History Of Money
Published in
3 min readJun 5, 2019
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Barter System
- Barter system has been in existence since 6000 BC
- Earliest forms of barter system had livestock trade (sheep, cattle, vegetables, grains)
- It was first recorded in Egypt
- Mesopotamia to Phoenicians and the Babylonians improved the system
- Goods were exchanged for food, tea, weapons, and spices. Even human skulls were used. Salt was a very important trade commodity that Roman soldiers were paid with it.
- Middle ages, Europeans traded crafts and fur for silks and perfumes.
- Musket balls, wheat, and deer skins were used by colonial Americans
- The invention of money did not kill barter system. But it made it organised.
- Barter system came back during the great depression of 1930s in a form similar to that of banks.
Disadvantages:
- No certification of proof to show legitimacy of the person you are dealing with
- It depends on trust
- Possible exchange of bad commodities
- Need a double coincidence of wants
- No common measure of value
- Storage issues high
Advantages:
- No need of money
- Flexibility that anything can be traded.
- Does not have to be material items. You can exchange skills
Coin & Paper Currency
- Currencies has been in existence for almost 3000 years
- Chinese started using goods cast made from bronze (cutlery, arrows, spades, daggers)
- They started using coins to avoid being impaled
- First known minted currency was a roaring lion coin created by King Alyattes in Lydia (present Western Turkey)
- It was made using a mixture of silver and gold which is called Electrum
- Chinese came up with paper currency in 700 BC (Tang and Song Dynasty). These notes in the beginning where only temporarily valid.
- By 1271 AD, the currency system in China was thriving. The government had took over shops which print currency and made state-issued currency. It was the time when Marco Polo visited the place.
- Medieval Islamic world build a monetary system during 7th — 12th centuries (Dinar). They are the first to use credit, cheques, savings account, transactional accounts, exchange rates, promissory notes, banking institutions for loans and deposits, etc.
- Manilla rings were used in West Africa since 15th century for slave trade.
- Metal coins and Archimedes Principle — To test its purity
- Europeans used coins up until the 16th century. And it was not until 1661, Europeans (Swedes) started using paper currency.
- European paper notes could be exchanged at any banks for gold or silver coins
- More than the government, it were the banks and private institutions who used to regulate the printing of currency
- First issuance of currency happened in colonial North America so that the traders do not run out of money.
- Paper currency improved international trade and also lead to conflicts between empires.
- Impact of World Wars lead the countries involved to print currency out of proportion leading to inflation. The Great Depression of 1930s is a result of this.
- Gold is set as the standard for printing currency.
- Mobile and virtual currency — The move towards digital banking
- Invented in 2009 by the the pseudonymous Satoshi Nakamoto, Bitcoin has become the gold standard of virtual currency.
Facts:
- American — “In God we trust”, Chinese — “All counterfeiters will be decapitated”
- Currency helped improve Lydia’s economy, but they were conquered by the Persians not long after.
- In 1685, plating cards were signed and issued as currency by the governor for soldiers in France.
- Coins made out of a mixture of metals were used in India.
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Originally published at https://www.writerandgeek.com on June 5, 2019.
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