An Attempt at Analyzing the Information Nature of Money

TL;DR

This paper analyzes the informational role of money in society, modeling its process through matrix representations and exploring its evolution from physical to digital forms with a focus on security and reliability.

Contribution

It introduces a matrix-based model of money's informational process and compares physical, electronic, and digital currencies emphasizing their shared reliable ledger characteristic.

Findings

Money acts as an informational bridge enabling exchange.

Matrix representation clarifies the transformation from initial to final states.

Future trends highlight security technology's role in digital currency development.

Abstract

Money was invented to address the difficulty in the double coincidence of wants between the supply and demand when people exchanged their goods and services. There are two information states in society: one is the initial state that people have goods and services due to division of labor; the other is the final state that people have different goods and services with the initial state due to exchange of goods and services between them. The process is that the initial state is changed to the final state with the help of money. Because the direct exchanges of goods and services are difficult to achieve the double coincidence of wants in time and space, it can be achieved with the help of money which is as a medium and bridge. In this paper the changing process of the state information is analyzed through the matrix representation of money, and then the nature of money with a kind of information of reliable ledger is more apparently shown. This paper also analyzes the common characteristics of physical money, electronic money and digital currency, that is, reliable ledger and explores the future trend of money development from the perspective of history and security technology of money.