any coins; but with the third generation they introduced denominations <1 rubel, subdividing 1 rubel into 100 kapeks and minting kapek coins despite their very low value (1 kapek being ~0.0046 USD)<p>- In 2014, the defacto state of Transnistria (official the Pridnestrovian Moldavian Republic) introduced transnistrian ruble coins made out of plastic.
Title should say (2013).<p>I would like the article better if it mentioned the difference between money as a store of value (my risk if I have a lot of it) versus as a medium of transactions (risk is limited to the amount in my wallet) versus inherent worth (tradable item). The first case needs belief in some form of backing. The second doesn't.<p>And of course we should mention using leaves as money by the Golgafrinchan people of Ark Fleet Ship B.
Previously: 2017 HN discussion of similar link about the Somali shilling from same blog: <a href="https://news.ycombinator.com/item?id=14414272" rel="nofollow">https://news.ycombinator.com/item?id=14414272</a><p>I am delighted by this as a real world physical example of a proof-of-work currency.
>The discount had hit its widest point as the paper (greenback) traded at 38 cents on the gold dollar.<p>The above is regarding the southern US Greenback, during the civil war.<p>I'm not convinced its measuring what its supposed to be measuring though. I assume the gold dollar is a Yankee dollar, so this is also measuring the relative values of waring currencies, rather than to some 3rd party standard.
Its unclear to me if a gold dollar is actually physically gold, which would ameliorate most of my concern, but theres still the risk of debasement, getting stuck with coin from the losing side etc.
Counterfeits are only counterfeit when you take them to the bank. As long as you can pass them on to someone else, they still have value.<p>Don't quote me on this, but I remember reading a good example. In the U.S. Waiters and waitresses frequently tip (and willingly accept) counterfeit notes from others who work in the industry. At the next opportunity, they pass them on by doing the same.<p>If anyone can find a good citation for this please feel free to add.
> According to chartal theory, the requirement that people pay taxes with government-issued bits of paper is what drives the positive value of these bits.<p>This is an actual theory? I thought it was just something people made up for the purpose of "proving" that bitcoin is worthless in internet discussions. It just sounds so silly.