learnaboutbit on Nostr: I think we too often equate value to money and assets (ex: house, car, Rolex). What ...

I think we too often equate value to money and assets (ex: house, car, Rolex). What is often overlooked, is that value is relative.

This image is a pie chart. Think of it as a representation of all the value in the world.

Does money have value? Clearly money does have value. I can use money to buy food and sustain myself or pay for shelter (rent), among other things. But why does it have value? Trust. The reason you accept money as payment is because you believe that the money will be accepted when you use it for payment at a future point in time. Once trust in the money is lost, it’s worthless.

Since money is a tool for measuring value in society, it should represent half the value. For every unit of money, there is a reciprocal unit of value.

Is a Rolex more valuable than a gallon of water? It depends. If I gave you a choice between the two, you’d probably take the Rolex. But let’s change the scenery. If your stranded in the desert, your probably taking the gallon of water.

So what changed? The supply did. We don’t value water as much, because we typically have an unlimited supply of water available.

When thinking about value it’s important to remember that it is all relative. Supply and demand is the driving force.

#money #value