One hundred twenty-two years ago today, Congress passed the Gold Standard Act, confirming the United States commitment to the gold standard. Previously, under the Coinage Act of 1792, the nation’s currency was indexed to the Spanish silver dollar and produced by the newly authorized Mint of the United States in Philadelphia.
The Constitution empowered Congress to coin money, replacing the issuance of bills of credit and fiat money (not backed by any commodity and declared by government decree to be legal tender), and common within the colonies.
Money came into existence some 5,000 years ago as a medium of exchange in the place of barter for goods and services. Notwithstanding, through the Industrial Revolution in this country, company towns often relied upon scrip as payment for labor, making a miner “owe his soul to the company store.”
The US dollar became the predominant form of global currency as the nation’s international trade also came to be in demand based upon its creditworthiness and tax policies. Every paper bill issued by the US Treasury contains the message: This note is legal tender for all debts, public and private.
In a short century and a quarter in Earth time, a system of reliable experience with money has existed. Now, however, entrepreneurs have introduced cryptocurrency to compete in the global mix of trade and commerce. Crypto is a digital currency or medium of exchange through a computer network, and is not reliant upon any central authority such as a government or bank to maintain it.
The computer network is tethered to a process called “blockchain technology” to secure its integrity in a digital ledger. The index of value of crypto continues to be linked mainly to the US dollar and other government-backed currencies, testimony to its lack of intrinsic value. Another novel type of crypto called nonfungible tokens (NFTs) has gained popularity and is similar to the earlier crypto phenomenon.
If crypto and NTFs seem incomprehensible, especially when viewing or holding a paper denomination of US currency, it is difficult to picture parents offering their children NFTs for the piggy bank as a lesson in financial management. Nor has there appeared a stampede by financial advisers to convince baby boomers to convert retirement portfolios into crypto. It was an axiom in the early introduction of television that it was best to wait until they were perfected before acquiring one for the home.