What makes crypto such a bad substitute for cash? The Smithsonian offers invaluable information.

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Before declaring its independence on July 9, 2011, becoming the youngest officially recognized nation-state in the world, the Republic of South Sudan chose a flag, an anthem and a currency. Within a week of secession, the South Sudanese pound was in circulation, featuring a portrait of late revolutionary leader John Garang de Mabior. By September, the currency of neighboring Sudan was no longer legal tender.

The Bank of South Sudan did not have to print banknotes, let alone pay the South African Mint to mint coins showing subjects of national pride ranging from giraffes to oil derricks. Neighboring Kenya already had years of experience handling payments through a mobile banking system called M-Pesa, and the blockchain was beginning to host a range of cryptocurrencies beyond bitcoin. The decision to follow tradition was political, equivalent to the choice made by Eritrea in 1998, shortly after its secession from Ethiopia. Even more than a flag or an anthem, a state currency broadcasts national identity.

Paper money, 500 dollar bill, 1922. Gold certificate. Gift of the United States Department of the Treasury. … [+] Courtesy of the National Museum of American History, Smithsonian Institution. 1978.0941.0520.

Jaclyn Nash, National Museum of American History, Smithsonian Institution

South Sudanese and Eritrean banknotes are currently on display at the Smithsonian National Museum of American History alongside dozens of other coins and currencies from around the world and throughout history, in a permanent exhibit aptly called The Value of Money. Built on solid numismatic foundations, exposure only becomes more timely with each shift in the economy and freefall in cryptocurrency. Even more valuable is a new rider open this year for kids who are coming of age at a time when they may never need to pocket a pound or a penny. Beneath their impressive surface sheen, both exhibits and their comprehensive online complements implicitly ask what money does when it does more than just quantify a financial transaction.

If crypto has a pre-modern lineage, it could trace back to the island of Yap in the western Pacific, where large stones have been used in major transactions for centuries. The stones are usually made of imported calcite, ring cut and set into the ground. Many are too heavy to lift and never physically change hands. Islanders simply remembered who owned which, a public ledger based on shared trust.

Unlike cryptocurrencies, Yapese’s rei has resisted external manipulation. A 19th century plan by an Irish sailor to import identical stone rings by ship resulted in an increased quantity which was met with greater attention given to when and how each rei arrived on the island . Stones that are older and require more effort to import have a higher value: proof of work before the letter.

Rai would not be viable in a modern global economy given the complexity and number of participants. (Even on Yap, most transactions use US dollars.) Nonetheless, the rai offers valuable perspective on contemporary economics because it shows that accountability involves more than accounting. The stones have a provenance. Each rai is the non-fungible product of all past transactions: a mnemonic device as much as a monetary instrument. The qualities that make rai work are anathema to crypto. More than a technical solution, a socio-cultural calculation may be necessary to make cryptocurrencies stable.

Deeper still, technological ploys that make transactions frictionless can undermine the economy. Despite all the obvious disadvantages of cash and the ease of exchanging bits, the value of money should be understood as more than just transactional. Throughout history, money has been a form of communication with many layers of meaning. From the old agora to the Mall of America, the market is a forum for ideas.

Some of the earliest coins were made in China, where coins were cast in the form of tools such as shovels and knives. Intrinsically worthless, these symbolic items were reminiscent of real tools with real utilitarian value, items traditionally traded for livestock and land. The change to an imaginary version in the 7th century BCE increased trade by making it easier to trade, i.e. friction was reduced by lightening the load, but these coins reminded people with each trade that the Money was only symbolic. Well represented in the Smithsonian collection, the knife and shovel arguably countered the abstraction of wealth and the attendant distortion of values.

Knife silver, China, 5th-1st century BCE. Howard F. Bowker Collection. Courtesy of the National… [+] American History Museum, Smithsonian Institution. 2017.0116.004, 2017.0116.005.

Jaclyn Nash, National Museum of American History, Smithsonian Institution

In the Middle East, currency evolved independently, following an entirely different trajectory. Around the same time China was casting bronze miniature tools, the Kingdom of Lydia (located in modern Turkey) began minting coins in a natural alloy of silver and gold. Previously, most transactions in the region involved the exchange of bullion, which required weighing and dosing with each exchange. With the stater and its fractions soon minted in pure gold or silver instead of alloyed electrum, Lydia standardized the monetary units while certifying authenticity.

