What would you do as a child if you saw a dollar on the street? I would have picked it up as a child and showed my mom immediately. I would have thought I was rich because now I had a dollar. However, if I saw a dollar on the street today, I would just keep walking. Wealth is different at different ages and in other circumstances. From learning and researching about the economy these past few days, I have realized there is so much more to money than I initially thought. Yet, only some worldwide use the same currency, let alone have the same value for their money as everyone else. In addition, money is just used as a placeholder to show value or wealth, while it can be much bigger than that. 

One example of one form of currency that was used was limestone. Yes, limestone is a rock. It looks unusual and out of the ordinary, but if you think about it, we used gold to trade, which seems unethical, too. The Yap people used this to trade or buy things from each other on their island. Milton Friedman explained in his article titled “The Island Of Stone Money” stating “[A]s their island yields no metal, they have had recourse to stone; stone, on which labor in fetching and fashioning has been expended, is as truly a representation of labor as the mined and minted coins of civilisation.” (Freidman , 1991). Due to having no metal on their island, the Yap people used boats to go over 100 miles around from their island to retrieve limestones and bring them back to their island to use as money. These limestones were not minor; most would not move from their spot on the island when sold or used. The ownership of the limestone would just change to the next person.

The Yap people would even trade a piece of Fei that they accidentally dropped off a boat to the bottom of the ocean. They still considered it valuable, and it would change in ownership when traded, even though the people not on the boat never even saw it. The people of Yap also did not refer to their currency as stones or limestones. Instead, they called it fei. These large pieces of Fei seem unrealistic due to their size and weight. However, all of the Yap people agreed that the Fei had value and it was their currency that they would use on the island. Thinking about that today, the US used heavy pieces of gold, which is very similar to the Yap people who used limestone called Fei. 

Today, we use cash, checks, and banks to exchange money in the US. However, we started with gold and then moved to cash. We never see the gold but simply understand that cash, check, and money in the bank has value. When changing from gold to cash, the Bank of France became involved. In the article “The Island of Stone Money,” Milton Friedman explained that when the New York bank handed over the gold to the Bank of France by changing the name of ownership and word of mouth, it upset the people of the US. The people of the US could not fully understand and trust that the US dollar was of as much value as the amount of gold given to France. Later, the people realized that the US’s new currency was valuable since they could purchase and use it similarly without issues. This is similar to the Yap people because when the Germans took the Fei from them, they painted black crosses to show their ownership. 

One of the newest kinds of currency is Bitcoin. Bitcoin is only backed by the US; no other country uses it. Bitcoin is an online currency that began in 2008, and it is a digital currency that can be traded among people anywhere in the world. Since this is an online currency, no one ever sees the bitcoin because it physically does not exist but is still seen to have value. Similar to the Fei that the Yaps used at the bottom of the ocean. In addition to Bitcoin not being physical, it can also be seen to have more value than the US dollar because the government can never touch or take it from people. In the US, if homeowners were to stop paying their mortgage, the government would step in, take their assets, and even throw them into jail. However, the US government cannot take it if they have bitcoin, which is considered one of their assets due to its value because the government has no control over the digital assets. The government has no control over Bitcoin since Bitcoin is kept in a digital wallet that needs many passwords to get into. Another similarity that Bitcoin has with Fei is the change in ownership. Bitcoin is recorded and traded to others just as the Fei would change in ownership often. 

There are many similarities between the US current currency, the US dollar, the Yap people’s Fei, and Bitcoin. All currencies depend on their populations to have faith in the spendability of their money. The Yap people used their limestone to show wealth, while today, the US uses paper dollar bills to deliver their wealth and some with Bitcoin. How we today use money to buy things is no different than how the Yap people did, just in different ways, like with paper money or digital. Lastly, there is one difference between the Fei, US dollar, and Bitcoin. Both the Fei and US dollar can grow larger and cause the currency to become less valuable; Bitcoin can not. Bitcoin will always remain the same since a cut-off of only 21 million in Bitcoin will ever exist. 

References 

Stonemoneyessay.pdf. (n.d.). Retrieved September 18, 2023, from https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf

Friedman, Milton. The Island of Stone Money. (1991, February). Hoover Institution. stonemoneyessay.pdf (wordpress.com)

Yaffe-Bellany, D. (2022, June 8). New to the crypto world? here are the terms to know. (published 2022). The New York Times. https://www.nytimes.com/explain/2022/cryptocurrency-guide