From barter to bitcoin on the Silk Route
By Harshit Gujral and Sukant Khurana
Highlights
● Significance of Silk route trade
● Distinct barter element of each empire.
● Rise of Mongols
● Unified and national system currency system
● Silk route ended with mongol disintegration
● Virtual Silk Roads are now using crypto-currencies, such as bitcoin!
Silk route reshaped the life of everyone living in Eurasia and of many in Africa. Silk route comprised of land as well as water routes. It was not a single road but a whole network of trade. The silk road connected the eastern Mediterranean to central Asia and central Asia to China.
Active trade on silk road started around 120 BC and ended in the 1450s with the fragmentation of Mongol empire. The nature of trading varied between this period. From Barter system or system of exchanges to currency and barter together. As the name suggests, silk exchanges from China constituted a large chunk in the barter trade on the Silk Route. Chinese vendors kept the secret of silk production secret for a very long time that ensured a monopoly of China in the silk trade. Every region had its own distinct element of Barter, for example, olive and olive oil from Mediterranean, silver, and iron from China, fine cotton textiles from India, Ivory from Africa, Spices and Tortoise shells from Arabia are few such examples.
With agriculture and new farming tools, there was more surplus of food, which was used for trading in exchange for other useful commodities. Trading started between different communities and empires of silk road where not only the surplus of food but also farming tools (tools made from stone) and crafts were exchanged. With this, a new social class of merchants came into existence; they would travel thousands of miles on foot to conduct trade with other communities.
Pottery traditions were on the rise in parts of the world now known as Asia, Japan, Korea, China, and many more. Obsidian i.e. a valuable volcanic glass was an important part of trading. along with increase in agriculture and farming there was more to exchange on silk road, it includes livestock, surplus production, salt, copper, cowry shells, pottery, animal skins, farming tools, and seeds etc.
As the empires on the silk route started becoming more of more segmented with Roman Empire in the west, Hans in East, Ottoman in Central etc reliability on barter system started decreasing significantly. Each empire started issuing its own currency. The rise of Mongol empire changed the dynamics of silk road as now Mongols controlled all the trade on the silk road. They Introduced their own currency and valued every other currency less than their own. The Mongol-founded Yuan dynasty also attempted to use paper currency. Unlike the Song dynasty, they created a unified, national system that was not backed by silver or gold. The currency issued by the Yuan was the world’s first fiat currency, known as Chao. This was a milestone in decline of Barter and rise of currency as Trade along Silk Route.
Now, the original Silk Road doesn’t exist anymore but virtual one does exist and bitcoin not barter is emerging as one of the mediums of exchange.The twist is that bitcoin is not issued by any one national government and while it is on the rise now, its future is currently uncertain. We think crypto-currencies are here to stay for a while but we do not know what final shape they would take.
References
1. CrashCourse (2002), The Silk Road and Ancient Trade: Crash Course World History #9, Available at https://www.youtube.com/watch?v=vfe-eNq-Qyg
2. Dong Wenchao: An Overview of China’s Gold & Silver Coins of Past Ages — the Gold and Silver Coins and Medals of Modern China. Beijing 1992, OCLC 180584759, ISBN 9625310010
3. Susan Whitefield (2004), The Silk Road: Trade, Travel, War and Faith
4. QuantInsti (2017), The Evolution Of Trading: Barter System To Algo Trading, Available at https://medium.com/@QuantInsti/the-evolution-of-trading-barter-system-to-algo-trading-c77ab16b6c96
Harshit Gurjal is a computer science student pursuing engineering degree. He is also a researcher with Dr. Khurana’s group.
Dr. Sukant Khurana runs an academic research lab and several tech companies. You can learn more about Dr. Sukant Khurana at www.brainnart.com or www.dataisnotjustdata.com and if you wish to work on biomedical research, sustainable development, artificial intelligence or data science projects for public good, you can contact him at skgroup.iiserk@gmail.com or by reaching out to him on linkedin https://www.linkedin.com/in/sukant-khurana-755a2343/.