Lydia was defeated by the Achaemenid Empire in 547 BCE. Learning metallurgy and minting from their new subjects, the Achaemenid kings began to issue their own currency in precious metals with a difference in signal: unlike the lions and bulls adorning the Lydian staters, the new sigloi represented the monarch, depicting him like a kneeling archer. with drawn bow. Wherever Achaemenid coinage spread, it carried an implicit threat of colonization.

Since then, most coins have been minted with subtexts ranging from political propaganda to visions of the future. The silver value includes an Athenian tetradrachm, which became the de facto currency in most of ancient Greece in the 4th century BCE, radiating the prestige of the city and spreading the glory of its patron deity with a portrait spectacular of helmeted Athena. Also on display is a 1786 Colonial American cent prominently displaying the Latin motto E Pluribus Unum (Out of Many, One), reinforcing the call for common purpose articulated by the Founding Fathers. And a map of Europe appears on a euro coin from the year 2000, tracing an alliance still in the making, suggestively seeking to connect the continent economically.

We risk exaggerating the rhetorical power of money. This becomes especially evident when money is to be self-sufficient, devoid of intrinsic value. China ensured the acceptance of coins and pioneered paper money through the strength and discipline of a centralized government. For a long time the United States and European nations imbued paper with the spirit of precious metals by solemnly guaranteeing the redemption of gold notes and pounds sterling against minted bullion. But as Germany discovered in the early 1920s, no amount of solemnity or fanciful engraving can counter the mistrust of the people. Within a few years, hyperinflation added so many zeros to the deutschmark that stacked trillion mark notes had to be transported to market in a wheelbarrow.

Although less extreme, inflation has also plagued the South Sudanese pound and other newer currencies such as the Venezuelan bolivar. In the case of the latter, the Smithsonian shows how artists have used colored silver as raw material for origami sculptures that can sell for far more than face value.

Charming as it is, the origami bolivar turns the rhetorical force of currency against itself, undermining national dignity far more effectively than a flag being burned or an anthem sung out of tune. When money is gutted or commoditized by the people, the values ​​of the nation are subject to renegotiation.

The physical qualities of money always convey meaning, whether or not that is what the issuing authority intended. Because meaning manifests itself in every transaction, every transaction is a mode of interaction. Even more than sobering friction, the exchange of ideas may be the greatest value of money and the greatest loss we could face if the world succumbed to cryptocurrency or even collapsed. was converting to Apple Pay.

Anything but obsolete, money is an ideal platform for social progress and economic innovation. Money can refocus national identity through the images depicted. Heads were turned by the one dollar coin depicting Sacagawea. The $20 bill featuring Harriet Tubman promises to make an even deeper impression, as Tubman’s face will replace Andrew Jackson’s face.

Sacagawea coin plaster, USA, 1998. Designed and donated by Glenna Goodacre. Courtesy of… [+] National Museum of American History, Smithsonian Institution. 2010.0249.03

National Museum of American History, Smithsonian Institution

The form money takes also has the potential to influence the terms of trade. Imagine a room with a mirror finish, confronting the spendthrift with a reflection of their facial expression. (Would that make people more honest?) Imagine a ticket printed with an optical illusion that makes it more impressive to the recipient than to the giver. (Are people becoming more generous?) The ergonomics of money can be modulated to influence consumption habits. Alloys can be changed to remember how transactions are processed.

One of the more modest pieces in the Smithsonian exhibit is a slender silver denarius from the year 46 BCE. On the obverse is a portrait of the goddess Juno Moneta, in whose temple silver was minted (and whose name is the etymological root of silver). The reverse, not visible in the exhibition or on the website, shows the tools used in the minting process, pliers to remove molten metal from the furnace and a hammer to strike it with a design effectively demystifying the process by which the money is born. Juno may be supernatural, but making money isn’t magic.

More than two millennia after its minting, the candor of this denarius remains unmatched, contrasting sharply with the cryptic ways of cryptography. In our fragile economy, the design brief for future money might start with asking money to explain itself. In the meantime, we must glean what we can in the numismatic galleries of the Smithsonian.

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