How did the money come into existence? The notion of money originated with the barter system, where people used goods and services to exchange. Since the barter system could have been more efficient, the world needed a tangible mode of exchange, such as valuable coins from precious metals such as Gold and silver.
However, Gold and silver are challenging to carry for size and security reasons. Therefore, over time, paper money evolved into our modern currency as a more efficient exchange system.
With the development of modern banks responsible for issuing and circulating paper money, cash became a better choice. In recent years, the digital currency has become a new form of exchange with the development of digital technology. As a result, it has become an opponent of traditional money that is centralized and slower.
- How did the money come into existence: The barter system
- How did the money come into existence: The Origins of coins
- How did the money come into existence: Paper money and its evolution
- How did the money come into existence: The Role of Banks in the Currency
- How did the money come into existence: Digital currency and its rise
The Barter System
The barter system was the easiest method of exchanging goods and services that relied on the principle of mutual benefit.
Since it depends on the coincidence of wants, the barter system was more efficient. The coincidence of wants signifies that both parties wanted what the other had to offer.
With the introduction of cash, people no longer had to offer services as an exchange. Instead, they could exchange goods and services for coins universally accepted as a medium of exchange.
The Origins of Coins
The origins of money go back to around 600 BC. At the time, they made coins from precious metals such as Gold and silver that were easier to transport, and division into smaller denominations was possible. Coins also had a standard weight and purity, which made them universally accepted.
Paper Money and its Evolution
Paper money became part of the exchange in the 7th century in Tang Dynasty in China. Paper money started as a promissory note, where merchants would deposit their Gold and silver with a trustworthy person and receive a monetary notice that they could use to withdraw the Gold and silver later.
This simple note system later evolved into paper money, issued by banks and backed by gold and silver reserves. The use of paper money became more widespread in the 19th and 20th centuries, and today most countries use it as their primary form of currency.
The Role of Banks in the Currency
Today banks issue and circulate paper money. In addition, they provide other services such as loans and administering and regulating the currency.
Digital currency and its rise
Digital currency is a unique system that exists only in digital form. First, decentralized digital currency such as Bitcoin means that a single institution does not control the sending and receiving process.
Instead, the information stays on the blockchain, a public ledger where a network of computers maintains transactions. Some identify digital currency as an opponent to the traditional bank system. However, others deem digital currency the future of money.
Finally, How did the money come into existence?
In conclusion, we can trace the origins of money to the barter system, which was inefficient and led to the development of coins. Then, paper money came into the picture from Asia and evolved into our modern currency. Finally, banks enabled the regulation and development of the current currency.
The rise of digital currency has contested the traditional currency system. The inflation and the questionable banking system caused a quick embrace of the new digital currency. In addition, many argue that the decentralized currency could become a system of criminals laundering illegal money. Yet, despite its evolution, cash remains an essential part of our daily lives and will continue to be so in the future.
