Now we’ll embark on a journey through history, experiencing the origins and progression of money. To evaluate each good used as money, we’ll learn about seven desirable properties in money.

How money starts

First, a bit about how money “starts up” in a community. First, communities bartered. Direct exchange, say strawberries for cows. Then at some point they started using primitive money, like shells. How did this happen?

Carl Menger, founder of the Austrian school, argued that money arose from individuals choosing what they thought was the best money for life or business. Eventually, the market converged on preferred money. People inventively and organically found the best good at being a store of value, medium of exchange, and unit of account over time. Bishop Oresme sings the same tune in his treatise on money.1

Desirable properties in money

Communities throughout history have found the following seven properties desirable in a good used as money:

• Durable: The good must not be perishable or easily destroyed. This ensures that money can circulate in the economy in an acceptable and recognizable state. Thus wheat is not ideal. Gold, however, can withstand wear and tear.

• Divisible: The good must be easy to subdivide, for smaller and more precise transactions. Paper bills and coins can be easily divided.

• Portable: The good must be easy to transport and store, allowing it to facilitate trade over long distances and making it possible to secure against loss or theft. A cow is thus less ideal than a gold bracelet.

• Established history: The longer the good is perceived to have been valuable, the greater its appeal. The US dollar today has a long established history relative to bitcoin.

• Scarce: “Scarce” means a limited availability of something. Perhaps most important for money to function as a store of value, scarcity taps into humans naturally valuing that which is rare—think of the one-of-a-kind Mona Lisa. However, we don’t want it too scarce; we can’t use the Mona Lisa as money. Instead, we want a balanced scarcity. As American legal scholar and cryptographer Nick Szabo termed it, money should have unforgeable costliness: the good must not be abundant or easy to obtain or produce in quantity, nor should it be too scarce or hard to obtain or produce at all.

• Fungible: One specimen of the good should be interchangeable with another of equal quantity. Metal coins (standardized) are better than diamonds (irregular in shape and quality).

• Verifiable: The good must be easy to quickly verify as authentic. Think of a store owner inspecting bills under light. Modern bills have improved anti-counterfeiting technology, like watermarks or holograms.

Now that we have our good money lens, now let's go on our historical money journey.

The evolution of money

Primitive money

We will begin with primitive forms of money, such as shells and beads crafted from local materials like stones, wood, and bone. These were used by societies worldwide.

But locally-sourced money had issues. For example, shells aren’t super durable, precise divisibility is difficult, and scarcity fluctuated as folks found or imported shells.

Precious metals

Humanity moved onward: metal money, primarily gold and silver, and sometimes other or mixed metals. Bishop Oresme preferred high-purity gold coins with a consistent weight and size, with a stamp from the coin issuer for verification.2

Metal coins were more durable and divisible. And portable, because you can condense value into a single coin and carry that instead of a great bunch of less valuable shells and beads.

However, the coins were heavy for large transactions, and some people abused the system by creating new fraudulent coins diluted with cheaper metals, which harms scarcity. The guilty included the Prince trying to finance expenditures or wars, hence Oresme’s treatise.

Gold-backed paper

Communities later moved on to paper receipts saying “we have this precious metal stored for you somewhere” as a form of money, and receipt holders could demand the actual metal at any time.

These paper receipts improved portability once again. No longer did you carry metal; large transactions were simple. The previous scarcity issue was shifted to the banks, who acted as trusted central issuers and custodians.

However, people began to notice suspicious activity within the banks; they were issuing more paper receipts than they had gold in storage, effectively creating money without sufficient asset backing. This practice led to bank runs and recessions.

Fiat money

Partly fiat, 1944-1971

The move to the next system was less about improving money, and more about attending to a crisis. By 1944, the difference between gold in each country’s banks and paper money created became so stark that a global financial crisis was imminent. So in July 1944, 730 delegates representing 44 nations met in Bretton Woods, New Hampshire and agreed on a system:

• The US dollar was tied to gold at $35 an ounce for government trades.

• The IMF was created to manage other countries’ exchange rates with the dollar, which became the world’s main currency.

• This led to more people using the US dollar.

The term “fiat money” comes from the Latin word “fiat,” which means “let it be done.” Here it means that this money’s value is established by government decree. During wartime instability, this agreement temporarily stabilized the system, as it inspired confidence through international cooperation and clear exchange rate rules.

Fully fiat, 1971-today

But the stability didn’t last long. The US, in coordination with the other nations, continued to create more dollars than there was gold, and in 1971 President Nixon had to say no more gold at all. Since then, currencies have lacked direct asset backing, and now fluctuate based on market forces and government policies. Notably, a country’s central bank can now create money without accountability to an amount of stored value, like they had to with gold before.

