alt Hacker News> A currency can arise from any fungible, tradable, generally-durable commodity that the bulk of society decides to accept as being worthwhile. In prisons cigarettes often fill that role; in pre-agrarian hunter gatherer groups it's often little baubles like shells. Government isn't necessary for this, but social contract is. You need to have enough faith that your neighbor will accept the currency to accept it yourself.
Are cigarettes really currency in this case? Aren't they more like one of many possible barter units? Can't you also price things in ramen packs in prison?
Similarly, I thought the sea shells thing had been sort of debunked. In that scale of society you don't need currency, you know the guy. David Graeber summarizes this rather intuitively. Why would you need to give a guy a sea shell in a "hunter gatherer group"? You're gonna see him every day of your life and everyone is gonna know/remember he owes you one. It would be like giving your sibling a sea shell because you did them a little favor or something. It doesn't actually happen that way because it would be a complete waste of time, just actually return the favor next time. I believe the sea shell thing is more like a gift, rather than a currency. Like you might give someone a flower to tell them you think they're swell. Presumably you think that because they helped you at some point. That doesn't make it currency. People just liked giving each other shells.
I think on most modern theories, currency really comes about from conquest. The idea is as you expand these informal IOUs are not enough. You don't want to have to lug around ramen packs or cigarettes. So at the point of a sword or w/e you say hey take this coin and give us food and then you honor the coin enough and people trust it, not because it's "fungible, tradable, generally-durable commodity that the bulk of society decides to accept as being worthwhile" but because if you don't accept it the government will kill you. And if you do accept it then not only will they not kill you but they'll give things back to you later, which you will end up being a positive incentive for everyone. Now instead of a presiding over a killing field you've created a market. But without the threat of the state, it is not coherent. That's what government is.
That's basically what it says on American money. "This note is legal tender for all debts, public and private". So sure a business can refuse you service, that's a separate issue. But if you have a debt in the United States and you try to give them US dollars and they refuse and say, no thanks actually we demand cigarettes - well now they are breaking the law, aka inviting the wrath of the state. So everyone uses dollars because the last thing anyone wants is to be in debt and think a pack of ramen is gonna work and they just get to say no thanks cigarettes for me please.
And of course, you also don't want to get impaled on a spike by a dude who looks suspiciously like that guy on the coin you probably should have taken.
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Currency is used for trade between multiple distrusting groups, credit is used for trade within a social group. There was an article recently on HN about the highland tribes of Papua New Guinea [1] and it described how the natives would trade amongst tribes using shells.
You actually see this on a small scale today in the functioning of many small communities, eg. you don't actually exchange currency to pay the host of a party, but you are expected to reciprocate and host sometimes yourself if you want to keep getting invited. There's a surprisingly large amount of these unpaid micro-transactions that happen, eg. my wife has gotten free childcare, free advice, free (used) furniture, free baby clothes, etc, all in the heart of Silicon Valley, because she reciprocates and also gives away her old furniture, baby toys, baby clothes, advice, introductions, childcare, etc. But when we have to pay the contractor for work on our house, we need dollars. When we buy a computer, we need dollars. When we buy all those goods that we give away new, we need dollars. That again reinforces the "credit is for people you know, currency is for people you don't" distinction.
Barter is used when a previous currency system collapses. The currency is no longer guaranteed to be accepted, so people want hard goods that they know they can use. But barter is an unstable equilibrium: as you mentioned, currency is just barter where one particular good becomes so widely accepted that people will take it not because they want it, but because it can be traded for other things that they want. There are reports of the Bosnian War [2] that described how alcohol and ammo quickly became pseudo-currencies because they were universally accepted and could easily be traded for what you actually needed.
Graeber isn't wrong, but as an anthropologist he over-indexes on the within-group interactions. There are lots of documented examples of currency emerging spontaneously from trade between groups where the groups all mutually decided that one type of object had value.
[1] https://news.ycombinator.com/item?id=49708431
[2] https://www.scribd.com/document/664716931/How-I-survived-a-y...
While your assumptions about barter societies are pretty much true, I think you're off on the origins of currency being tied to force. This is overly influenced by modern fiat currencies whose values are derived from government requirements rather than valuable assets. There was a long period of time where precious metals and other valuable items were used as stores of value without a central authority requiring their use. People used official coinage because its weight and purity was standardized and it made things easier, and the value changed alongside debasement, often in spite of official attempts to prevent this. People also used different currencies alongside each other based on their weights and purities. The only times in ancient societies where we have something similar to what you're describing where a specific currency must be used is in taxation, and even then, most taxes were settled in equivalent values of other goods and not specific currencies. The only example I can think of for what you're describing is the Jewish temple offering system in the second temple period, in which certain obligations to the Temple were ruled to have to be paid in Tyrian sheckles specificall
Sea shells were traded across the North American continent. I don’t know if they were currency, but they were found 1000 miles from the shore.
The point is that they weren’t just used within a single group where everyone had access to more for the cost of only labor.