Money History - Introduction to Ancient Exchanges

[Leviathan.007]

These days we are using currencies while some people don't know about how they came out and here I'm going to explain it.
In ancient ages people had had some jobs like farming and shepherding and whenever a farmer wanted some milk/meat from shepherd he had to give him some farming product instead. Here when a farmer wanted to trade his farming product for mild he didn’t know how much farming product he must give in return.

So, people started using valuable stuff and valuable metals such as gold and they created coins. But, if they wanted to spend a huge amount of coins they had to carry a huge amount of it and this wasn’t good for security.

Here the first generation of the exchanges (Ancient Exchanges) came out, when you wanted to carry 10 million coins with you from Boston to Paris you could give all your coins to an exchange in Boston and he could give you a receipt with signature and …, instead of carrying 10m coins you had to just carry a piece of paper with you and you could give the receipt to another exchange in Paris who and receive your coins on Paris.

Just after few people started to trade receipts instead of giving them to the exchanges and trade coins and here is how the money banknotes came out but they were backed by gold (Here is how people saying currency backed by gold these days). In 1944, after meeting of 43 countries, they set something called Bretton Woods system, in this monetary system every single USD worth rate of $35/ounce. In other words the US government said they are ready to exchange any amount of gold with this rate of exchange.

But between 1968-1973 this monetary system had some problems because the US government could supply this huge amount of gold and in the end on 1973 any currency could be directly exchanged into another currency of another country. In other order since that time fiat currency or non-gold backed currency appeared. Today we know them as money banknotes and they are backed by the economy and political and … power. But people find out there are some problems with the money banknotes. For example, in order to provide budget deficit governments started to print a huge amount of banknotes and printing huge amount of banknotes lowering value of the money.

So, digital currency appeared and got accepted by people (Credit Cards). Today you can transfer millions of dollars to another country using digital currencies, meaning you don’t need a suitcase full of money to transfer your money to another country with old fashioned way. But you may ask what the difference between digital currency and encrypted currency? Digital currency is centralized system and total supply can be changed with decision of banks/governments and can be controlled by them. While, crypto currency is decentralized and total supply is fixed (For example, there are only 21m bitcoins) and can’t be controlled by any government because it’s completely peer to peer.


I tried to make this article real short. So, you won't spent too much time for it.

[abhiseshakana]

The right title should be money history instead of economic history  . History is not just to be told but it can be a lesson and we analyze the influence of previous decisions that ultimately affect life today and then we wish if we can go back to the past and change history. Then let it go and make an analysis tool so that we can succeed in the future.

From the history above it can be seen that printing banknotes then fiat money creates new purchasing power from something that is not valuable. Because the money has no price but is used to reflect the price of all goods, this is where injustice arises because something that is worthless (fiat money) can be exchanged for (something valuable). Fiat money does not provide immediate use but can be used to buy useful goods. Fiat money also provides unfair benefits in terms of issuance, known as seigniorage, which is the return on the issuance of the money to the money issuing authority.

https://en.wikipedia.org/wiki/Seigniorage

[Leviathan.007]

The right title should be money history instead of economic history  . History is not just to be told but it can be a lesson and we analyze the influence of previous decisions that ultimately affect life today and then we wish if we can go back to the past and change history. Then let it go and make an analysis tool so that we can succeed in the future.

From the history above it can be seen that printing banknotes then fiat money creates new purchasing power from something that is not valuable. Because the money has no price but is used to reflect the price of all goods, this is where injustice arises because something that is worthless (fiat money) can be exchanged for (something valuable). Fiat money does not provide immediate use but can be used to buy useful goods. Fiat money also provides unfair benefits in terms of issuance, known as seigniorage, which is the return on the issuance of the money to the money issuing authority.

https://en.wikipedia.org/wiki/Seigniorage

Hey abhiseshakana,
I've changed the title into something else, thank you for the recommendation. 
Mostly I created this thread because of some people they didn't know these basic stuff and what "backed by gold" actually used to mean.

[Leviathan.007]

We can see that over the years there will be a change in the exchange tool. Fiat money has been dominating for a long time and I think in the coming years the world will soon change. People's Bank of China (PBOC) is in the process of testing the use of cryptocurrencies applied in mass payment. China is ahead of the world in terms of trends and if it succeeds, I doubt that the whole world must use it. Because China is the second power in the world, all import and export activities of China are very influential to the world.

The point of reading history is to use if for the future, I think Fiat money is going to disappear soon since digital and crypto currency came up. China is one of the greatest economy powers. So, expanding crypto currencies in China will effect the world and as you can see It's already started.

[Ucy]

Money needs to have values attached to it to be considered valuable. This is why printing money out of thin air without corresponding value is such an abomination. If you keep printing money out of thin air for someone, make sure the person is/will contribute something that is "proportional" to the money he/she receives otherwise the money has little to no value and that could create potential problems for everyone else that uses the money.

