Quest for Good Money: Past, Present and Future

This open-access book explores the history and functions of money, focusing on the role of a unit of account or denomination. It discusses the challenges of defining and deriving denominations for paper money and coins, as well as the potential for digital or cryptocurrency to be denomination-free. The book appeals to those interested in creating new digital or cryptocurrencies and serves as a textbook on central bank digital currency.

Format: Hardback
Length: 151 pages
Publication date: 03 November 2022
Publisher: Springer Verlag, Singapore

This comprehensive open-access book delves into the intricate history and multifaceted role of money, a fundamental aspect of human civilization. Money is commonly understood to fulfill three interconnected functions: serving as a medium of exchange, a store of value, and a unit of account. While researchers often focus on the first two functions, the third function, the unit of account, tends to be overlooked. This book, however, takes a unique approach by examining the definition and derivation of denominations within the monetary system.

In the realm of paper money and coins, determining the denomination is a well-established process. It is based on the problem of the least number of weights, which was first proposed by Bâchet and later proven by Hardy and Wright in 1960. This approach allows us to accurately identify the denomination of money by considering the number of weights required to represent a specific amount.

However, the case of digital or cryptocurrency presents a different challenge. Unlike paper money and coins, digital or cryptocurrency does not have a physical form and is typically stored in wallets that are essentially denomination-free. Wallets can hold any amount of currency without any upper or lower limits, making denomination irrelevant in this context. When discussing stablecoins, which aim to maintain a stable price relative to a major legal tender, the concept of denomination becomes even more complex. Stablecoins are often considered a unit of account or denomination of digital or cryptocurrency, assuming that a specific denomination is predefined.

This arrangement, however, raises important questions about the nature of denomination-free or decentralized autonomy. By taking a denomination as given, the arrangement undermines the very essence of a decentralized system where individuals have control over their own money without the interference of centralized authorities.

To address these challenges, this book offers a comprehensive exploration of how we can reconcile these two perspectives on denomination. It provides valuable insights for anyone interested in creating new digital or cryptocurrencies, as well as serving as a comprehensive textbook on central bank digital currency. By examining the historical evolution of money, the functions it fulfills, and the challenges posed by digital or cryptocurrency, this book aims to deepen our understanding of the complex monetary system and its implications for the future.

Weight: 424g
Dimension: 235 x 155 (mm)
ISBN-13: 9789811955907
Edition number: 1st ed. 2022