The evolution of money

The concept of “money” follows the history of civilization since, about ten thousand years ago, humans began engaging in agriculture and animal husbandry. At that moment, through trade or barter, the exchange currency was the object itself, not an abstraction to which a certain value is attributed (such as a fifty-dollar bill, for example). The Greek philosopher Aristotle, who also wrote about the nature of work and employment, established the two uses that every object could take: its original use and its use in a sale or exchange. Portable and intrinsically valuable objects became candidates for the role of money, and ancient civilizations scattered throughout the world have used materials such as gold, silver, copper, salt, tea, and seashells for the specific purpose of facilitating the exchange of goods. The very origin of the word “money” is linked to this use: The Latin word Moneta was the title or surname of the Roman goddess Juno, in or near whose temple money was coined in Ancient Rome.

In his 2008 book, “The Ascent of Money: A Financial History of the World,” Harvard professor Niall Ferguson argues that the invention of the concepts of “credit” and “debt” was as important to the evolution of civilization as any relevant technological innovation. Until recently, the crossing between technology and finance took place far from the public eye, through the use of mathematical models and computers to price and trade assets around the world or through the development of real-time control and monitoring systems for bank and exchange activities. But fintech companies are rapidly changing this, bringing innovation to everyday life at an ever-increasing pace.

One of the best-known examples of this segment is the PayPal service, originated from a company called Confinity — a combination of the words “confidence” and “infinity.” Its purpose was to allow money transfers between two parties through virtual accounts funded directly by the users. The service began operations in 1999, months before the technology stock market crash in the United States: between March 2000 and September 2002, the NASDAQ index lost almost 80% of its value, having previously increased fivefold between 1995 and 2000. But the company survived, and some of its top executives, such as Peter Thiel (Palantir) and Elon Musk (SpaceX, Tesla, Neuralink) remain active in the innovation ecosystem. Currently, the company has almost two hundred million active users, receiving and sending money across the world in twenty-five currencies.

Getting payments through credit cards has also been made simple thanks to another company that did not even exist ten years ago. Square, founded in 2009 by Jack Dorsey (Twitter) and Jim McKelvey (Lockerdome), allows smartphones to receive credit card payments by attaching a small square device to them (hence the company name).

It is not just the processes of money borrowing, sending, and receiving that are being changed by fintech companies. Services such as asset management, real estate investment, payment processing, and capital markets are also being affected by the industry startups. But no fintech innovation is generating as much buzz as cryptocurrency — our next topic. See you then.