People who work hard on farms(for example), produce quality foods but earn little from the foods are the types that really deserve some money printed out of thin air... same as people who create good applications that lots of people use but make little from the applications.
Printing money out of thin air for someone (or potentially bad business) that will likely not pay back or be profitable is what makes the culture of printing fiat money out of nothing bad.
You could however print money for sustainable welfare schemes if the beneficiaries will be willing to contribute in whatever way to the society. The difference between them and the employed is the ease of getting a job and getting paid. There  definitely will be some kinds of jobs that need to be done somewhere but society probably don't find "profitable" short-term

[justdimin]

The article is great and quite short and explains things very well but the pictures are making it a bit more difficult. I would say making all the pictures a bit more same size and smaller would have helped your deal, plus having a bit more bigger font for it and also making all of the pictures and words more central instead of leaning left would help as well.

This is coming from a content writer of 5 years, I am not saying anything bad for your article at all, it is definitely doing what it was intending to do so there is really nothing wrong with what you wrote, just more eye candy would work a lot better for getting more views. However I think it is a good start for a new writer, if you want to keep writing more and get more views I am sure you will get better over time.

[Lizzylove1]

Money has been in a steady dynamic change over the years. When some friends tell me bitcoin is a pyramid scheme or is going to crash, I remind them on the evolution of money, many wonder how can these wonderful banks be someday be taken over by another form of money other than the current paper money. Well I just let them know robots are taking over humans, and smartphones have shutdown cybercafe and the list is endless.

[davis196]

So, people started using valuable stuff and valuable metals such as gold and they created coins. But, if they wanted to spend a huge amount of coins they had to carry a huge amount of it and this wasn’t good for security.

This statement is partially wrong.In the middle ages,gold was so valuable that only a small portion of it was enough to buy lots of stuff.Plus,people back then had horses,weapons and armor,so it wasn't that hard or dangerous to transport precious metals.
OP,your forum thread would be great for teaching kids about how money got invented  and how they were improved during the ages.However,most of the people in the forum know everything about the history of money,economics and finance,which makes your thread kinda pointless.

[EdvinZ]

Thank you for such an interesting digression into the history of money. It is noticeable how money became more convenient and mobile. There is no doubt that the future belongs to electronic money, which can be sent in any amount to any place in the world in seconds. It may not necessarily be cryptocurrencies, they may not be able to win a competitive part of the market, but centralized electronic money is unlikely to disappear.

[sheenshane]

Barter system during ancient people is very historical information and to add another information, they call it "barter change" when people are exchanging items for another good that they need. Though the thread might be well known to everyone in this forum however the topic only aims and point out the revolution in exchanges how it was before, how it is today and how it might be in the future it only tells us that cryptocurrency can be the future of exchanges replacing fiat and digital currencies.

Anyway, the revolutions in exchanges are possible and I'm looking forward to that cryptocurrency will be the future of it because of the features and advantages that we can benefit from it. But we really dont know when will that happen.

[so98nn]

Reminds me history classes after reading your post. So just went on to see what were the more unique and popular forms of currency out in the world during oldest decades.

I guess the article which I found from the CNBC is pretty amusing. Just loved the Currency number 9th The death penalty dollar and the 1st one which is Rai Stone.

The full article is present Here, The Weirdest Currencies

I will just put on one liners and photos if you wanna have quick look on them.

1. Rai Stone



2. Holy water dollar



3. Squirrel pelts



4. Off with his head!



5. The unlikeliest Kennedy coin



6. The world’s largest note



7. Edible currency



8. Green stamp money



9. The death penalty dollar



10. Wooden bills






Also, one can have cool discussion over the Currency no. 6th which say worlds largest currency whose cost was the 100 Million Billion Pengo. That’s right: 100,000,000,000,000,000,000 Pengos^[Reference]

Well, if we compare this with the today's bitcoin then its nothing in terms of digits. I mean one can have as much as bitcoin and in terms of USD it could be large number.

However, being that big currency its value in 1946 was only $0.20 Now thats funny!

[Ucy]

Barter system during ancient people is very historical information and to add another information, they call it "barter change" when people are exchanging items for another good that they need. Though the thread might be well known to everyone in this forum however the topic only aims and point out the revolution in exchanges how it was before, how it is today and how it might be in the future it only tells us that cryptocurrency can be the future of exchanges replacing fiat and digital currencies.

Anyway, the revolutions in exchanges are possible and I'm looking forward to that cryptocurrency will be the future of it because of the features and advantages that we can benefit from it. But we really dont know when will that happen.

It's important to note that barter isn't going away... there is nothing really bad or "primitive or ancient" about it. It depends on what you find convenient in "certain situations".
 We could actually barter goods and services in a modern way. I could tell someone: "work in my company for two years, I will provide your basic needs with little weekly money(allowances)"... This is kind of bartering in my opinion.
You could combine bartering with other
means of exchanging goods and services in a society. Whatever works well for that society can be used.

[mu_enrico]

Great thread, I like reading something light like this. Anyway, I want to read more about Quantitative Easing (QE) and Open Market Operation (OMO) if OP can extend the discussion since it's the key about "printing money out of thin air" arguments. It got soo bad in the last decade that people should carefully think about it.

