The importance of trade and what we ambiguously call “money” demonstrates a simple fact: humans are natural cooperators. Evolutionarily, this is no surprise. Agents gain more if they manage to coordinate on mutual contribution than if they act alone.
Any subset of a population that succeeds in coordinating on such cooperation will tend to outcompete those that do not. The evolutionary problem is therefore not why agents would want to help one another, but how such agents can find one another across time and space.
The specific difficulty is this: indirect reciprocity requires that contributors be identifiable after the act of contribution and in the absence of social memory.
Animal signals
The essence of the problem is signalling.
Consider a population of agents who wish to help one another whenever possible. Suppose agent j helps agent i at time t₁. At time t₂, agent j encounters agent k and needs help.
For indirect reciprocity to function, j must be identifiable by k as a past contributor.
Ordinary signals—such as marks, gestures or speech—cannot solve this problem. If agent j emits a signal that agent i can also emit, the signal cannot uniquely identify agent j. Agent i may emit the same signal and be helped by k at time t₂, even if only agent j has contributed.
This is why promises, declarations, reputational claims, and symbolic badges fail without enforcement. What agents require is not mere communication, but a signal that cannot be re-emitted.
Transferability and objecthood
A signal becomes reliable when it is transferable.
This is why bearer instruments historically outperform account-based records. A balance on an account is a signal that can be re-emitted by replenishing the balance, whereas a bearer instrument irrevocably transfers that capacity when passed on.
The essential feature is the ability to transfer signalling capacity, thereby disabling the sender from signalling again. This means that the signal acquires an object-like character, though it need not be supported by materiality.
This object enables the following protocol:
Agent j helps agent i iff agent i transfers the object to j.
The holder of the object is thereby identifiable as a past contributor.
No assumptions about trust, value, or enforcement are required. The informational content is carried by possession alone—or, more precisely, by exclusive signalling capacity.
Uniqueness
Transferability is necessary but not sufficient.
If multiple agents can hold equivalent signalling objects, the signal collapses informationally. Two agents would be able to signal the same contribution even if only one had contributed.
This is why mere material concreteness is insufficient. A coin or a note may be physically tangible, but if it is duplicable, it does not uniquely identify a contribution by itself.
Therefore, the signal must be unique, either as a whole or as a verifiable part of a divisible, unique whole. The scarcity of a substance such as gold matters only insofar as it preserves this exclusivity.
Money as memory
At this point, money can be defined minimally, without reference to social or cultural criteria:
Money is a unique, transferable signal that enables indirect reciprocity.
Money thus functions as natural memory (moneta). It records contribution and provides an objective criterion for choosing an exchange partner.
Everything commonly attributed to money—value, medium of exchange, unit of account—presupposes this more basic role. Calling duplicable, non-unique items “money” is a cultural misconception.
Bitcoin and monetary theory
The origin of money is often explained by reference to cultural or conventional criteria, such as state authority or a commodity’s “sellability.” These are ultimately subjective accounts of value.
According to the present argument, money does not require prior value. Rather, an object becomes valuable because its function as a unique, transferable signal allows human animals to realise the fitness benefits of indirect cooperation.
Across history and across environments, humans have repeatedly converged on such signals. These have included:
- salt and grain in constrained economies
- cattle and livestock in pastoral societies
- cigarettes and alcohol in prisons and closed systems
- shells, beads, and ornaments in intergroup exchange
- metal tools, bars, and coins
- gold as a divisible, globally recognised stock
- and now, bitcoins on the internet
What these objects share is not intrinsic utility or cultural meaning, but contextual non-duplicability and transferability in signalling. Political or commodity use is therefore contingent, not foundational.
Bitcoin makes this explicit. Bitcoins have neither government backing nor material substance. They consist entirely of digital signals—ones and zeroes transmitted over a network—yet Bitcoin achieves absolute scarcity, non-duplicability, and transferability at a global scale, with a fixed limit of 21 million units.
For the first time, monetary signalling is achieved in a purely informational domain.
Conclusion
Money has never been defined scientifically by reference to empirical reality.
Terms such as “store of value,” “final settlement,” “liquidity,” or “hardness” lack scientific explanatory value; they only describe the consequences of successful signalling.
Money does not work because it is valuable. It is valuable because it works.
And it works because it is a unique, transferable signal that allows cooperators to recognise one another across time and anonymity.
Anything that does not fulfil this role but relies on promises and enforcement is more accurately called credit.
References
Maanmieli, Jose. Money Is a Token of Cooperation: The Biology of Indirect Exchanges, Alethes.net (2019). This paper proposes an objective, behavioural definition of money as a transferable signal that enables cooperation, distinguishing it from altruism and credit.
Maanmieli, Jose. Unique Memory: Bitcoin and the Concept of Money (SSRN Working Paper, 2024). This work examines the fundamental problem of digital cash in decentralised networks and articulates the nature of money and scarcity in purely informational form.