Other fiat money changes

There have been other changes within the fiat money paradigm. In the 1950s, credit cards started to become popular. People started to use fiat money via plastic cards that allowed you to buy now and “settle your tab” later. Then with widespread internet adoption in the 2000s, people started to use fiat money online.

The main problem with fiat currencies is their lack of scarcity—nations have shown a persistent habit of “printing money” to solve short-term political problems.

Bills and coins…

Practically, we have used paper or plastic bills and metal coins for a long time, but, as you’ve seen, the value those things have represented have changed.

A reminder, our end goal is a stable money, and consistent money printing prevents that. In the next post, we’ll learn about the material and moral consequences of unstable fiat money you've likely felt.

Have feedback to improve this part of the course? Submit it anonymously here.

We’re taking next week off, so the next part of the course will be released on April 26.

Wishing you a blessed Holy Week!

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In this post, we’ll learn about the three functions of money: store of value, medium of exchange, and unit of account, and how new forms of money—like Bitcoin—demonstrate these functions in stages.

In the last post, we learned that most people know money as a medium of exchange—that is, money facilitates trade. But it’s more than that, and the other two functions will help you understand how money today is broken.

Store of value

First, there’s money as a store of value. For example, you earn wages with your labor, then you put that money aside in your “nest egg”—money specifically put aside for future use, like retirement or emergencies. People here are using money as a tool to store value over time.

This is the first stage. Throughout history, goods like shells, beads, and gold initially gained demand as collectibles due to their unique properties or aesthetic appeal. Communities often first valued items like shells, beads, and gold for their inherent qualities—the beauty and portability of shells and beads, the luster and purity of gold, perhaps. Bitcoin was there as well in the early 2010s as a novel digital toy for internet enthusiasts. As more people recognize these inherent properties as interesting and also as suitable for storing value, demand grows, and the good begins to function as a “store of value.” People recognize that it is holding value over time, leading to more and more demand, as education and acceptance spread throughout society. This process causes the price of the good to increase, sometimes in a volatile way.

From a Catholic perspective, we must grasp “productive property” before we understand how Pope Leo XIII wants us to have a store of value. Pause and read his quote below.

In Catholic Social Teaching, productive property refers to assets, primarily land and tools, that enable families to earn livelihoods. Think of a tractor or a laptop. His Holiness emphasized productive property because it was tied to his vision of families having the means for self-sufficiency and flourishing.

Now money, like golds, shells, or beads, isn’t productive property. However, money as a store of value leads folks to invest in productive property. Just like last lesson, we’re going one layer below Rerum Novarum.

Here’s how it works. The Austrian school of economics framework has saving and investment as the engines of economic progress.

Saving is the initial act of forgoing present consumption, of whatever resources you possess.

Investment is the use of those saved resources to acquire productive property, like tools or land.

Saving therefore is the essential source of investment. Without saving, there is no investment in productive property. Then we use that productive property in a circular, interactive flow of producing goods and services and “consuming” them.

So production is the use of that productive property to create more goods and services. And consumption is the ultimate goal, made possible by increased production. Consumers consuming informs producers what to produce, creating a feedback loop.

The Austrian school calls this process economic progress. They define it as an expansion of the availability of goods and services that satisfy human wants. Though the framework primarily focuses on market processes, and therefore can include disordered wants, it does not preclude prescribing a moral element, and Catholic teaching can provide that.

Catholic teaching tells us that “true human wants” extend beyond the material and include goods that fulfill spiritual and social wants. Therefore, true economic progress includes a church with open doors and scheduled services, a quiet garden with seating for contemplation and reflection, and a local theater or art studio offering workshops and exhibitions, goods and services that today’s economic metrics often fail to fully capture.

So, God-focused economic progress is important, so therefore, saving, the initial step that leads to investment in productive property and permits the process, is important.

We can save in consumption goods, like 100 cans of soup. We can save in tractors or laptops. We can also save in money, which is the simplest way to save for the wage earner. A succinct quote from our friend Dr. Hülsmann, to summarize this important teaching.

Medium of exchange

The next function of money is the one most people know about, from last video: money as a medium of exchange.

Once a money has fully established itself as a store of value in a society, the price appreciation relents and its value becomes stable. People then have more freedom to use it for everyday transactions since they are not as strongly motivated to delay spending in hopes of a significant value increase.

The medium of exchange function of money was recognized by the Early Church, including St. John Chrysostom in 390 AD.

Unit of account

Then, finally, after the monetary good becomes widely adopted as a medium of exchange, it evolves into a unit of account.

People begin to use it as a standard measure of value for pricing goods and services. It becomes the money people think in. Here’s an exercise. How much is a hamburger worth? What does rent cost? Some amount probably comes to mind for you.

