I was 35 years old before asking myself the question, “what is money?”

That’s a sobering thought considering it made up 50% of every transaction I’d made until that point.

I knew money was important. In fact, most of my goals surrounded it. “I want to make £x Million before I’m 30” I’d scribble in notebooks. But I never knew what it actually was, where it came from, and what makes a good form of it.

I’ve since spent a lot of time righting this wrong, and my learning journey has crescendoed in the decision to store all my wealth in a new form of money; Bitcoin.

Today, the vast majority view this move as sheer lunacy. I prefer to think of it as economically rational, and I want to share the context behind it.

Therefore, should the 2024 consensus be right, and this ‘crazy’ financial act results in the catastrophic loss of all wealth your Mother & I have worked for, you’ll know why I did what I did – and perhaps you’ll choose to forgive me!

What Is Money?

Let’s imagine money doesn’t exist.

As a human, all I care about is the survival & replication of my somewhat weak genes (apologies for that weak chin, son). To do this, at the very least I need to find shelter and food for our family.

Now, as you’ll soon discover, I’m a pretty pathetic excuse for a human. And naturally I don’t know the first thing when it comes to building houses or producing food. However, I do know how to fly an aeroplane, and that can be valuable to homebuilders and farmers.

I say can, because it’s not a given.

I know a builder. If I’m desperate for an attic conversion to create an extra room for your 6-month old Sister to sleep in, I’m going to ring him up. He’ll tell me it’ll take 12 weeks of hard work to build, and he’ll want to know how I can compensate him for his time & energy.

I can fly him to Amsterdam of course. But what if he doesn’t want to go to Amsterdam? Then I can fly him to Rome? What if he’s a home bird and doesn’t want to fly anywhere? Well then, I need to a find a builder who does or the trade won’t take place – and your Sister is condemned to a childhood of room-sharing with you 😬.

But what if there was something that could store the energy & time I expend flying others to Amsterdam? What if that thing was universally appealing to everyone in society, so much so that I knew in the future, I could exchange my spent time & energy for anything I wanted, with whomever I wanted?

That thing is money. And at its core, it’s just a token for exchanging time and energy.

Where It Came From?

I’m obviously not the first person to stumble across the tricky little dilemma (officially called the ‘double coincidence of wants’) of wanting something – an attic room – in exchange for an undesired kind of value – a flight to Amsterdam.

In fact, some 300 years ago a butcher in Africa was (probably) getting pissed off he couldn’t exchange his meat for a loaf of bread the vegetarian baker had just made (those pesky vegetarians 🥗 ). He was so annoyed he decided to use some rare and novel seashells to store his time and energy, safe in the knowledge that everyone in his community would accept them in future exchanges for the desirable things they offered.

Very soon, everyone in the community used these hard-to-come-by seashells to buy and sell products & services. This meant the African economy’s efficiency went through the roof, and the whole society became far better off as a result.

What Makes a Good Money?

So if seashells became money (which they did, although probably not exactly in the way I proposed!), why aren’t we all using them down the local supermarket today?

To cut millennia of history short, a good money has a handful of unique properties that make it suitable for storing someone’s time & energy. I’ll touch upon them now, but if you want more, read Lyn Alden’s book Broken Money.

Let’s go back to our African community…

After seashells were adopted as money, and upon hearing of this development, European explorers started turning up in Africa with tons and tons of them (they were readily available in their home countries). There was a short time where Europeans lived like Kings, purchasing real African services & products at very little cost. Finally, the locals realised they were being exploited, and everyone in the economy lost confidence in seashells as money, looking to alternatives to support trade agreements.

Money needs to be scarce.

If it’s easy to produce, then it’s poor money.

There are other crucial monetary properties like durability, fungibility, divisibility, portability, verifiability, and censorship resistance, but scarcity is the one underpinning everything. This property, and its absence from money we use today (2024), is the reason I moved the ‘family farm’ into Bitcoin.

Much like how Europeans had a near infinite amount of seashells to inject into the African economy in the mid 19th century, our current governments in 2024 have infinite amounts of ‘fiat’ or ‘paper money’ to inject into our global economy, funding pretty much anything they want (think wars and wasteful infrastructure projects). All whilst stealing the time & energy of their own citizens to do so.

I predict, like the Africans who lost trust in seashells storing their time & energy, global citizens will do the same with government money in the near-to-mid future (certainly by the time you’re shaving!).

I believe they’ll seek an alternative money that’s truly scarce.

For this reason Reg, and others I’ll expand upon in a future letter, I also believe that alternative will be Bitcoin.

And that’s where all our wealth is now stored.