I am seriously enjoying these in depth conversations that the Gridcoin community is spawning. So let's continue! = ). If anyone thinks it would be better to have these conversations in the comments of a single thread, please speak up. I personally think the length of these dialogues doesn't really work in comments, but I'll do whatever.

This is in response to:

My Thoughts on the Value of Gridcoin by @decayingzombie

which is the third post in a continuing conversation so far consisting of:

I agree with the day to day utility of what you call value, @decayingzombie, and I very much agree with the connection you draw between time, energy (or work), and your definition of value, however I think there is confusion of terms when you talk about value. I am by no means an economist, just someone who studies economies. What I’m describing here is only my understanding as such.

Currency

But why do I accept a $20 bill in exchange for moping Joe's floor? I accept it because I know that I can go down the street to Sally's coffee shop and use it to get a sandwich and a coffee. Sally accepts my dollars because she can then use the dollars I've given her to pay someone to mop her floor or buy herself goods. The cycle continues and we have a very rudimentary and simplistic view of an economy, at least from the perspective of trading time for money. My apologies to the economists in the crowd. Of course, rooted in all this is the high-level backing of the currency by debt or gold or beaver pelts or whatever else society deems as THE determiner of value.

What you’re describing here is a standardized currency. A standardized currency is not required for an economy to function. And the backing of debt or gold, beaver pelts or tulips, is not required for an economy or currency to exist. The value of a currency is based on its ability to be traded easily. Consider, standardized currency wasn’t common place until we learned how to make little metal coins.

Currency needs to move around for a true economy to develop around it (again, sorry economists for gross oversimplifications).”

Since currency isn’t needed for an economy, this can’t be true. It’s an oversimplification for a reason = ). And I’m not an economist!

Commodity

A commodity is a thing that can be sold and used. This thing has to fulfill a few more requirements to be called a commodity, but I won’t get into that. It's things like gold, oats, coal. Gold, as I mention in my post you link to, has held value as a commodity throughout history because it is useful, rare, and beautiful. We had a commodity based economy until 1971.

Fiat

Fiat is defined as “a formal authorization or proposition; a decree.” It does not stand for anything. Fiat’s second definition is “an arbitrary order.” If we take the enjoyably pessimistic point view, all formal authorizations or decrees are arbitrary, so fiat economies are economies of arbitrary law. It sounds harsh, but it’s what it is. Fiat, as with most economic systems, dates back thousands of years. We live today in a debt based fiat economy meaning that arbitrary laws create an economy which prioritizes debt as a determiner of value.

Economy

An economy is nothing more than the resources of an entity, called “wealth” in capitalism. Capitalism also makes economies particularly focused on production and consumption, but at its roots, economy is just the resources of an entity. Its second definition ties it into management of these resources. There is nothing about exchange, though management often creates exchange.

Asset

An asset is a useful thing. That’s it. Literally. Anything can be an asset if it's useful. A house, a stock (which is useful in our system), a skill, a book, these are all examples of assets. Remember this: Commodities and assets are both things that meet wants and needs, but not all assets are commodities while a commodity is always an asset.

How does Gridcoin fit into all of this?