The concept of money dates back almost to the dawn of humanity. Money, as we know it now, derives its value from being an accepted medium of exchange, a unit of measure and a store of wealth.
Over the course of human history, money has taken on different forms: from cowrie shells to coins and banknotes, up to current electronic money and digital computer codes, it is clear that money has undergone a very interesting evolution.
The primitive barter
It is difficult to imagine the world without money, but this was the reality in 6000 BC. It is believed that at that time the exchanges took place through barter, or the direct exchange of goods or resources for a common benefit.
The first humans engaged in such trade with goods of any kind. The system accelerated in 9000 BC, when humans began to engage in livestock farming and agriculture.
Barter of agricultural goods
Commodity trading became dominant and, of course, some commodities such as salt and livestock were believed to be more valuable than others. Bartering had considerable advantages, such as the immediate exchange of products, but it was from its limitations that money was born.
The original barter system only worked when the needs of two individuals coincided, and lacked a shared measure of value. Furthermore, some assets were indivisible, and there was no standard to follow to defer payments.
Commodity money only appeared in 3000 BC The ancient Babylonians developed the first guidelines for money using a unit of measurement known as a “shekel”, which represented a specific weight of a variety of goods ranging from grains to metals. .
Around 1300 BC, the coastal regions around the Indian Ocean began trading using cowrie shells, which were either used whole or worked to be worn as an ornament.
Then, in 1100 BC, the Chinese began to use bronze molds that replicated tools such as knives, hoes, swords and arrows.
Over time, the bronze molds evolved into round coins that featured a hole in the center so that they could be threaded through.
The first coins minted
Outside of China, it was in the kingdom of Lydia (modern Turkey), around 600 BC, that coins began to be minted for the first time. Coins were made from lumps of silver, and when Persia conquered Lydia in 546 BC, minting techniques spread to Persia and Macedonia, as well as the Greek and Roman empires, where they were further refined. The coins would later begin to feature the depiction of emperors and gods to attest to their authenticity.
The first banknotes
When it seemed that Lydia was ready to take the first place in currency innovation, the Chinese, in 118 BC, began to use as money pieces of leather of 90 cm2 cut from the rare skin of the white deer and which had painted edges. of bright colors.
These pieces of leather could be considered to all intents and purposes the first documented type of banknote. In 806 AD, China would once again play the role of innovator with the introduction of the first paper banknotes. It is believed that leading to this innovation were a shortage of copper and the excessive weight of the coins during larger transactions.
In 1271, Marco Polo visited China and was impressed with the banknotes and introduced the idea to Europeans.
It was not until 1661 that the first European banknotes were printed in Sweden. Then, as the European nations continued with their colonization initiatives, the banknotes spread throughout the rest of the world.
The transition from convertible money to legal tender money
In 1800 came the gold standard, which allowed banks to create money and guarantee it with precious metals. In 1884, Bank of England notes were fully backed by gold, and the United States followed suit in 1879.
The gold standard would then be set aside by major economies following the Great Depression of 1939. We went from convertible money (ie guaranteed by a material asset) to legal tender money (guaranteed by a nation’s government).
Introduction of electronic money transfers and the invention of credit cards
The first bank card was introduced in 1946 by a Brooklyn banker, John Biggins, and allowed those who used it to shop from various vendors. The Diners Club card was introduced in 1950 and paved the way for the launch of the first credit card, issued by the Bank of America in 1958.
American Express also launched its first credit card around the same time, and it was the first to be accepted globally. In 1970 the magnetic stripe was improved by allowing a machine to securely decode the owner’s personal and financial information.
The magnetic stripe brought cards into the information age. But it was the introduction of the chip in the 1990s that allowed for the mass global adoption of credit cards.
In 1994, the arrival of the World Wide Web revealed the need for an online ecommerce ecosystem. In 1998, PayPal was founded, which used the internet to make payments and money transfers online.
Then, in 2008, immediately after the global financial crisis, the Bitcoin white paper was published with the title: “Bitcoin: a peer-to-peer electronic money system”. This document opened the doors to the launch of the first cryptocurrency, Bitcoin. Cryptocurrencies are fully decentralized currencies that work thanks to blockchain technology.
Cryptocurrencies are still in their infancy, so it’s hard to tell if they actually represent the future of money. But what is certain is that money will continue to be a key component in how humans conduct business transactions and interactions.