The idea of money as a unit of account has been understood for centuries. Here’s a quote from French Bishop Nicolas Oresme, often regarded as the greatest medieval economist.

Recap, and where’s bitcoin?

To recap, these are the three functions and stages of money:

• Store of value

• Medium of exchange

• Unit of account

Monetary goods that are not yet a unit of account may be thought of as being “partly monetized.” Now where are we at with bitcoin?

In 2025, bitcoin is establishing itself as a store of value.

Bitcoin is not widely used as a medium of exchange in most countries. Your local restaurant will probably say “no” if you ask them if they accept bitcoin for the payment of your bill.

And because of that, bitcoin is not a unit of account, though it is a common misconception that it is. While you can indeed buy a coffee with bitcoin in some cafes (let’s say in the United States of America), the price listed is the US dollar price sought by the merchant translated into bitcoin terms at the current USD/bitcoin exchange rate.

It will likely be several years before bitcoin transitions from being an emerging store of value to being stable and a medium of exchange and unit of account, and that path is fraught with risk and uncertainty. But the pursuit is important: the one mention of “currency” in the Catechism, in paragraph 2431 on the Seventh Commandment (Thou shalt not steal), demands a stable currency.

In the next video, we’ll learn seven desirable properties in money to evaluate various forms of it throughout history.

Have feedback to improve this part of the course? Submit it anonymously here.

The next part of the course will be released later this week.

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Building upon our exploration of the necessity of money, let’s start to explore the core question: What is money?

Go grab a piece of candy. If you don’t have one, grab some small object near you and pretend it is a piece of candy. Place it in front of you.

• Who would be willing to trade their candy for a US$1 bill? Raise your hand if so.

• Now, keep your hands up if you would still be willing to trade your candy for a $1 monopoly bill instead of your piece of candy.

• Why or why not?

• What makes one bill so desirable and another one basically valueless?

Do you ever wonder what makes money… well, money? Most of us know how to use it, but not many of us understand where it comes from or how it works.

The most understood function of money is that it is a way to exchange goods and services. It represents the value of these items in a form that can be easily traded. This value goes beyond physical properties, like the paper it's printed on.

Take a moment to reflect on the quotes here.

Money can take many different forms, such as paper notes, metal coins, and electronic payments. Governments or other authorities typically issue and control money, but money is so much more than just a physical or digital medium of exchange; it’s like a universal language that allows us to trade with people all around the world, even if we don’t speak the same language or have the same culture. For example, you can be on the other side of the world and still “speak” money by placing a product on the counter and exchanging it for the local currency or using a credit card. But if you don’t have your card or the right currency, you can’t exchange value.

Money allows us to make exchanges without having to rely on bartering, that is trading items or services directly, which requires finding someone who wants what we have to offer.

As French economist Jean-Baptiste Say pointed out, “Money is but the agent of the transfer of values.” In other words, money itself doesn’t have the power to satisfy human wants; it is a tool to help us to trade one thing for another.

There are many different types of transactions, ranging from simple exchanges (such as buying a sandwich at a deli or a book at a bookstore) to more complex financial transactions (such as buying a house or investing in stocks or bonds).

A summarized teaching from Pope Leo XII in his encyclical Rerum Novarum: the buying and selling of goods, which is facilitated by money, is a natural activity of man when conducted with justice. And how does that buying and selling happen?

In summary, most people understand that money facilitates trade, as it’s universally accepted as final payment. And why? Because it has value beyond its physical properties. Later, we’ll learn where this value comes from.

Note that this course does not delve into what “buying and selling with justice” means in Pope Leo XIII’s teaching. Rerum Novarum provides principles for how a just society produces, distributes, and consumes goods and services. For example:

• Fair agreements: Emphasizing the importance of just contracts between worker and employer, respecting the dignity of both parties.

• Use property responsibly: Highlighting that owning things comes with a duty to help others, and that employees should respect employers’ property.

This course, however, addresses, “What is money?” and then, “What is a good money system?” These are seemingly small parts of a vast economy, but because money is so often used, the quality of our money impacts how well we can live the just Christian economy Pope Leo XIII calls us to.

In the next video, we’ll look in more detail at the functions of money.

Test your understanding

1. True or False: The value of money is solely based on its physical properties, like the paper it’s printed on.

2. Fill in the Blank: The video states that money allows us to make exchanges without relying on ___________, which is trading goods directly for other goods.

3. Multiple Choice: According to the video, what is the most known function of money?

   1. To accumulate wealth for its own sake.

   2. To facilitate trade by acting as a medium of exchange.

   3. To control governments and economies.

   4. To replace the need for physical goods.

Answers here.

Links:

• Pope Leo XIII: Rerum Novarum (summarized teaching in paragraph 22)

Have feedback to improve this part of the course? Submit it anonymously here.

