What Is Money? Part 6
From Paper To Protocol
In our previous discussion, we explored how central banks and fractional reserve banking transformed the world’s economy—shaping our modern financial system and redefining the relationship between money, trust, and authority. Now, as we bring our “What Is Money?” series to a close, we arrive at a compelling and perhaps inevitable next question:
What happens when money reaches its limits?
We’re not just talking about physical cash disappearing or credit cards becoming ubiquitous. We’re talking about a deeper, more fundamental question: Is our current form of money still adequate for the world we’re building?
A Quick Look Back
Throughout this series, we’ve traced money’s journey from barter and beads to bullion and banking. We've seen how money emerged as a tool to exchange value—rooted first in tangible goods, later in precious metals like gold, and eventually in trust-backed paper and centralized digital systems.
Each transformation in money’s form wasn’t just about convenience. It solved a limitation of the previous system. Barter gave way to commodity money to overcome inefficiency. Commodity money gave way to coinage and paper for durability and portability. Central banking emerged to bring stability and scale.
And now, new limitations are emerging.
Cracks in the System: The Limits of Modern Money
On the surface, it seems like money is more accessible and digitized than ever before. We have contactless payments, online banking, payment apps, credit cards, and near-instant money transfers. But dig a little deeper, and it becomes clear: the underlying structure of our monetary system was not designed for a fully digital, global economy.
Here are a few of the growing limitations:
Lack of Granularity: The U.S. dollar—and most fiat currencies—aren’t easily divisible beyond two decimal points. In an era of microtransactions, where freelancers might be paid by the minute or AI systems trade data by the millisecond, this lack of granularity creates friction. It’s a limitation of the system’s design, not its users.
High Transaction Costs: Digital payments often come with hidden fees—from credit card processors, bank intermediaries, or third-party platforms. These fees disproportionately affect small transactions and lower-income users. As more people work gig jobs or earn in small, irregular increments, the system becomes increasingly inefficient.
Time Delays: In a globally connected digital economy, it can still take days for funds to move between banks or across borders. This lag stands in stark contrast to the real-time nature of our digital lives.
Centralized Bottlenecks: Nearly all digital dollars still flow through a central set of gatekeepers—banks, governments, and payment platforms. This centralization can create single points of failure, limit access, and restrict innovation.
Invisibility to Innovation: Perhaps most importantly, the current system wasn’t built with programmable money in mind. It struggles to integrate with emerging technologies like smart contracts, decentralized apps, and machine-to-machine payments.
Taken together, these issues point to a hard truth: our money isn’t keeping pace with the needs of the modern digital economy.
In earlier posts, we emphasized that money is a technology—and like any technology, when it no longer meets the demands of its environment, something new begins to emerge.
Enter Bitcoin: A New Form of Money for a New Economy
Bitcoin is one such emergence. It’s not just a digital version of cash. It’s a rethinking of what money can be.
At its core, Bitcoin is a decentralized, software-based form of money. Created in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin was designed to address many of the pain points we’ve just explored: centralization, inflation, inefficiency, and lack of transparency.
Here’s what sets it apart:
Decentralization: No central authority issues Bitcoin. It’s maintained by a global network of computers, called “nodes,” which verify and record transactions on a public ledger known as the blockchain.
Programmability and Precision: Bitcoin can be divided into 100 million units, which equates to 8 decimal places rather than 2. This enables micropayments and machine-level financial interactions that traditional systems simply can't support.
Security and Transparency: Every transaction is recorded publicly, yet pseudonymously. It can’t be altered or deleted, making fraud and manipulation nearly impossible.
Fixed Supply: Unlike fiat currencies, Bitcoin’s supply is capped at 21 million coins. This scarcity mirrors the properties of gold and introduces a built-in defense against inflation.
Borderless and Peer-to-Peer: Anyone with an internet connection can send or receive Bitcoin—without needing a bank, a credit score, or permission.
So, Is Bitcoin the Future of Money?
That’s still unfolding. Bitcoin is young, evolving, and often misunderstood. It’s volatile. It’s controversial. And it’s certainly not perfect.
But its creation marked a turning point—a signal that a new chapter in the story of money had begun. Even if you never use Bitcoin, the technology behind it is already reshaping how we think about money, ownership, and value.
Governments are exploring their own digital currencies. Developers are building financial applications that live entirely on blockchain networks. And more people are starting to ask: What should money look like in a digital age?
At Sequoia Advisor Group, we believe that being financially informed means understanding not just what is, but what might be. Bitcoin may not replace traditional money tomorrow—but it has already challenged the status quo. And that alone makes it worth your attention.
Thanks for joining us on this six-part journey through the past, present, and future of money. For more insights into the evolving world of finance, visit our blog or schedule a consultation. We’re here to help you stay informed, confident, and prepared—no matter what the future brings.
