How do you define value?
Ever wondered, why do you pay 3 dollars for a tall latte at Starbucks and not 5 dollars? Who decides the right value for a tall latte?
Value can be estimated using following factors:
- Actual cost to develop product (in this case tall latte)
- Demand of the product
- Supply of the product
- etc.
Money is generally used as a metric to define value these days. At the dawn of human civilization, barter system was used to exchange products and services. Then humans started using accounting to estimate value of products. Then followed metals and then gold coins to trade products.
Around 7000 years ago, fiat currencies (paper money) were invented.
Fiat in latin means an order issued by government determining the value of this paper money. As the internet matured, people moved to digital form of transacting using online banking but money was still physical and centralized.
In the last decade or so, money was actually converted digitally and was called cryptocurrency aka bitcoin. It is the decentralized digital money which has no physical identity. Blockchain, the technology behind bitcoin offers decentralized ledger based technology to do transactions.
The Economy Of Trust 