Wednesday, September 18, 2019

The History of Money and How Does Bitcoin Follow in to That

The recent surge in interest towards bitcoins and other cryptocurrencies makes one wonder about the history of money in general, and how it links to the recent concept of cryptocurrencies.

When we talk about the history of money, even paper money is relatively a new concept, as the concept of money has been around for a long time now. Money by itself is nothing, it can be a shell, a piece of paper or a metal coin with a historic image on it. However, the value it carries is a different factor. The value that is placed on money is not related to the physical value of the product that is used as a medium of transaction. Money gives people, especially traders, the luxury to trade goods indirectly and to save for the future. The major reason why money is valuable is because everyone knows that all others will accept it in the future.

Before we study the history of money, it is pertinent to note that money has been part of our history since the last 3000 years. Before the use of money, people went for the barter system to finalize daily transactions.

Asian Cutlery

Somewhere around 1,100 B.C., there was a transition in the ancient Chinese society. Chinese started off by using actual tools and weapons as forms of money, but due to the inconvenience that was caused due to the size and structure of these weapons, including sharp arrows, they replaced them with miniature bronze replicas. These tiny daggers and arrows were eventually replaced with more accessible circle like miniature instruments that can be called as the first minted coins.

Coins and Currency

The first currency was minted in 600 B.C. The coins were a mixture of gold and silver and were stamped with denominations. Countries that implemented the new form of currency, benefited from the change as currency boosted both internal and external trades, which eventually initiated the domino effect.

Paper Money

The history of paper money is said to have been initiated by goldsmiths that issued a paper for deposits that were made to them. The Chinese adapted the methods and moved from coins to paper money before the rest of the world, as narrated by Marco Polo during his visit in 1,200 A.D. The first paper money in Europe was issued way after 1600 A.D, when it was imminent for a system to be made for successful trade with the colonies they had under their control.

Virtual Currency

The banking system has played a vital role in bringing cards to the picture, but the latest innovation in the form of digital and crypto currencies has made a strong statement as to what defines the future of money. Bitcoins that were invented in 2009 by Satoshi Nakamoto have set the gold standard for virtual currencies that are now available in numerous types.

The underlying trend in the history of money is that innovations have been leading the way. We have not been content with what defines our transactions and have always been looking for more feasibility. Virtual currency may be labeled as a fad by many, but if past records and the human nature is anything to go by, cryptocurrency and other digital forms of money are here to stay.

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