[silversurfer1958]

I thank your detailed article on the history of money. I think cash was invented to facilitate the exchange of goods with each other. And science and technology thrived in the 21st century, producing cryptocurrencies. And BTC is the king in the cryptocurrency market. Cryptocurrencies have many advantages over cash. The advantages are transparency, anonymity and high security. I think in the future cryptocurrencies will be accepted for payment worldwide.

[shield132]

Here when a farmer wanted to trade his farming product for mild he didn’t know how much farming product he must give in return.

I don't agree with you in this. The reason why people started to use coins was that they were looking for something unique that would be valuable for everyone. Maybe I want to buy product from you but you don't want hen from me, so deal was something unique and with help of this I would be able to sell hen on someone and with collected coins, I would be able to buy product from you cause what I offer is something that everyone is looking for and no one is exception.
And this type of exchange is called Barter.

Here the first generation of the exchanges (Ancient Exchanges) came out, when you wanted to carry 10 million coins with you from Boston to Paris

I hugely doubt anyone even know continent of America that time. I hope you don't think that 18th century is ancient. And if we really talk about ancient exchanges, then I want to remind you that such system belongs to banking 17th century banking.

governments started to print a huge amount of banknotes and printing huge amount of banknotes lowering value of the money.

It doesn't lower value of money in reality cause society needs money. No money = no work. What lower value of it is banking system where a lot of money is collected and stored.

[abhiseshakana]

It's important to note that barter isn't going away... there is nothing really bad or "primitive or ancient" about it. It depends on what you find convenient in "certain situations".
 We could actually barter goods and services in a modern way. I could tell someone: "work in my company for two years, I will provide your basic needs with little weekly money(allowances)"... This is kind of bartering in my opinion.

As long as there is agreement from both parties, a barter system can take place. It's just that it will be hard to find another party who coincidentally and at once:

- Has the same items needed.
- Requires what we offer
- With values that are approximately the same or can be compared.
- Willing to exchange it

The existence of technological sophistication and complexity of the world socio-economy today, it seems that the barter system will be difficult to realize. Unless we build a community economy. Corona pandemic can trigger community economic formation (environment). Primitive times all people produce what is consumed and consume all that is produced. We can apply the idea of independence in the face of a corona pandemic provided there is a commitment from environmental members to support one another and the focus is humanity, not profit. For example in a small environment consisting of 50 families. Each family produces one or two daily basic needed for its community and then exchanged with each other both in barter and buying and selling.

[aakay]

I think what you explained in the first part is refered to the " trade by barter" system. I just kinda remembered some of the stories i was told concerning those. Some funny actually. Like if you are need for salt, you will have to seek for someone who is willing to exchange and amount of salt for another commodity which you have and is willing to part ways with. We have really come a long way from the past but so sad the world is experiencing this awful pandemic. I just hope the world heals soonest

[buwaytress]

History of money indeed. Some important milestones right there, but that's also missing out on a lot of the other types of money used in various cultures and civilizations throughout the world. Barter, by the way, is making a comeback in some communities -- I know one near me that actually does barter, and there are a whole lot of other money systems being used and experimented now (paying it forward, which is basically not an exchange but a promise to "spend" elsewhere using not cash but in kind).

Before the gold standard and the current US dollar standard, we also had the "daler" or "thaler" silver standard used in Europe and their colonies in the New World (where the dollar got its name from by the way!).

[abhiseshakana]

History of money indeed. Some important milestones right there, but that's also missing out on a lot of the other types of money used in various cultures and civilizations throughout the world. Barter, by the way, is making a comeback in some communities -- I know one near me that actually does barter, and there are a whole lot of other money systems being used and experimented now (paying it forward, which is basically not an exchange but a promise to "spend" elsewhere using not cash but in kind).

Before the gold standard and the current US dollar standard, we also had the "daler" or "thaler" silver standard used in Europe and their colonies in the New World (where the dollar got its name from by the way!).

http://library.uniteddiversity.coop/Money_and_Economics/A_History_of_Money-From_Ancient_Times_to_the_Present_Day.pdf

This book can be a reference to this discussion. I have not read as a whole, it's just interesting that there are so many crises and all of them are crises in the financial sector that are believed to be caused by money printing practices carried out by the authorities. Quoting Lord Josiah Stamp who is a former director of the Bank of England who stated that weapons from banks are printing money out of nothing.

https://en.wikipedia.org/wiki/Josiah_Stamp,_1st_Baron_Stamp#Quotes

[mycryptocoin]

a good article. I also write a article about the currency. The history of money is very long, extending throughout the history of human development. The first is shells, followed by essential items such as salt, cloth, jute ... and then coins like silver, coins and rare metals like gold ... When the exchange of goods appeared chemistry will form monetary form. And Blockchain is a groundbreaking idea of money, where distance restrictions or language and country barriers are almost zero. We can in the United States transfer money to our friends in Japan at a rapid rate. fast, the fee is almost zero and can check your transaction exactly whenever