“This wise man observed that wealth is a tool of freedom.
But the pursuit of wealth is the way to slavery.”
― Frank Herbert, God Emperor of Dune
The history of money is, in a very simplified - and partial - way, the history of finding a way to attribute a price to very different goods and a way to efficiently make demand and offer for goods and service meet, without a bulky intermediary.
If I farm carrots and cabbages, and my neighbour makes wooden bowls, or is a butcher, it would be great and fair to find a way to agree for example how many of my carrots are worth a pound of his pork ribs.
What if the butcher doesn’t need my carrots right now, but wants to sell me his pork ribs, and maybe he wants to get his hair cut? Money is an elegant solution.
I don’t need to bring my 300 carrots with me, I don’t need to find the seller of goods to be inclined to buy my carrots, and I know that a pound of pork ribs is gonna cost 3 bronze coins whether I’m a farmer, a doctor, or a wood sculpter. Nice.
Once the principle of money was established, it became a technological evolution to figure out better and easier way to generate, transport, and store money.
For millennia, money existed mostly in the form of metal coins of various alloys, and their value was strictly related to their weight in such metal, plus the guarantee of the State minting the coins, that they were genuine. This guarantee granted the coins the status of legal tender, that is, the one currency acknowledged in contracts, disputes, courts of law, tax collection, and so on.
In the West, during the XVII century, both England and France started introducing paper money, aka banknotes. In the beginning they were just “documents” that promised a payment in money (coins) to the bearer at a bank of change.
Basically they were “IOUs” (I owe unto), the obvious advantage over coins being ease of transport (paper took less space and much less weight), and unlike more cumbersome letters of trust, they were not tied to any owner, that is, a banknote was paid by the bank to the bearer of it, no other proof or identification necessary.
For centuries after that, the institute of finance and banking had new evolutions, but money stayed technologically the same: there were coins and banknotes, with value more or less tied to their equivalent in precious metal, and - in theory - backed by actual gold reserves of the nation minting the coins.
As you may already imagine, printing paper money was cheap, and it could easily lead into temptation to print more than the State had in gold reserves.
Indeed it did not take long for it to happen, and in France John Law led to one of the first “banknote hyperinflation”, fuelled in part by terrible decisions about bonds in Louisiana that became worth like toilet paper.
Up until my grandparents generation, there was no widespread concept of a “screen” (my grandparents were born before TVs were widespread in homes), and the concept of money - and of the rest of economy - was very much physical and material: money was still coins and paper notes you would count, stack, save, yes maybe deposit in a bank and receive some balance writing on a paper booklet (your savings account), but most everyday experience with money was very much material.
To go do groceries, you needed to carry cash with you, and you would gauge how quickly or slowly those banknotes were flowing in and out of the house.
Then came computers, and - slowly at first - another technological leap happened to money: now money could be just a number on a screen, “guaranteed” by checks and controls in the database, assuring your money was indeed “real” albeit immaterial.
Suddenly, we do not need to carry wads of cash around with us, we can just bring a plastic card, and recently even just our smartphone. Even the physical act of paying got dematerialized, thanks to contactless payments and qr codes.
Computer brought forward another new revolution: videogames.
Playing games was until then of course a very physical activity, and I would say most of the time a very social one: most games were for groups of people, whether in teams or one person for themself against the others. Very few games were solitary.
Videogames introduced gaming on video, that is, on a screen. Videogaming in the 70s was still mostly a social activity for the simple reason that videogames were not home but in Arcades, where young people would gather to play together or compete with each other, and socialize in the meantime.
While most “legacy” games demanded the players to keep track of their “wins” or “points” largely in their head or on blackboards - for example, most card games - or with some physical tokens of some sort - for example, card games at Casinos, using
plastic chips to represent money -, videogames could represent the score on the very same screen the game was being played. The score became a number on the screen, and most games featured leader boards of high-scores, to stimulate competitiveness and of course bring more money to be spent on the games.
The rest is recent history and should be familiar to anyone reading this:
videogames migrated from arcades to our homes, and multiplayer migrated from our homes to online, thanks to the internet. Leaderboards and the concept of highscores remained. Platforms like Steam also made smart use of new concepts like achievements.
Now let’s bring these two concepts together:
There is an entire generation, young enough to be born when videogames were already ubiquitous, and young enough to have known money to be electronic for most of their life, and old enough to be entering the workforce or be already in.
In other words, for a new generation of people money is yet another number on a screen, and it’s their current game-score at the game called life, it’s their “irl highscore”. There is the possibility of Game Over, but mostly you see your money as a score that goes up and down following the hardships and levels and rewards of life:
You work, you get “points”, that you spend on cosmetics and upgrades - clothes, haircuts, games, a car - and consumables and potions - food, entertainment, bills, subscriptions.
The street used to be life’s tutorial for kids, exploring and learning hardships, social dynamics, friendship, respect, betrayal, duty, fun, etc. Now kids grow up playing videogames since early age, but also much of life has been “gamified”, and these kids enter the adult life with a vision of life as a videogame: you play your skills and your cards well, you score high, you have more points to spend, you upgrade your character, etc.
This translates super well to the competitive field of finance, gambling trading and finding “strats” (strategies) that work well to score higher, accumulate more points, level up, scale, move horizontally and vertically. The high speed, low entry barrier and high competitiveness of crypto is a paradise for young gamers, who are unencumbered by a heavy material association with money and just see it as a number on a screen that goes up or down depending how well you “play”, and that can apply many of their videogame skills and thought process to the markets.
Zoomers, welcome to the era of finance as gaming.