Evolution of currency
How would you react if someone offered you 10 shards of obsidian in exchange for your phone? Well over 5000 years ago, people would be more than happy to make that trade. How have we evolved from using bizarre measures of currency to the utilization of decentralized coins to make our purchases? Well, a plethora of factors including an overall advancement of the human race with agricultural, technological, and industrial revolutions have enabled us to transition from accepting goatskin as fair pay for a kilogram of rice to paying by simply scanning a QR code. Within my blog, I would delineate the evolution of currency as well as the cause of the change.
In order to understand the transformation of currency, we must go back to the very advent of currency. From shekels in Mesopotamia to cattle in parts of Europe, people began to assign a certain value to various such items that were often rare to find in nature. By doing so, they unconsciously moved away from the inefficient barter system to develop the first currencies of the world. Barter required both merchants facilitating trade to be willing to accept what the other is offering in exchange for the goods he desires. A standard currency put an end to this dual nature of needs and led to the advent of one of the bases of the financial world. However, this base was laden with problems in its provincial stages. Shekels were mere pieces of silver that must be weighed at each point of sale and cattle would often be prone to disease and famine.
In order to further prevent such problems from arising, the people of China developed the world's first coinage approximately 3000 years ago. Not only did this solve the issue associated with shekels but it also relieved people of the anxiety behind losing one's fortune due to a famine. Moreover, these coins had their value imprinted upon them and often had the name of the presiding ruler. With the creation of these coins came the creation of exchanges where merchants would have to purchase and sell their coins as they moved from one empire to another.
Yet, these coins were heavy and could not be utilized effectively to pay large sums of money. Hence, these Chinese once again trailblazed the financial path that leads to the advent of paper money in 600 BCE as they hoped to reduce the costs of producing currency. With the rise of papyrus and writing materials, paper presented itself as a solution to their current problems and enabled people to pay larger sums of money without lugging behind them a huge sack of coins.
Following the global acceptance of a paper currency, the world began to innovate further; though its glamourous shine and alluring nature, gold presented itself as a standard after the second world war as the United States declared that most countries must base their respective currencies on their gold stores within the country. With an explosive expansion of economies worldwide, the gold standard soon became inefficient, causing worldwide consensus to drop it as a viable currency.
Unlike scrooge from Donald duck, the world’s richest people do not own piles of money and gold coins hidden in their vaults within their mansions but rather this money is stored within banks in the form of digital currencies and assets. As global trade began to flourish, people found it increasingly difficult to make transactions with their buyers and sellers due to the need for large amounts of cash. Hence, banks worldwide hopped onto the technological revolution by utilizing the world wide web/internet to transfer funds from accounts around the world in the form of bank transfers, credit cards, debit cards and other electronic payment methods.
However, the centralized nature of these currencies had inspired Mr. Nakamoto to utilize the concept of blockchain to create one of the first decentralized currencies in the world, BitCoin. With the advent of such cryptocurrencies that utilized ledgers and held pride in privacy, the world slowly began to utilize these currencies to make payments upon the dark web. Although the future of these currencies remains unknown, one can only hope that these currencies are identified by the world are valid methods of payment and hence can serve to replace the fiat currencies of various nations.
The evolution of payment methods is parallel to our own development as the creation of various currencies acted as the core of the financial world upon which different financial instruments were built. The future of currency remains uncertain with governments treating the utilization of decentralized currencies as crimes. However, each new currency enables us to become more efficient and hence boosts the economic growth and development of the human race.
