Recently, DHK dao has been on a tour holding “Drifting Classroom” workshops at various independent bookstores in Hong Kong. The most recent session was last Friday at Have-a-nice-stay Bookstore. Towards the end of the workshop, I shared with the participants the “Eight Misconceptions About Money.” The following is the first part of the transcript, compiled by “AAI”, artificial^2 intelligence, for attendees to review and to help more people understand what this money we all chase after really is.
After learning the basics of opening a wallet, lending out funds via AAVE, and swapping different tokens on Uniswap, I want to chat with everyone about eight common misconceptions about money. This is my usual spiel, but this is the first time I’m approaching it from the angle of these misconceptions. If the previous hands-on steps were about “knowing the what,” I now want to help everyone “know the why.” If the practical part was the how-to-do, I hope to also let everyone know how it works and why it matters.
You might find it strange. Why not explain first and then do the practical steps? What if you lose assets by jumping right in? Well, if that happens, I’d honestly congratulate you. Mistakes make the most lasting impressions; the earlier you make them, the smaller the loss. I also prioritize practice because listening after you’ve already tried something is less boring and easier to understand. I call this approach “Practice-Learning” (習學).
Of course, “Practice-Learning” can’t be a one-time thing. The real process should be practice, learn, practice, learn, practice… a continuous cycle of hands-on application, periodically taking time to understand the principles. Besides looking at new materials, you can also revisit things you didn’t fully grasp before, like the Bitcoin whitepaper.
Of the eight misconceptions, the first four are about traditional currency, and the latter four are about cryptocurrency. This time, let’s talk about the first half.
1. Real Money = Fiat Currency
Whenever students ask, “How do I convert XX coin back into real money?” I always start by clarifying what “real money” is. This is probably as annoying as when a child says “Teacher go to the potty,” and you respond, “Teachers don’t need to go to the potty.”
But I’m not trying to mess with beginners; it comes from a place of genuine concern. While swapping between different currencies is a fundamental skill that’s necessary to master and not at all difficult, I see many people who bought Bitcoin or Ether long ago but always rush to convert it back to “real money” after a small gain, letting bigger returns slip by. This isn’t just a misjudgment; at its core, it’s a lack of conceptual clarity. They mistakenly believe that the currency used in daily life is the only “real money,” and everything else is “virtual.”
What Muggles call “real money,” the precise term is “fiat currency”—that is, currency issued by a government. I don’t mean to denigrate fiat currency; the US Dollar and Hong Kong Dollar are certainly real money. But the reverse is not true: real money is not necessarily fiat currency. It also includes assets with “moneyness,” like gold, Bitcoin, and Ether. It’s like how the truth doesn’t only come from official sources but can also come from citizen media, fact-check centers, and oral histories.
The functions of money are for pricing, purchasing, and saving—or in academic terms, as a unit of account, a medium of exchange, and a store of value. The more an asset possesses these qualities, the higher its “moneyness.” This is the real reason why the USD, HKD, and others are considered real money. Those of us fortunate enough to be born in countries with sound monetary systems find this hard to recognize. In contrast, for citizens of Zimbabwe, Argentina, or Turkey, it’s common sense that real money is not the same as fiat currency. Just as those born in democratic and free countries may not recognize the simple truth that government announcements are not necessarily the whole truth. In authoritarian societies, everyone knows officials are full of lies and just scoffs at the news (any resemblance to actual events is purely unfortunate).
👉 When it comes to money, everyone is part of the establishment.
2. Fiat Currency = Stable
This year, you can often hear people discussing stablecoins, even in cafes or on the bus.
When discussing stability relative to the Hong Kong Dollar, most people will say “HKD stablecoin.” But when it’s relative to the US Dollar, few people ever say “USD stablecoin.” This is because, due to America’s national power and historical reasons since World War I, the USD is widely recognized as the world’s currency—the standard for setting prices and the basis for calculating profits and losses. The dollar is the default; if you don’t specify a benchmark currency, it’s assumed to be USD.
Continuing with the examples of Argentina and Turkey, locals there know there is other real money besides their fiat currency. When they have extra funds, holding USD is far better than holding pesos or lira. In contrast, people in Hong Kong and Taiwan, who live in stable monetary systems, have the illusion that fiat currency is absolutely stable. In reality, the HKD or TWD only appears absolutely stable because you are using them as your unit of account, interpreting all changes as the rise and fall of other assets.