Read this post in Spanish here.

The next part of the course will be released on Wednesday, April 2, 2025.

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In this post we’ll explore money’s role in our lives.

Take a pen and paper, or a notepad app on your device, and answer these five questions. You can answer with practical examples, like buying food for the first question, or more philosophical answers, as you wish!

• Why do we need money?

• What is money?

• Who controls money?

• What gives money its “value”?

• What question do you have about money?

When you’re done, share your answers in the comments, and click ‘like’ on your favourites. Reflect on your unique ideas that didn’t match the top voted ones—these are good and useful!

After this exercise, you’ll have a clearer understanding of money, and in the next posts we’ll dive deeper. Keep these answers because we’ll reflect on them at the end of the course.

The quote up top is from Friedrich Hayek. Pope St. John Paul II recognized Hayek as one of the most important Catholic scholars of the twentieth century, though the Austrian had long ceased to practice his faith. In 1980, Hayek was one of twelve Nobel laureates invited to meet with the pope, which would inform the pope’s encyclicals and the 1992 Catechism.

Prepare for the course—answer these five questions

• Why do we need money?

• What is money?

• Who controls money?

• What gives money its “value”?

• What question do you have about money?

Leave a comment

Have feedback to improve this part of the course? Submit it anonymously here.

Read this post in Spanish here.

The next part of the course will be released on Wednesday, March 26, 2025.

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Hey! This is David. Glad to have you here for our one-hour Introduction to Bitcoin in the Faith course. In this course, you’ll learn the past, present, and future of money in the context of the Bible, the Catechism, and Catholic economists and theologians.

I’m a teacher, and I’ve studied economics and engineering. Let’s start with a prayer. The priest who catechized me always began his classes with this prayer.

In the name of the Father, the Son, and the Holy Spirit.

COME, Holy Spirit, fill the hearts of Thy faithful and kindle in them the fire of Thy love. Send forth Thy Spirit and they shall be created. And Thou shalt renew the face of the earth. Amen.

Let us pray: O GOD, Who taught the hearts of the faithful by the light of the Holy Spirit, grant that, by the gift of the same Spirit, we may be always truly wise, and ever rejoice in His consolation. Through Christ our Lord. Amen.

We’re here to study Bitcoin, but first, we need a grasp of money’s history and the current financial system. This foundation helps us understand Bitcoin’s unique nature and its potential, viewed through human dignity and the common good. Without it, Bitcoin’s significance might be hard to grasp.

This course adapts My First Bitcoin’s open-source diploma, used by over 30,000 graduates in El Salvador and 30+ countries. We’re grateful for their work!

Next, I’d like to introduce three Catholics who’ve aided our mission.

We met Dr. Guido Hülsmann at the ‘Thank God for Bitcoin’ conference in Nashville, July 2024. He’s an economist known for The Ethics of Money Production. He was the conference headliner and we chatted as I bought his latest book on charity.

We met Don Jesús Huerta de Soto through email. He is a respected economist and businessman in Madrid, and Dr. Hülsmann told me that he teaches there. I asked my Spanish teammate to email Don Jesús and ask if he would offer us guidance. He responded! He generously hosted us for a meeting and his evening lecture, and gifted us eight books. These books have made this course better.

Finally, we met Pierre Rochard at the Catholic Bitcoiners retreat in El Salvador in November 2024. Pierre is known for his early Bitcoin articles and helping lead Bitcoin companies. Pierre used his platform to spread the news of the event, and his leadership in the community emboldens our mission.

These three men follow the Austrian school of economics, with origins in 1500s Catholic Spain, more concretely in the School of Salamanca, and 1800s Catholic Austria. These two men here, leaders of the movement. First, Martín de Azpilcueta from Navarre, a priest, church law expert, and economist that laid the groundwork for this very course in 1556. And second, the Austrian Carl Menger, the founder of the Austrian school, who wrote his Principles of Economics in Vienna in 1871.

My background in teaching and economics, combined with my faith, is the foundation for this course.

This helped us connect with Don Jesús. My teammate wrote to him of my conversion studying Bitcoin.

In this course, you’ll learn about money in the first half, then get practical with Bitcoin in the second, all in the context of the Faith.

Trust the process—the reward of a deeper understanding, informed by your intuitive sense of morality, will be worth it.

Let’s continue with some questions for you.

Links:

• Pierre Rochard’s account on X, and his apostolate CatholicBitcoin

• Don Jesús Huerta de Soto’s website

• Dr. Jörg Guido Hülsmann’s publications

• My First Bitcoin’s website

Have feedback to improve this part of the course? Submit it anonymously here.

Read this post in Spanish here.

The questions mentioned at the end of the video will be released when we launch the next part of the course next week, on Wednesday, March 19th, 2025.

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