The Evolution of Money
The first money that mankind used was a system of barter, or simply exchanging something of value for something else of value. This system was predominant throughout history and widespread as it usually resulted in mutually beneficial and satisfactory transactions. However, this “commodity” form of money was not without its own problems or limitations. Problems of divisibility, transportation of goods, spoilage of agricultural products, and the seasonal nature of some items were just some of the issues associated with commodity money. Additionally, a skilled salesman could take advantage of the average trader causing what you could consider to be the first trade imbalances.
The next step in money’s evolution occurred when precious metals began to be traded for goods and services. This metallic form of money used copper, bronze, silver and gold for exchange, immediately solving the divisibility and spoilage problems of commodity money. As with any form of money it had its own issues as well and most notably lacked uniform standardization, so it was not accepted everywhere.
To solve the problem of standardization, precious metals began to be minted into coins of standard values. They could be token value representing a certain set amount or face value, being worth the metal content contained in the coin. These coins were not accepted everywhere and the purity of the metal could also be questionable. A new problem that began to be seen with the coinage of money was authenticity, as counterfeiting began to be practiced.
Around 1400 years before it was adopted by the West, the Tang dynasty in China began to use paper money. Paper money grew in popularity due to the convenience it offered and because it was officially sanctioned for use. The Chinese experienced everything associated with paper money from widespread counterfeiting, to hyper inflation, to a complete ban on paper currency hundreds of years before it was first used in Europe. In Europe, beginning in the 1600s paper certificates of gold on deposit, began to be traded and used as currency. The practice of paper money being representative or convertible to a precious metal was the standard of paper money for several centuries, even after bank notes began to be issued by governments and central banks. However, in 1972 the Nixon administration in the United States, suspended the convertibility of the US dollar into gold, changing everything. It’s said in the global financial system, when the U.S. sneezes the rest of the world catches the flu, so the nations of the world followed the U.S. example.
The paper currencies of the world are all fiat money now, meaning they are not convertible to precious metals and have zero intrinsic value. Additionally, since they are debt based, they are subject to the effects of inflation and lose their purchasing power year after year. In extreme cases of hyper inflation like in Zimbabwe for example, 3 million % inflation was experienced! It took $300 Billion Zimbabwe dollars to buy one loaf of bread! Fiat money can also be demonetized by the issuing government authorities, for example what recently happened in India. Poof! Just like that and your life savings could vanish!
Money continued to evolve as the explosive growth in technology and the ever expanding use of the internet brought about an environment that created a massive paradigm shift in money. The virtual world that was created online gave rise to the need for virtual money.
Virtual money, or Cryptocurrency, promised the potential to solve virtually every problem that all forms of money have previously had. Having a truly global currency that can go anywhere in the digital world without physical limitation is truly powerful. Cryptocurrency is also easily verified and cannot be counterfeited. All transactions are recorded on a decentralized ledger and cannot be tampered with and it is almost infinitely divisible. It is also designed for peer to peer transactions without a middle man, so it has the potential to be used without costly fees. Many cryptocurrencies have also become lucrative investments as their value has increased dramatically in many cases.
As with all previous forms of money, cryptocurrency has its own issues to contend with. Therefore, in order to smooth out some of the wrinkles associated with actually having a truly usable crytpto, there are several projects available that are worth your consideration.
Consider Glodcoin and its exclusive e-commerce platform CYBMALL.
https://medium.com/@mansourcarson/the-evolution-of-money-50ef6ba1732e
