The foundations of “Money”

Now that we understand the characteristics of Durability and Portability, we are going to build on that foundation and simplify the ‘complex’ concepts of Divisibility and Uniformity… with Pizza!

Divisibility

Everyone loves a good pie, and it has been the basis for our grade school teaching of fractions.

The basis is, you can take one full Pizza and split it in half. But if that’s not enough for your friends, you can split both of those in half, making four slices. But no matter what, each slice is still just a fraction of one whole pizza! The process of halving the pieces can continue until you get slices so thin nobody wants just one and will eventually start taking 2-3 slices of the toothpick size slices *cough* inflation *cough*

The same is true with “Money”! Let’s break down One U.S. $Dollar.

One dollar, has 5 smaller denominations (smaller slices); Quarters, Dimes, Nickels, and Pennies, each can be used in any combination to add up to one full dollar (or full pizza). Some are smaller slices, some are bigger.

• One Dollar (1.00)
  • 4 Quarters (0.25 * 4)
  • 10 Dimes (0.10 * 10)
  • 20 Nickels (0.05 * 20)
  • 100 Pennies (0.01 * 100)

Even further, each of the denominations, can be split up into the smaller units below it.

• 1 Quarter (0.25)
  • 2 Dimes + 1 Nickel ( [0.10 * 2] + 0.05 )
  • 5 Nickels (0.05 * 5)
  • 25 Pennies (0.01 * 25)
• 1 Dime (0.10)
  • 2 Nickels (0.05 * 2)
  • 5 Pennies (0.01 * 5)
• 1 Nickel (0.05)
  • 5 Pennies (0.01 * 5)

With this, we can start to see how the dollar has Divisibility!

Uniformity

Again, we all love a good pie!
Universally though, whenever we’re each sitting in front of a fresh pie, everyone is looking at, and calculating, which slice they want…
Is it big enough? Does it have enough toppings? Does it have all the toppings you want? Is it the right slice of crust? Maybe you’ve already had a few and you want a ‘smaller‘ slice so you don’t feel so bad?

Regardless of your reasoning, you instinctively know that each piece is a little different. They’re not uniform.

Now, let’s say that your parents told you that you and your brother would have to figure out who does the dishes that night. Using the ‘economics’ of bribery, you think about offering him the smaller slice to do the dishes… do you think he would accept? What about the biggest slice without any toppings? Only then, your parents come in from left field and offer him the largest slice, with all the toppings, not do them!

Here is the dilemma! If all the slices were exactly the same, maybe you could offer one extra slice to get out of the tedious chore. Instead, you’re stuck and end up having to wash them yourself.

This is where “Money” needs to be uniform. This way, you can buy (trade) the same amount of goods/services for the same amount of ‘slices’ (or pieces of currency).
One $Dollar is not any better than the next. You can offer more slices or less, and be just as competitive.
Better described, one ounce of Gold (Money) is not any more special than the next ounce. Gold is gold is gold is money is money is money. It’s a unit of measurement, and that measurement is the same for everyone who measures it.

Connecting the dots

In this post, we’ve described how Pizza is the ideal form to understand the “Money” characteristics of Divisibility and Uniformity. We now understand how you can divide a full piece of a whole, and in order for it to be considered “Money” each piece needs to be exactly the same as the next. Building off of this foundation, consider the following:

Divisibility

Cryptocurrencies are just computer code. Because of this whenever it’s created, it’s written into the code how divisible it is. In our example of the U.S. $Dollar, it is divisible down to 0.01 (penny).

However, with Bitcoin for example, a “Satoshi” is the smallest divisible unit of a single (whole) Bitcoin. A single “satoshi” is 0.000,000,001 Bitcoin. That means there are 100,000,000 ‘sats’ in a single Bitcoin. This is a TON of divisibility.

Uniformity

Again, cryptocurrencies are, at the end of the day, computer code. Think about it like this; last time you typed the letter “B” using your keyboard, the character “B” showed up on your screen. Nothing changed from the last time you typed it, and nothing will change the next time you type it. Code is code, and it will always be uniform. This is exceptionally true with Crypto. One Bitcoin will always be one Bitcoin, and you can’t distinguish it from the next.