From Barter to Bitcoin: The History of Money

Money is a fascinating topic. It has been around in one form or another for thousands of years and continues to evolve. Today, we have a variety of types of money, from traditional forms like cash and coins to newer ones like cryptocurrency. In this article, we will explore the history of money and discuss how cryptocurrency and the technology it rests on are paving the way for a new era of digital transactions and revolutionizing many industries!

The history of money

It’s hard to imagine a world without money but believe it or not, that’s how the world started. For centuries, humans traded goods and services with each other in a system called barter. If you wanted something that someone else had, you had to trade something you had for it. The exchange could be anything from goods and services to livestock and land.

But as time continued, people realized that this system was extremely inefficient. What if someone didn’t want what you had to offer? What if they didn’t need anything that you had? At this point, currency makes a rescue, in the form of coins. Originally, money was just a way of trading goods and services more efficiently. It was an agreed-upon currency that was easily transported and could be used to represent value.

Some early societies used items such as shells to trade, and Egyptians used to exchange gold bars which had to be weighed each time a trade took place. The emergence of coins made this exchange easier because coins had a set worth and therefore could be counted without being weighed. Since they are made of precious metal, society simply accepted the ascribed value. The British Pound, for example, is called this because £1 literally used to represent a pound of silver.

Moreover, this allowed the possibility for countries to engage in trade with each other since these metals had a mutually agreed value. Precious metals came with a guarantee that they could be exchanged for something the seller would want or need.

Although the fundamentals of trade remain mostly unchanged, how we carry out these transactions has entirely transformed. As banks became prominent, governments began to control currency and trading, trust in these systems grew. We realized we didn’t need to transport blocks of precious metal in our pockets to trade. Paper money, which first appeared in China in 700CE, has become a more convenient form of exchange and substitutes coins.

The value in these notes is not in the notes themselves, as they are not precious material, but rather in the promise each one carries, to pay the bearer on demand the sum of X pounds by the bank of England — X being the sum the note represents. The notes, therefore, act almost as a receipt of proof that you own or have available X amount of money.

Technological improvement has given rise to novel forms of storing and trading our assets. We can now sell and purchase online, through credit cards, and on our mobiles through online paying apps such as PayPal. So, it’s no longer about notes, coins, or physical assets — our currency is now largely invisible. It is, for the most part, simply entries on a spreadsheet. If you purchase a phone from Apple, all that happens is your bank adds an entry into your spreadsheet that you now have X amount less in your spreadsheet, and that Apple now has X amount more.

The emergence of crypto

With the novel existence of cryptocurrencies, we are on the cusp of entering what some consider, the most convenient era of trade. The easiest way of understanding cryptocurrencies is that they are 100% virtual, there are no notes or coins or tangible currency, it is instead the transfer of digital assets. The function is like an online transaction made by a bank, where a spreadsheet logs any exchanges and transactions made, however, it is many copies of just one gigantic spreadsheet of all transactions made using that currency, called a ledger.

Anybody who is part of a particular currencies network will have one, it simply means setting up a computer to crunch through transactions on a copy of the spreadsheet. An incentive is offered for doing this process called mining, usually in the form of crypto assets. There are around a million Bitcoin miners in the world, and Bitcoin is just ONE of many cryptocurrencies!

Advantages of using crypto

There are evident advantages to using crypto as a form of currency. Listed below are just some of these.

· Due to the numerous copies of the ledger associated with each currency, it becomes much harder for anyone to try anything dubious. You would have to change these numbers through at least half a million random computer networks around the world to successfully pull off a fraudulent transaction!

· There is a clear organization that allows for open and traceable transactions through a decentralized system. Decentralization eliminates a single point of failure as the network is hooked-up to, and therefore backed up by, an enormous number of computers.

· Crypto may seem complicated, but for many reasons it is simpler as it is more accessible than traditional banking and removes the need for a bank altogether, providing an outlet for personal wealth that’s beyond restriction or confiscation, placing both the power and responsibility in the currency holders’ hands.

· Thanks to the systems running on multiple computers by the people, transactions are much faster which means you can send money virtually to anywhere in the world in just seconds, or a few minutes — on a slow day — with blockchain.

· Unlike with banks, there’s no paperwork and documentation necessary and it removes concerns surrounding exchange rates and interest rates. Even transaction fees are lower with cryptocurrencies.

· Aside from being quicker and less hassle, one key benefit of Cryptocurrencies is, as the name suggests, they are secured by cryptography. Crypto exchanges, like Himalaya Exchange, use military-grade security to protect crypto assets so they are more secure than fiat currencies.

Disadvantages of crypto

· Crypto is an emerging market, and both regulations and education on the subject still need to catch up to the advances in this type of technology.

· Due to its infancy, it is still a rapidly growing trade, prone to volatility. How many participants engage in the market is the main influencer of the quick rises and drops. However, the more individuals that participate, the less susceptible the market is to prices being affected by factors such as social media, and the more stable it will become.

· False perceptions are often responsible for negatively influencing the market. There seems to be a huge misconception that it is anonymous therefore a currency used mostly by criminals. However, this is far from the truth as cryptocurrencies are not anonymous, they are pseudonymous. Pseudonymous means despite your identity being anonymous, your public key is permanently encrypted into the blockchain from the moment of your first transaction. In fact, only 0.34% of crypto transactions are criminal compared with 5% of cash transactions.

Conclusion

The emergence of crypto and blockchain technology signals a huge shift in the very nature of how business and finance are conducted. The technology means more security, faster, more transparent operations, and more cost-effective solutions, without the need for a middleman. Crypto and blockchain open several opportunities to revolutionize cybersecurity, the transport of goods, trading, social media, and much more. Even the internet may meet its third generation through blockchain which could mean its re-decentralization, along with the decentralization of business and commerce worldwide. How we live, work, and interact with others will be massively impacted and the result will be increased control over our finances and a more trusted and authoritative internet, that will have no single owner or manipulation of data.