From Barter To Bitcoin
Money: The terms "money" and "currency" are often used interchangeably. However,
several theories suggest they are not identical. According to some theories, money is
inherently an intangible concept. Currency, on the other hand, is the physical or tangible
manifestation of the intangible concept of
money. Money doesn't always have value,
whether it's represented by a seashell, a metal
coin, a piece of paper, or a string of code mined
electronically by a computer. With
global wealth estimated to be about $432
trillion at the end of 2023, the value of money
depends on the importance that people place on
it as a medium of exchange, a unit of
measurement, and a storehouse for wealth.
Money allows people to trade goods and services indirectly. It helps communicate the price
and value of goods and provides individuals with a way to store their wealth. It is valuable
as a unit of account—a socially accepted standard by which things are priced and with
which payment is accepted. However, both the usage and form of money have evolved
throughout history.
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The Journey of Money
Money has been part of human history for at least the past 5,000 years in some form or
another. Before that time, historians generally agree that a system of was likely used.
Bartering is a direct trade of goods and
services.
If you exchange an axe as part of an agreement in which the other party is supposed to kill a
woolly mammoth, you have to find someone who thinks the tool is a fair trade for having to
face down the 12-foot tusks of a mammoth. If this doesn't work, you would have to alter the
deal until someone agrees to the terms.
A type of currency slowly developed over the centuries that involved easily traded items
like animal skins, salt, and weapons. These traded goods served as the medium of
exchange even though the value of each of these items was still negotiable in many cases.
This system of trading spread across the world and still survives today in some parts of the
globe.
One of the greatest achievements of the introduction of
money was the increased speed at which business, whether
it involved mammoth slaying or monument-building, could
be done.
First Official Currency Is Minted
Meanwhile, farther west during this era, in 600 BCE,
metal coinage was invented when Lydia's King Alyattes
minted what is believed to be the first official currency, the Lydian stater.
Transition to Paper Currency
During 1260 CE, the Yuan dynasty of China moved from coins to paper money. By the time
Marco Polo, a Venetian merchant, explorer, and writer who travelled through Asia along the
Silk Road, visited China in approximately 1271 CE, the emperor of China had a good handle
on both the money supply and its various denominations.
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In fact, in the place where modern American bills say, "In God We Trust," the Chinese
inscription at that time warned:
"Those who are counterfeiting will
be beheaded."
Parts of Europe still used metal
coins as their sole form of currency
until the 16th century. Colonial
acquisitions of new territories via European conquest provided new sources of precious
metals and enabled European nations to keep minting a greater quantity of coins.
But banks eventually started using paper banknotes for depositors and borrowers to carry
around in place of metal coins. These notes could be taken to the bank at any time and
exchanged for their face value in metal, usually silver or gold coins.
This paper money could be used to buy goods and services. In this way, it operated much
like currency does today in the modern world. However, it was issued by banks and private
institutions rather than the government, which is now responsible for issuing currency in
most countries. The first paper currency issued by European governments was actually
issued by their colonial governments in North America. Because shipments between Europe
and the North American colonies took a long time, colonies often ran out of cash.
Instead of going back to a barter system, the colonial governments issued IOUs that traded
as currency. The first instance was in Canada (then a French colony) in 1685 when soldiers
were issued playing cards denominated and signed by the governor to use as cash instead of
coins from France.
Important
The gold standard was established in the 1870s. Under this rule, currency printing was
permitted based on the amount of gold a country had in its reserves.
Mobile Payments
The 21st century gave rise to a novel form of payment activated with the touch of your
finger. Mobile payments refer to money used to pay for goods and services. They can also be
used to transfer money to another individual, such as a family member or friend. This can all
be done using a portable electronic device, such as a smartphone or tablet device.
This form of payment first came to prominence in Asia and Europe before moving over to
North America. From payments via text message, the technology evolved to allow checks to
be deposited using the camera app on smart devices.
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Mobile payment services like Apple Pay are vying for retailers to accept their platforms for
point-of-sale payments. There are also apps dedicated to this method of payment,
including Venmo and PayPal.
Virtual Currency
Virtual currencies are only available in electronic form. As digital representations of money,
this type of currency is stored and traded using computer applications or specially designated
software. The appeal of virtual currency is that it offers the promise of lower transaction fees
than traditional online payment mechanisms do and is operated by decentralized authorities,
unlike government-issued currencies.
Bitcoin quickly became the standard for virtual currencies. It was released in 2009 by the
pseudonymous Satoshi Nakamoto. All of the world's Bitcoin was worth $1.14 trillion as of Aug.
7, 2024.
Keep in mind, though, that virtual currencies like Bitcoin have no physical coinage because they
are traded on exchanges.
Although Bitcoin remains the most popular and most expensive one, other virtual
currencies have hit the market. They include Ethereum, XRP, and Dogecoin.
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