May 31, 2022

Thinking About Money Part III: Money and Securities


3 min read

Blog Post Image

One of the curious aspects of Gensler’s claim that there are too many cryptocurrencies is his simultaneous claim that almost all of these currencies are in fact securities. While the idea that there are too many different types of money seems, at least on first pass, possible, the notion that a few thousand securities is too many is laughable. According to the OECD, more than 41,000 companies are listed on the world’s stock exchanges. If you then include bonds and derivatives, the number of securities is many times that number. But what is the difference between money and a security?

The question of what qualifies as a security for regulatory purposes is a matter for courts and legislation. History, however, suggests rather strongly that securities are simply another type of financial instrument that grew with the use of money. If we return to our long suffering medieval trader, it is important to understand that coins were often scarce and their value was hard to determine; accordingly, much trade was carried on via barter. But can you barter for goods that do not exist yet or are not present? Yes you can, through contracts. Merchants would write up contracts that established items to be bought or sold at some time in the future at a fixed price. The next step seems inevitable: such contracts were used as credit, sold and traded. Futures trading, option contracts, joint-investment companies, and insurance pools, sprang up repeatedly not just in Medieval Europe, but also in India, China, Greece, the Middle East and Rome. Rome, for instance, had sophisticated futures markets for grain trading.

Essentially, once you get an economy of sufficient complexity the entire nexus of financial instruments begins to develop. We tend to think that barter was followed by silver and gold, then coins, then paper currency then, at some point, stock and bond markets developed and you reach the inevitable form of the modern financial world. Yet, some of our oldest written records are small, clay tablets that acted as receipts of deposit for certain goods. These receipts were used for trade thousands of years ago and also formed a basis of central accounting. Indeed, the ancient use of tokens is now seen as the likely impetus for cuneiform writing. So trade, tokens, borrowing, debt, accounting, futures contracts, and so forth likely pre-date and may have indeed been the driving force for the development of writing. Many of those aspects that we associated with the modern financial world are nascent in the earliest records of human civilization.

Babylonian Tax receipt from circa. 1500 bc. Photo credit gruntzooki

In sum, the development of cryptocurrencies, whether they are securities or not, is in perfect keeping with the entire history of financial instruments. In the last century or so, our cultures have grown used to thinking about money in a way that is not very representative of the history of money and the world of finance in general. What cryptocurrencies and the development of DeFi is reminding us is that creative financial instruments have sprung up repeatedly throughout history and the advent of new technology and new types of digital goods makes the crypto world seem not surprising but rather inevitable. The vast landscape of cryptocurrencies and fintech generally should be thought of as new technology expressing ancient human financial creativity.

  • Please see our fee schedule for more information.
  • 2
  • Not all assets will be available to trade without restriction at any time. Assets currently available for trading will be displayed in the application.
  • 3
  • For additional details, please review our Terms of Service.
  • 4
  • Structure has partnered with custody providers who utilize secure multi-party computation and other security measures to protect your assets and information. No system is ever completely secure and Structure is not responsible for any losses incurred due to issues at our custody provider.

© Copyright 2022 Structure Financial, Inc. All Rights Reserved. Neither Elon Musk, Tim Cook nor Tim Apple are customers of Structure Financial, Inc. Zero-commission refers to $0 commissions for accounts that trade tokenized assets via mobile devices. Please see our Commission and Fee Schedule. Structure Financial, Inc.'s services and STXR are not available in the United States and other prohibited jurisdictions. This is not an offer, solicitation of an offer or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Structure Financial, Inc. is not registered. Structure Financial, Inc. does not recommend any assets or securities. All investments involve risk and the past performance of an asset, security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The content included at and any affiliated websites, including social media sites (the “Website”), is provided for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the Website.

Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in the Website were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss, including the complete loss of invested capital. Historical or hypothetical performance results are presented for illustrative purposes only. Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors. These risks are to be assumed by the customer. Third-party information provided for Structure Financial, Inc. product features, Structure Financial, Inc. communications and communications emanating from its social media community, market prices, data and other information available through the Website are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any comments or statements made herein do not reflect the views of Structure Financial, Inc. or any of its subsidiaries or affiliates. Note that certain Structure Financial, Inc. product features listed are currently in development and will be available soon. All assets, and investments are offered to self-directed customers by Structure Financial, Inc. Structure Financial Inc. is not a member of FINRA or SIPC.