Defining “currency”

Webisteme started a thread on A broader definition of currency, which prompted me to dedicate a post to the topic. My definition has certainly evolved since March 2009, so I wanted to share it here:

A currency is an attributable symbol whose meaning is common – consistently accepted, acknowledged – within a group of people, and over time.

The commonality, commonplace of a symbol is what distinguish a currency from other symbols. Currency is etymologically what runs, what is everywhere, not necessarily because it measures a flow, but  rather because its meaning is everywhere. I would argue that the existence of currency precedes in time the flow of wealth it may at some point trigger. I would also argue that a currency can but does not have to be formal, agreed upon, well-defined, it can be instead informal, emergent.

For a symbol to become currency requires either (or combination of):

  • force: this is the easiest. someone forces onto others the meaning of the symbol, such as is the case of the Government legal tender laws and monetary policy.
  • emergence: this is the most fascinating, because it is uncontrollable and can result in very quick social changes. An example is: having a Web site, blog, LinkedIn profile, twitter stream is a currency, if you don’t have one, it will raise strong doubts from a hiring manager.
  • agreement: this is probably the hardest. A group of people decide together that something will be used as currency.

Clearly, understanding how a currency emerges, and designing for a symbol to emerge as a currency seems to me to be a potentially very powerful piece of knowledge that I feel isn’t much written about in the Internet literature.

8 thoughts on “Defining “currency””

  1. Hi Guillaume,

    I agree with the basic position that a currency as a symbol which has common acceptance within a group of people, in a certain time. Money is one form of currency which is transactable, and therefore serves as a store of value. However, many currencies, like LinkedIn recommendations, are not.

    I wonder if the definition shouldn't be refined to include 'symbol of value' and 'changes value flows' there too. I'm not sure we'd want to accept any commonly accepted symbol. As @GregoryJRader pointed out, do we want to accept the spec sheet for an engine as a currency? Or what about traffic lights?

    When we include the notion of value, we get a more intuitive definition: a currency is a commonly accepted symbol of value. As a consequence of this, value flows differently. The “Certified Organic” sticker is a symbol of the value of organic production of the object, and its use changes production and consumption. It is a currency in the sense that it facilitates a new current of value… as compared to its absence.

    Thanks for the post and continuing the conversation.

  2. I used the term “attributable” to distinguish from any symbol, to reflect that it is an expression from someone about something or someone.

    I like the simple: “a currency is a commonly accepted symbol of value”. I think what flows differently though isn't value, it's available energy, attention, productive and creative capacity.

    “Like” is a currency. RT are a currency. The flows they shape is our limited attention.

    There is no limit to what symbols we can use to express value, but there is a limit to expressing all things of values as multiples of one symbol (especially one enforced through violence), and of course a limit to our creative/productive capacity.

  3. Thank you Anthony. I think the paper does provide answers to the “how does a currency scale” part of the emergence question. But does not answer the question: how do people come up with using a common symbol of value to set balances and credit limits between each other?

  4. True, though semiotics is a broad field and it may help to narrow the question to specific types of currency within your broad definition to make progress.

    For the common case of trading in fungible goods and services with many potential counterparties it seems to me like market mechanisms and the passage from commodities with mostly universally appreciated value to tokens that represent the commodity is central. In this case the work of emergence of value appreciation is sidestepped since the commodity itself is already valued and one need only convince people that the act of representation is a trustworthy one somehow.

    But since in practice fewer things fit very well into this mold than are often assumed to and reputation is one of the notable ones I can see your interest in broadening the discussion.

    The research on self-enforcing norms in game theory is also interesting, e.g.

  5. You're not the average blog writer, man. You definitely have something important to contribute to the net. Such a outstanding blog. I will come back again for more.

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