Philosophy
Money is trust.
Every monetary system depends on some form of confidence. Markets move because millions of people continuously update what they believe something is worth. This page doesn't score that trust — there's no rigorous methodology for a number like that yet — it lays out the five different things people are actually trusting when they hold a form of value.
The dollar, gold, and Bitcoin all function as money or a store of value, but nobody trusts them for the same reason. A dollar is a claim backed by an institution. An ounce of gold is worth something because it always has been and can't be created at will. A bitcoin is worth something because a decentralised network enforces a fixed set of rules nobody controls. Stocks and currency pairs work differently again — one tracks productive capacity, the other is a constantly re-evaluated judgement of one economy relative to another.
Understanding which trust model is behind an asset is the first step to understanding why it moves the way it does — and what would have to happen for that to change.
Value backed by a government, central bank, and the legal and financial infrastructure around them.
People trust
- government
- central banking
- financial infrastructure
- economic strength
- global liquidity
- legal systems
Value from physical scarcity and a long, independent track record as a store of value.
People trust
- physical scarcity
- durability
- global recognition
- historical monetary role
- independence from a single issuer
Value from a fixed protocol enforced by cryptography and a decentralised network, not an issuer.
People trust
- protocol rules
- cryptography
- network consensus
- scarcity
- decentralisation
- adoption
Value from a company's ability to generate future earnings and cash flows.
People trust
- companies
- earnings
- management
- products
- innovation
- future cash flows
Value judged relative to another currency — a currency has no absolute price, only a constantly re-evaluated one.
People trust
- interest rates
- inflation
- economic growth
- central bank policy
- political stability
- capital flows
- trade