>>A currency is a socioeconomic compact between capital and labor, intermediated by subject matter experts (ie the central bank) and government.
Currency is an asset with a particular use-case. Its consumers do not enter into some elaborate agreement (compact) in order to use it. They use it because it's useful.
It arose as an emergent property of market interaction, i.e. distributed processes, not centralized authorities.
EDIT, responding to below:
No, the distributed processes of the market are a collective intelligence that vastly outperforms any single entity at the task of effectively managing the money supply.
Re your sciencedaily link, you are misinterpreting that in context.
I suggest reading David Graeber's book Debt, the first 5000 years. He is the world authority on the topic.
A short summary:
Contrary to the imagined assumptions of Adam Smith, prehistoric humans operated via gift economies. This makes sense because they lived/survived in smallish tribal bands that required cooperation. This was even true of humans before our species split from our hominid ancestors. This is one reason why instincts around fairness and reciprocal empathetic behavior are so strong within us. For hunter gatherer bands they were essential to survival.
The first thing that can be called money appeared in temple complexes in the Levant, during the neolithic revolution, thousands of years before your article's discussion of trade behaviors in Europe. These were entirely about a social contract and central authority. Those that lived in the surrounding vicinity of the temple were required to bring contributions, eg a goat herder would bring goats. The temple would record their contribution, typically denominated in units of weighed grain. This recorded the temple's debt to the herder, who could later claim the grain as needed. In turn, the herder's contribution would be used to support the specialized people building and operating the temple, growing the grain, etc. In essence this was the first government and tax redistribution system.
It's a fascinating book if a bit slow due to the level of detail in places. It will disabuse you of many assumptions people have about the history of economics that are directly contradicted by archeological evidence or later, written history.
As to your second point, we have ample historical evidence of how that goes wrong.
"The study challenges this notion by introducing the concept that money was a bottom-up convention rather than a top-down regulation. Bronze Age money in Western Eurasia emerges in a socio-political context in which public institutions either did not exist (as was the case in Europe) or were uninterested in enforcing any kind of monetary policy (as in Mesopotamia). In fact, money was widespread and used on a daily basis at all levels of the population."
So it clearly argues that money originated as a bottom-up phenomena without centralized authorities. You may dispute that theory, but it's not a misreading of the link's argument.
>>Those that lived in the surrounding vicinity of the temple were required to bring contributions, eg a goat herder would bring goats. The temple would record their contribution, typically denominated in units of weighed grain.
To call that money is quite tenuous. This kind of system would have been useless with any kind of long-term trade, e.g. the trade in lazuli, tin or flint, which has been occurring since even before agriculture.
If we want to use a definition of money so expansive as to include some temple credit system, then we could look to the theories of Nick Szabo, who originated the concept of smart contracts and the blockchain.
Szabo notes that proto-money has originated independently in numerous regions, like the kula trading ring in pre-colonial Melanesia, where two independent forms of proto-money enabled long-term trade: necklaces circulated clockwise, from one island to another in the kula ring of islands, while armshells circulated counter-clockwise.
In pre-colonial America, wampun, which are shells of the clam venus mercanaria, were used as proto-money, and in fact adopted by the colonists to great enough extent that the term "shelling out", denoting spending money, originates from it.
Szabo hypothesizes that the standardized collectibles seen in various early sites of homo sapien settlement dating from the paleolithic, like the ostrich-eggshell beads from the Kenya Rift Valley dated at 40,000 B.P and the mammoth ivory bead necklace from Sungir, Russai dated to 28,000 B.P, were in fact the earliest forms of money, and that the trade-based trustless coordination that this proto-money enabled raised the carrying capacity of the environment, and enabled humans to out-compete neanderthals.
The centralized authorities protect the economy against some failure-modes that a distributed process is vulnerable to (currency scarcities, tampering, panics, large-scale theft). They introduce other problems. Whether one thinks they introduce more problems than they fix is pretty much the defining factor on where one stands regarding the utility of fiat currencies.
I understand the point you're making, but I'd like to add that even if you accept that potentially stablecoins might avoid some problems a (politically tainted) central bank has, the issue isn't merely one of accepting that possibility, it's also one of lack of evidence and novelty.
Having a bunch of private actors potentially run a huge experiment in which the economic fallout will not be born by them if it goes sideways is entirely unreasonable. I mean, that's kind of the whole problem with banks and their dodgy behavior, and this is no better; if anything it's even more risky since it's even less well understood and there's even less oversight, and fewer ways even a democratically elected government could intervene should the need and popular mandate arise.
I'm all for running that experiment, but then with proper oversight, accountability, transparency, disaster planning, etc - and as much as possible without the conflict of interest caused by having those running the system own large stakes of it too; that's just asking for shady business.
>>Having a bunch of private actors potentially run a huge experiment in which the economic fallout will not be born by them if it goes sideways is entirely unreasonable
The experiment is entirely opt in, with no one being affected that does not choose to be.
Of course its not; no more than the 2008 financial crisis was entirely opt in. Individuals do not have the opportunity to fully control all aspects of the financial system they're exposed to.
Individuals fully control whether they interact with the financial system at all, and if they do, which parts they are exposed to.
The risk posed by any financial asset is not distributed uniformly across the economy. Its impact on any party is proportional to their direct and indirect exposure to that asset, which is something that they control and have to take responsibility for.
Currency is an asset with a particular use-case. Its consumers do not enter into some elaborate agreement (compact) in order to use it. They use it because it's useful.
Currency predates the government:
https://www.sciencedaily.com/releases/2021/05/210506174103.h...
It arose as an emergent property of market interaction, i.e. distributed processes, not centralized authorities.
EDIT, responding to below:
No, the distributed processes of the market are a collective intelligence that vastly outperforms any single entity at the task of effectively managing the money supply.
See Selgin's articles on free banking:
https://www.alt-m.org/2015/07/29/there-was-no-place-like-can...