{"id":3424,"date":"2025-05-19T07:49:00","date_gmt":"2025-05-19T05:49:00","guid":{"rendered":"https:\/\/andreaszapf.de\/blog\/?p=3424"},"modified":"2025-05-16T22:19:06","modified_gmt":"2025-05-16T20:19:06","slug":"note-to-myself-my-requirements-towards-a-currency","status":"publish","type":"post","link":"https:\/\/andreaszapf.de\/blog\/?p=3424","title":{"rendered":"Note to myself: My Requirements towards a Currency"},"content":{"rendered":"\n<p>With all the discussions about our monetary system, traditional money vs. digital currencies, cryptocurrencies, and how things are going to change, I\u2019d like to take a step back and look at <strong>my personal requirements towards a currency<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/andreaszapf.de\/blog\/wp-content\/uploads\/2025\/05\/ChatGPT-Image-16.-Mai-2025-22_16_37.png\" rel=\"lightbox[3424]\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/andreaszapf.de\/blog\/wp-content\/uploads\/2025\/05\/ChatGPT-Image-16.-Mai-2025-22_16_37-1024x683.png\" alt=\"\" class=\"wp-image-3425\" srcset=\"https:\/\/andreaszapf.de\/blog\/wp-content\/uploads\/2025\/05\/ChatGPT-Image-16.-Mai-2025-22_16_37-1024x683.png 1024w, https:\/\/andreaszapf.de\/blog\/wp-content\/uploads\/2025\/05\/ChatGPT-Image-16.-Mai-2025-22_16_37-300x200.png 300w, https:\/\/andreaszapf.de\/blog\/wp-content\/uploads\/2025\/05\/ChatGPT-Image-16.-Mai-2025-22_16_37-768x512.png 768w, https:\/\/andreaszapf.de\/blog\/wp-content\/uploads\/2025\/05\/ChatGPT-Image-16.-Mai-2025-22_16_37.png 1536w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<p>And maybe \u2013 just maybe \u2013 that helps you to consider your own requirements. Helps you to find out what is important to <em>you<\/em>. And makes you actively think about what kind of system you\u2019d be willing to trust, use, and rely on.<\/p>\n\n\n\n<p><strong>Spoiler alert:<\/strong><br>We might find out that we have <strong>different<\/strong> requirements. Or we might find out that we have the <strong>same<\/strong> requirements, but put a <strong>different priority<\/strong> on each of them. And that\u2019s just fine \u2013 that\u2019s why we\u2019re talking about it.<\/p>\n\n\n\n<p>But before we head into those requirements \u2013 let\u2019s pin down some basic definitions. Because clarity matters, especially when talking about something as foundational as money.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Currency<\/strong>: A <strong>currency<\/strong> is a system of money in common use, especially within a nation or economic region. It refers to the <em>form<\/em> of money \u2013 whether it&#8217;s coins, paper notes, or digital tokens. It\u2019s the <em>vehicle<\/em> that carries value and allows us to transfer it. Dollars, Euros, Bitcoin \u2013 these are currencies.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Money<\/strong>: <strong>Money<\/strong> is a broader concept. It refers to anything that is generally accepted as a <strong>medium of exchange<\/strong>, a <strong>store of value<\/strong>, and a <strong>unit of account<\/strong>. Historically, that included gold, silver, shells \u2013 and today, it includes fiat currencies, central bank reserves, and even some digital assets.<\/li>\n<\/ul>\n\n\n\n<p>Not all money is a currency, and not all currencies fulfill the full function of money. But the distinction is important: <strong>Currency is the form. Money is the function.<\/strong><\/p>\n\n\n\n<p>To be clear: that\u2019s a simplification \u2013 but a deliberate one. A functioning monetary system typically requires both: the <strong>form<\/strong> (&#8220;currency&#8221;) and the <strong>function<\/strong> (&#8220;money&#8221;). Occasionally, we encounter one without the other:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>There are <strong>currencies<\/strong> that fail to store value \u2013 for example, during hyperinflation.<\/li>\n\n\n\n<li>And there are \u201cthings\u201d that <strong>fulfill the functional definition of money<\/strong> but are <strong>not considered a currency<\/strong> in a legal or institutional sense. Bitcoin is a prominent example of that second case.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">My Top 3 Requirements towards a Currency<\/h2>\n\n\n\n<p><strong>When it comes to requirements, fewer is usually better<\/strong> \u2013 it helps you focus on what\u2019s essential and ignore the \u201cnice to haves.\u201d So here are <strong>my Top 3 requirements for my (ideal) currency<\/strong>:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Store of Value<\/strong>: This is a <strong>fundamental requirement<\/strong> \u2013 a true <em>showstopper<\/em> if not fulfilled. I don\u2019t want my personal assets, my safety bag, my future to be stored in something that can\u2019t maintain its value. If something is worth 100 today, I don\u2019t want it to be worth 10 a decade from now.