What makes money, money?

Money is a technology that's changed throughout history. Understanding the basics of traditional money is helpful for understanding how Open Money works

Before we dive deeper into the history of money or how money is evolving, it probably makes sense to first talk about what makes money, money.

There are some great books and articles that nerd out about the nuances of money or how to develop in-the-weeds definitions of money. But this project isn’t one of those.

Instead, we want to develop a very basic and straightforward definition of money that we can use to characterize both money historically and money as it might exist in the future.

Regardless of the format, a good money system should act like a three-legged stool:

Act as a unit of exchange. After all, using money to facilitate commerce, trade value (like products or services), or assign worth to intangibles (like time or art) is one of the core functions of money.
Act as a unit of account. Or, put another way, money is like a standardized system that we use to value things or keep track of them. Money systems function as databases, and the actual money in the system acts as a ledger to track value. Without some kind of basic system, it would be difficult to create values for things or facilitate trade between disparate goods and services.
Serve as a store of value. Money needs to be durable and hold up over time. Historically, this idea of durability led to the minting of metal coins—standardizing a common material while ensuring its scarcity and physical longevity. In a modern economic sense, durability means the ability of a currency to retain value compared to other assets. While volatility can complicate this aspect, the key takeaway is that money should exhibit some measure of stability to function effectively long-term.

Beyond these three pillars, there are other characteristics that are critical to understanding money—especially in the context of Open Money and digital currencies.

Distribution: The accessibility and reach of money play a significant role in its effectiveness. A money system that is too centralized or limited in scope can hinder economic participation and innovation. Open Money aims to address this by leveraging decentralized networks to achieve broader inclusion.
Fungibility: Money should be interchangeable and uniform, meaning that each unit is functionally identical to another. This ensures seamless transactions and consistency within the system. Fungibility is a crucial trait that enables trust and fluidity in economic interactions.

Thinking about money as a technology is helpful for framing its evolution. Throughout history, the underlying technology of money has transformed alongside larger economic and societal changes.

The transition from barter to commodity money, from metal coins to paper currency, and eventually to digital transactions all align with broader shifts in human organization and technological capability.

Today, we are witnessing another major transformation in money technology—one driven by the digital revolution.

The rise of the internet, blockchain, and decentralized finance is not happening in isolation. It is a response to the unfolding digital transformation and the need to adapt to new technological paradigms, such as AI, automation, and the decentralization of power structures.

The Open Money framework embraces this transformation by acknowledging that money is no longer just a static tool but an evolving, adaptive system designed to meet the demands of an increasingly digital and interconnected world.

The question we must ask ourselves is not whether money will change, but how we can guide its evolution to better serve a global, networked economy.

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