Money In The Columbian Exchange

I asked several people the question “what is money?” and the responses I got were all very different. Several people gave the obligatory “cash” answer I was expecting, but some answers were more insightful than others. My waiter at a local restaurant, Michael Sovik, eloquently answered, “Money is paper currency with value backed by the U.S. government”. He then went on to say that he didn’t really understand how we are able to do that, and when asked about the derivative market he stated he had never heard of it. My colleague, Tiffany Tunno, answered “cotton,” which at first I thought was because she didn’t want to answer the question. It wasn’t until she sent me a link stating the amount of cotton that is used to make currency as shown in …show more content…
currency education website, in 1690 the first paper currency was issued by the Massachusetts Bay Colony to pay for its military expeditions which caused the other colonies to start issuing paper currency too. In 1861, Congress decided to issue money through the Department of Treasury to finance the Civil War and since then all U.S. currency has been considered valid and redeemable. There are many recent events that point to a possible uproar in the currency market on a worldwide market. Two years later, congress officially establishes a national banking system with the U.S. Department of Treasury supervising it. It wasn’t until 1913 that The Federal Reserve Act established the Federal Reserve as the nation’s central bank. “In 1913, the Federal Reserve replaced the national bank system, and Federal Reserve notes were issued with a promise to redeem them in gold on demand” (Skouson). In 1933, Roosevelt required all gold to be turned in as to reduce the gold content of the dollar essentially abandoning the gold standard. In 1965, the Coinage Act took the actual intrinsic precious metal value out of coin currency making. Finally, in 1973 President Nixon officially took the U.S. off a gold standard and put U.S. currency on a fiat monetary system …show more content…
An explanation of how Bitcoin works is, “Each unit has an encrypted key which fits uniquely into a spot in the so-called blockchain. Every piece of bitcoin created has a unique spot on this blockchain. This special construction ensures security during transactions as well as prevents counterfeiting. Because of these security features, bitcoin removes an essential element that was thought to be necessary for every financial transaction: trust” (Melloy). Internet moguls, Winklevoss twins known for their association with Facebook are some of the biggest supporters of Bitcoin. They estimate Bitcoin market capitalization could go up to $400 billion or at least rival payment companies such as American Express, Visa, and MasterCard and believe that bitcoin has the capability to become better than, or even greater than those as an asset. A factor to consider in this Bitcoin hype is the fact that the Winklevoss twins have their asses on the line with Bitcoin because they are the huge backers behind the idea. Bitcoin has had some falters along the way, but the Winklevoss twins are doing their best to stabilize this new currency by building infrastructure that not only legitimize the currency but secure it at the same time. One of the major upsides to bit coinage is that, like gold, it can be used to hedge against inflation. The advantage that Bitcoin has over gold, according to Winklevoss twins, is that it