<\/li>\n\n\n\n<li><strong>Independence from Arbitrary Control<\/strong>: Again \u2013 this one is <strong>non-negotiable<\/strong>. I want my belongings to be <strong>safe from manipulation by others<\/strong>. I don\u2019t want anyone to control my assets. I don\u2019t want anyone to dilute or deflate their value. And I certainly don\u2019t want anyone to take them from me \u2013 <em>without my consent<\/em>.<\/li>\n\n\n\n<li><strong>Acceptance and Usability<\/strong>: The third essential requirement. Whatever currency I store my value in, it needs to be <strong>widely accepted<\/strong>. I need to be able to <strong>pay<\/strong> with it, <strong>invest<\/strong> with it, <strong>account<\/strong> with it. The \u201cperfect\u201d currency is utterly useless \u2013 if no one\u2019s willing to trade with me.<\/li>\n<\/ol>\n\n\n\n<p>There might be more requirements, sure \u2013 but honestly: <strong>these three are the essential ones<\/strong>. I\u2019m not asking much, right?<\/p>\n\n\n\n<p>Well, I might not be asking much &#8211; yet, many currencies have failed on these three simple requirements. Let&#8217;s take a closer look at them &#8211; they can be translated into &#8220;Stability&#8221;, &#8220;Resilience&#8221;, and &#8220;Portability&#8221;.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why Stability Matters<\/h2>\n\n\n\n<p>The base for every (good) currency is <strong>trust<\/strong>. The moment people start <strong>losing trust<\/strong>, a currency is already dead. Whoever can, will take their value out \u2013 and <strong>everyone else will lose everything they had<\/strong> in that currency. A loss of trust instantly breaks all three core requirements: It no longer stores value. There are no belongings left to protect or control. Acceptance and usability drop to zero.<\/p>\n\n\n\n<p><strong>Nobody accepts money in a currency that\u2019s already dead.<\/strong> If you don\u2019t believe me \u2013 look at the image below.<\/p>\n\n\n\n<p>But what makes a currency &#8220;stable&#8221;? Or when does it become &#8220;unstable&#8221;? Well \u2013 history has taught us a few key parameters:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Predictable Supply Mechanism<\/strong>: A currency needs a <strong>predictable, slow, and transparent<\/strong> mechanism for supply growth. This can be managed by a governing authority \u2013 or (in the modern world) by an algorithm. But <strong>uncontrolled or erratic growth is deadly<\/strong> \u2013 it leads to inflation, and inflation (or deflation) directly threatens the currency\u2019s ability to store and maintain value.<\/li>\n\n\n\n<li><strong>Trustworthy Governance<\/strong>: Whoever controls the currency must be <strong>absolutely trustworthy<\/strong>. That can be an institution, a government \u2013 or again, an algorithm. But it must demonstrate <strong>transparency, accountability, and independence<\/strong>.<\/li>\n\n\n\n<li><strong>Security &amp; Forgery Resistance<\/strong>: A good currency <strong>cannot be tampered with<\/strong> and is <strong>hard to forge<\/strong>. If something is easily subject to fraud, <strong>acceptance will vanish<\/strong>, and with it the third core requirement: <strong>usability<\/strong>. <\/li>\n\n\n\n<li><strong>Widespread Acceptance<\/strong>: A stable currency has a <strong>strong network<\/strong> behind it \u2013 a large user community that accepts and trusts it. That, in turn, creates a <strong>positive feedback loop<\/strong>: broad acceptance strengthens trust, which enhances stability.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Why Resilience Matters<\/h2>\n\n\n\n<p><strong>Resilience<\/strong> is the ability of a currency to withstand internal and external forces that threaten its core values. Here are a few critical challenges a resilient currency must be able to endure:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Uncontrolled Inflation<\/strong>: Inflation isn\u2019t inherently evil \u2013 but it must be <strong>low and predictable<\/strong>. At the end of the day, any inflation means your assets are losing value.<br>The European Central Bank, for example, targets a 2% inflation rate for the Euro. That\u2019s modest \u2013 and more importantly: predictable.<\/li>\n\n\n\n<li><strong>Manipulation<\/strong>: A good currency is <strong>resilient against manipulation<\/strong> \u2013 even (and especially) by its own government. In fact, the most common source of currency manipulation is the state itself. History provides plenty of examples. This is why resilient systems separate <strong>currency governance from political power<\/strong> \u2013 enter the <strong>central bank<\/strong>. Much to the dismay of some\u2026 even current world leaders.