So am I saying the US Dollar is absolutely stable? Of course not. The USD is just one form of real money, and its function as a store of value is far inferior to Bitcoin. It just recently hit a new low against Bitcoin at 0.000008 BTC.
You are free to use your country’s fiat currency as your unit of account and measure the fluctuations of other assets from that standpoint. But regardless of whether you are American, thinking that fiat currency is absolutely stable is a beautiful misunderstanding. And depending on which country you’re from, this misunderstanding could cost you dearly.
👉 All stability in the world is relative.
3. Holding Fiat Currency = Saving
“Bitcoin Hits a New High,” the news will report. You rarely hear people make a big deal of specifying that Bitcoin hit a new high “against the US Dollar.” The reason, as just explained, is self-evident. In fact, before Bitcoin hit a new high against the USD last year, it had already broken records against the Japanese Yen, the Euro, and other currencies earlier.
The Hong Kong Dollar has been pegged to the US Dollar since 1983, and the New Taiwan Dollar’s exchange rate against the USD is also quite stable, so residents of these two places don’t feel this effect strongly. But if you’re like my friend L, who has been working in Japan and earning Japanese Yen for a few years, you’ll start to feel that something is off. For some reason, it seems like Bitcoin is rising especially fast for you. You work hard, you’re thrifty and frugal, and you save a portion of your salary every month without investing or speculating. Yet, your money becomes less and less “valuable.” Weren’t we told that saving is risk-free?
Unfortunately, only when you and your country have no contact, trade, or exchange with other nations, and you cover your eyes and pretend other assets don’t exist, does holding fiat currency equal saving. Otherwise, just like my friend L who unknowingly chose the Japanese Yen, when you hold fiat currency, you think you haven’t made a choice, but you already have. You think fiat currency is stable, but that stability is relative. You think you are saving, but you are actually investing—investing in that fiat currency.
👉 The so-called “I don’t invest” is just going all-in on fiat currency.
4. The Dollar = A Unit of Measurement
When I go to the market with my mother, she’ll say, “The veggies are over ten dollars a catty now, so expensive!”
Her understanding is that the vegetable sellers are getting greedier, or maybe the farmers behind them, or no, the landlords. In short, no matter who is greedy, the vegetables are getting more expensive, just like a child growing taller or a middle-aged person gaining weight.
Is that really the case?
No. Even if the sellers, farmers, and landlords are all perfectly content, the vegetables will still appear more expensive because today’s dollar is not the same as yesterday’s dollar. The “dollar” is like the power levels in Dragon Ball. As time goes on, it keeps shrinking. Master Roshi, with a power level of just over 100, seemed formidable at first. But later in the series, you’d be embarrassed to even mention a power level that wasn’t in the millions.
A catty of bok choy for sixteen dollars. Here, the “catty” (a unit of weight) is like a kg, a meter, or a liter. It’s a unit of measurement, a concept of physical quantity. One meter in the Jurassic period is no different from one meter today. You might say that’s obvious—if a meter kept getting shorter, wouldn’t you seem taller even if you stopped growing? It sounds absurd, but this is precisely the effect governments want: to make money worth less and less to stimulate consumption.
The Cantonese “蚊” (dollar), however, is a unit of accounting. It reflects purchasing power. One dollar can be roughly understood as the fraction: “1 / Total Money Supply.” When you work hard to earn money, you are increasing the numerator. At the same time, the government is also “working hard” to print money, increasing the denominator. If the numerator grows faster than the denominator, your purchasing power increases. Otherwise, even if the amount of money in your hand seems to grow, your actual purchasing power is decreasing.
Investing to preserve value means preserving the entire fraction. Focusing only on investments that increase the numerator is like staying behind to practice basic martial arts when everyone else has gone to the Hyperbolic Time Chamber or King Kai’s Planet, where power levels are in the tens of thousands. You might feel like you’ve improved by increasing your power level by a hundred points, but you could end up dying a miserable death.
👉 To understand Bitcoin, you must first understand bok choy.
Money, which we intuitively see as permanent, stable, and tangible, is actually a 100% social construct, a product of a specific time and place. And with the birth of the blockchain, the foundations of that construct are beginning to shake.
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