The Casino Inside Your Bank: What Cloudmoney Reveals About Digital Money

Picture yourself at a casino table, chips stacked before you. Each chip is a promise, redeemable for cash—unless, of course, the casino runs out. In 'Cloudmoney', Brett Scott uses this powerful metaphor to explain the reality of digital bank money. When you deposit cash in a bank, you receive a digital IOU, not a vault full of your own cash. Banks lend out far more than they hold, relying on the fact that not everyone will demand their money at once.

This system works—until it doesn’t. If confidence falters and too many people try to cash out, the system collapses. Bank runs may seem like relics of the past, but in a world of cloudmoney, they are a real and present danger. The difference between cash and digital chips is not just academic; it’s a matter of resilience and safety. Understanding how your money really works is the first step to protecting yourself in an increasingly digital world.
References: Cloudmoney by Brett Scott, Goodreads review, Cybersalon review 2 4