<\/li>\n\n\n\n<li><strong>Censorship<\/strong>: A good currency is, in principle, <strong>free<\/strong>. That\u2019s a bold statement \u2013 and a complex one. But generally speaking: it shouldn\u2019t matter who I transact with, or how. Yes, I fully acknowledge that this level of freedom <strong>can be misused<\/strong> \u2013 but I firmly believe it is wrong to <strong>sacrifice the freedom of the many to control the few<\/strong>.<\/li>\n\n\n\n<li><strong>Confiscation<\/strong>: Another hot topic. I\u2019m not talking about asset seizure due to criminal conduct \u2013 I\u2019m talking about <strong>governmental actions<\/strong> like: broad-based asset freezes, forced expiry of digital money, negative interest policies, or even retroactive restrictions on asset use. A resilient currency protects individuals from these <strong>system-level confiscations<\/strong>.<\/li>\n\n\n\n<li><strong>Control<\/strong>: Closely tied to censorship, but broader in scope: A resilient currency should not allow <strong>centralized control or surveillance<\/strong> of every transaction, every wallet, every account. Whether it\u2019s individuals or corporations \u2013 <strong>systemic overreach must be prevented<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Why Portability &amp; Usability Matter<\/h2>\n\n\n\n<p>Even the most stable and most resilient currency is worthless if you can\u2019t use it. This requirement is often overlooked \u2013 but in practical terms, it <strong>decides whether a currency is alive or dead<\/strong>.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Portability<\/strong>: A currency must be <strong>easy to carry, transfer, and access<\/strong> \u2013 both in physical and digital form. In today\u2019s world, this means: I can use it <strong>globally<\/strong>, not just locally. I can <strong>send and receive<\/strong> it across borders and platforms. I can store it <strong>securely<\/strong> without relying on physical proximity or fragile infrastructure<\/li>\n\n\n\n<li><strong>Usability<\/strong>: Beyond moving it \u2013 I must also be able to <strong>spend it<\/strong>. Everywhere. Easily. Without friction. This means: A functioning <strong>payment infrastructure<\/strong>. <strong>Merchant acceptance<\/strong> \u2013 whether local shops, online platforms, or international services. <strong>Legal clarity<\/strong> \u2013 it must not be illegal or punished to use that currency. <strong>Speed and cost-efficiency<\/strong> \u2013 nobody wants to wait 10 minutes or pay $20 in fees to buy a coffee<\/li>\n<\/ul>\n\n\n\n<p>Usability is the real-world test for any currency &#8211; it is where theory meets practice. A currency that cannot be used is not a currency &#8211; it is an idea.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>So here they are \u2013 my Top 3 Requirements for an ideal currency, and the reasons behind them.<br>If you&#8217;ve followed my <em>Monetary Journey through History<\/em> (Part I | II | III), you\u2019ll know that <strong>some currencies come close<\/strong> \u2013 but <strong>none of them met all the requirements and was able to maintain that status<\/strong>.<br>Most fail <strong>sooner or later<\/strong>, and usually <strong>in at least one of these key dimensions<\/strong>. Why? <\/p>\n\n\n\n<p>Because history has never seen a <strong>perfect currency<\/strong>. But that doesn\u2019t mean we shouldn\u2019t aim for one.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With all the discussions about our monetary system, traditional money vs. digital currencies, cryptocurrencies, and how things are going to change, I\u2019d like to take a step back and look at my personal requirements towards a currency. And maybe \u2013 &hellip; <a href=\"https:\/\/andreaszapf.de\/blog\/?p=3424\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":65,"featured_media":3425,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[125],"tags":[],"class_list":["post-3424","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","jetpack_featured_media_url":"https:\/\/andreaszapf.de\/blog\/wp-content\/uploads\/2025\/05\/ChatGPT-Image-16.-Mai-2025-22_16_37.png","jetpack_shortlink":"https:\/\/wp.me\/p1azp4-Te","publishpress_future_action":{"enabled":false,"date":"2027-04-14 14:22:15","action":"change-status","newStatus":"private","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=\/wp\/v2\/users\/65"}],"replies":[{"embeddable":true,"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3424"}],"version-history":[{"count":1,"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3424\/revisions"}],"predecessor-version":[{"id":3426,"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3424\/revisions\/3426"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=\/wp\/v2\/media\/3425"}],"wp:attachment":[{"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/andreaszapf.de\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}