From Barter To Digital Currencies – A Concise History of Money

The First Currencies

The objects our ancestors used for bartering had tangible value: one could milk a cow or preserve its meat to survive the winter, plant the grain, or use the sword in battle. However, as they switched to the first forms of money, the long story of objects with assumed value began.

The world’s earliest currency appeared around the 3rd millennium B.C.E. Back then, Egyptians and Mesopotamians traded with gold bars, which were gradually replaced by stamped coins: to simplify payments and battle counterfeiting. The invention of currencies allowed them to set prices for goods, ease trading – and accumulate wealth, leading to the stratification of the society.

Early Developments

Foreign trade has always been one of the main drivers of the economy. Around the 9th century, China developed the world’s first paper currency. It was called fei kian, or flying money, as it could easily be blown away by the wind – but it could also be carried long distances by the tradesmen, who didn’t have to carry around bags of coins anymore.

As Marco Polo recollected in his notes, the Chinese Emperor printed so many banknotes that he could buy the whole treasure of the world, “though it costs him nothing.” Well, as we know today, it did – and it took the world another millennium of trial and error to harness inflation.

The 20th Century

The 20th century brought even more mobility to payments, as plastic bank cards found their way into every wallet in developed countries. At that point, security married convenience: now, one could store their money safely in the bank, and, still, pay with it with a swipe of the card. And then – in just a few decades – mobile payments made it unnecessary to even have a physical card on you.

Decentralization and Digital Currencies

Today, in 2021, we’ve reached the level of globalization our forefathers could never dream of. Yet, we are still battling inflation, fueled by economic crises and the pandemic. So the newly found decentralization comes as the next logical step of the evolution of money, promising to bring even more mobility, freedom, and simplicity to payments.

Some criticize cryptocurrencies for their transitory value, which is based on demand. But isn’t this the very trend that we started 5000 years ago? Money has no value outside the human community, and digital money is no different.

What happens next remains to be seen. Will the trend toward globalization continue? Will we see the birth of a new global meta-currency? I guess we’ll learn from the next chapter of our story.

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