The money flower.

The “Money Flower” is an interesting way to chart money. A taxonomy. In the diagram below, I present the notion of money, in 4 overlapping groups:

  • Available everywhere. Does anyone worldwide have access to this money?
  • Electronically. Does it only work with digital networks?
  • Issued by a central bank. Is the value of this money regulated by a central actor?
  • Peer-to-peer. Can users exchange the money without the intervention of a third party?

I treat the different groups.

  • M-Pesa, BKash. These are mobile payment systems available in Kenya and Bangladesh respectively. I imagine the Genesis: once there was someone in Kenya with the vegetable farmer. He had to pay off but had forgotten his money. He asked the vegetable farmer if he could also pay with minutes. You could send each other minutes via the network of the GSM provider. The vegetable farmer accepted. And voila: M-Pesa! In Bangladesh, too, such a system exists, BKash and in several other countries. It is not issued by a central government (but linked to it) and it is “peer to mobile operator to peer”. So not Peer-to-peer.
    Although it is not a distributed block chain currency, they are very interesting because they demonstrate how quickly a whole population can adapt a new electronic payment system.
  • Reserves, bank accounts, electronic payment traffic, PIN, SWIFT. This is the atmosphere that currently deals with the lion’s share of money. It goes without saying. It involves electronic money, created and issued by central banks, transactions always expire through third parties (banks), and certainly not everyone has access. 53 of the world’s population has no access to formal financial services.
  • Paypal. An electronic payment system from the United States, once conceived by the now so famous Elon Musk. It can be disputed whether everyone has access to it, but access is better than that of bank accounts. Paypal sits ‘ between ‘ all transactions, so it’s not peer-to-peer. It works with the US-Dollar.
  • Cash. Cash is essential for the livelihood of a large part of the world’s population. In practice it is not traceable and therefore ‘ fungible ‘, i.e. each unit of a coin is as much worth as any other and in every possible denomination. There are no notes of €50,-which are worth more or less than others. It is not electronic, which makes personal contact necessary for a transaction. And that contact is then Peer-to-peer. It is available almost everywhere and for everyone.
  • Gold, Silver. Precious metals such as gold have the most important characteristic that they are scarce. The limited supply floats the value. They also don’t go fast. Gold acts especially well though value storage for the long term. Fast buying and selling (without a broker) is very impractical because of the physical contact needed and the fact that your gold does not divide into a few thousand pieces.
  • Regional or local currencies. Every self-respecting city in the Netherlands has (ever) a local currency. In Rotterdam you have the Dam, in Amsterdam the cinch and in Eindhoven the penny. The most famous and most successful is the Bristol Pound. One important reason to create them is to keep money locally and thus stimulate the local economy.


Now we go to the parts of the flower where it really becomes interesting: the parts that block chain is used for.

  • Cryptocurrency, Bitcoin. Available wherever internet is, electronically, not issued by a central bank and peer-to-peer. The story of Bitcoin begins in 2008 when one “Satoshi Nakamoto“a White Paperpublished that Bitcoin and the block chain described. In 2009 it was launched, in 2010 someone bought two pizzas for 10,000 Bitcoin and in that same year the creator of the public stage disappeared. Bitcoin has not yet been hacked. (Custodians though). The value (as with fiat money) is determined by supply and demand , has risen tremendously, but is very volatile. Its periodic creation (which lasts up to 2140) is already fixed. Bitcoin is from no one and does not run through intermediaries. There are hundreds of clones, called Altcoins.
  • Regional “airdropped” cryptocurrency. This variation on the above global cryptocurrencies is one that is issued locally. A nice example is the Aurora-coin. This coin is evenly distributed in Iceland to Icelanders only. But after the distribution, the geographic boundary is acute. After all, you can send crypto money worldwide over the Internet. The coin has not become a success. The Icelanders have exchanged him for Fiat money, the Euro.
  • “Government Cryptocoin”. Serious examples of Governments that play with (thoughts about) cryptocurrency are the UK and Estonia. In July 2016, the Bank of England published a paper examining the macroeconomic aspects of a centrally issued cryptocurrency. Estonia has serious plans to Estcoin to launch, a cryptocoin issued by the Estonian Government. But much is still unclear and the President OF the ECB Mario Draghi criticized the plan. China is also workingon it.
    “Cryptocurrency-purists” say that all these examples are not inadequate. It is a digital extension of the already existing – in their view, non-functioning – monetary system, with money creation by banks, unpredictable presses by central banks and negative interest rates.
  • Decided “Government Cryptocoin”. This currency could perhaps be of interest to an internal circle of government actors and could serve to settle accounts.

On the whole, this money flower is interesting because it makes the new area where “electronic” and “Peer-to-peer” overlap nicely. This area exists for less than 10 years and there still needs to be invented and developed. The two subareas, inside and outside control of the government, then take a good look at the forces ratio: governments that want to maintain grip And The peers who want “power to the People”. Or – as is also said – the government that wants to protect the peers and the peers that need protection…

Source: I came across this money flower on the track thanks to a tweet from @TuurDemeester. He refers to a piece on the website of the Bank for International settlements where the model is presented.