The Portability and Acceptability of Money
- A Travelers Edition
I have spent the past few weeks thinking a lot about the portability of money. A couple of recent events put this property of money at the forefront of my mind.
I took a family trip across an international border (from Canada to the U.S.)
My brother visited me, again crossing an international border with a different currency (Northern Ireland to Canada).
Understanding What Money is
Properties of Money
Money can and has taken many forms throughout history. Everything from ancient sea shells, grains, and precious metals to modern-day video game in-game currencies, cell phone minutes, and cryptocurrencies. Yet they all carry varying degrees of the same basic seven properties of money that make them more or less good by comparison. The combination of these properties will determine how easy and willing people are to adopt them. Some better forms of money may be great in some of these properties but worse in others. Those seven properties are:
Durability
Portability
Divisibility
Fungibility
Scarcity
Acceptability
Verifiability
Portability
As the name implies, this property of money relates to the easiness with which it can be transported from one location to another. A good form of money is easy to transport and move freely within a system without barriers or delays. The easier it is for individuals to transport money from one place to another, the more likely people will utilize it as a form of money. There are outliers like gold that are both difficult to transport but are still considered a good form of money based on the other properties. Gold was able to find a way to work around its lack of portability by replacing the hard asset with certificate claims on gold during the 14th and 15th centuries. The paper the certificate claims on gold is far easier to transport when compared to the heaviness of the gold itself.
Acceptability
Again, as the name implies, acceptability refers to how readily accepted a form of money is. Prior to the introduction of central banks and the standardization of national currencies, banks were primarily regionalized and issued their own bank notes that acted as claims on hard assets. The smaller your regional bank was or the further away you went from the HQ of a regional bank, the less likely their money would be accepted or would be traded for at a discount. The more accepted a form of money is, the better and stronger it is considered.
My Recent Experiences
My vacation
My extended family and I took a recent trip down to Tampa Bay, as many canucks do during the start of the colder weather up North. Side note Off-season at theme parks is the only way to travel—no lines for rides or food, and still warm enough to enjoy the water parks.
The portability of money and ease of transacting in the U.S. when traveling from Canada has improved drastically in recent years. Before, when I traveled, I used to have to call my bank and inform them I would be out of the country and making purchases so they would not freeze my accounts. (They still did sometimes), and withdrawing USD in cash from my local bank was never an issue. Most Canadian banks have a healthy supply of USD on hand at all times.
Yet, each time I would make a payment from a Canadian credit or debit card, I would incur an additional administration fee, and withdrawing USD from a Canadian bank not only carried an administration fee, but it was done so at a favorable exchange rate to the bank: a real lose-lose situation, but a necessary evil under the current fiat monetary system. The digitization of fiat currencies has improved the portability problem in fiat but introduced additional hidden costs for this convenience.
My Brother’s Visit
My brother was in a similar portability situation when he came to Canada. He wanted to exchange some GBP for CAD cash. He had the unfortunate added pain point of not only paying a weighted exchange rate to the bank and an administration fee for doing so but also being exposed to a seven-day waiting period for the transaction to process since CAD is not a preferred currency for most banks in N.Ireland. Let that sink in: he was charged on the arbitrage of exchanging his money, a fee for doing so, as well as a waiting period for the money that he already owns.
Shrapmetal
Before having a family and before the events of Covid, I would have considered myself well-traveled. However, one of the lingering issues I always found with traveling is what to do with your remaining native cash when you stop. You can reexchange it at an unfavorable rate, perhaps attempt to spend it while you are still in those countries, or even keep it as a small souvenir and reminder of your adventures. For me, more times than not, I would haul it back to my home, where it remained trapped in time, slowly depreciating in value over time through inflation.
I often find myself wondering how much “trapped” currency exists in the world, squirreled away in cupboards and drawers, never to see the light of day again. CBDCs and other digital currencies attempt to solve this issue of trapped money by removing the need for physical cash, yet by doing so, introduce a whole cohort of nefarious and malicious dystopian paths of economic controls.
Not All Fiat is Created Equal
My brother’s experience with exchanging money and the issue of portability reminded me of some deeply repressed memories of dealing with GBP growing up. I grew up in Northern Ireland, which, for all intents and purposes, is legally part of the United Kingdom. This means that our economy operates under the GBP instead of the Euro or Irish pound.
Even though the Central Bank of England is the issuer of money in the U.K., the retail banks are regionalized and print their own bank-specific notes. My bank at the time, Northern Bank, issued Northern Bank GBP notes with different designs from the other regional banks, but all were ultimately controlled and weighted the same as each other via the central bank.
The problem would arise when I would visit a different region in the U.K. that was unfamiliar with my regional bank. Often, I would try to pay for a bus or train route on the mainland only to be met with disgust and rejection of my legal tender. It often became easier to exchange Northern Bank notes for specific Bank of England notes prior to traveling so as not to upset the locals' temperament on the mainland.
Picture traveling across the U.S. or Canada with your own state or province-issued bank note that is the same currency as the rest of the country, and vendors reject it. If we did opt to exchange Northern Bank notes for Bank of England tender, we would also be charged for doing so, even though it is all the same legal tender ordered by the central bank. Absolute lunacy.
A Universal Currency
The digitization of fiat currencies has helped with some of the portability issues from before. However, this convenience often comes with hidden fees. CBDCs aim to build upon the digitization of money, yet they will probably introduce the same hidden exchange fees and are potentially a back door for aggressive government surveillance and control. Definitely not ideal.
Bitcoin stands alone. A universal standard of money that is globally accessible, highly portable, and standardized. A form of money that is uncensorable and uncontrollable from any individual or institution. This is a solution to the issues described above and one that has growing adoption by the day.
The downside to Bitcoin currently is that it is not universally accepted as a means of payment. Adoption will continue to grow, and eventually, we will see a Bitcoin standard. There is a plethora of literature and content on the subject, and new Bitcoin meetups are starting every week to help grow education and adoption at the grassroots level.
If you are in Halifax, NS, Canada, this upcoming Thursday (November 2nd, 2023), a few of our Meetup members will give a short presentation on how business owners can implement Bitcoin as a payment method. We meet on the first Thursday of every month. If you do not live in or near this location, fear not. I am sure there is a meetup near you, and if not, why not take the initiative and start your own? I have found from my experience that Bitcoiners are, by and large, extremely welcoming and helpful.
