Unlike what many people think, euros, dollars, rubles or yen are money whose life span is very limited. In fact, they are all a type of money known as a “fiat” or fiduciary, officially born in 1971, which is not backed by gold or anything else. It’s just paper or numbers on a computer.
In fact, it is not normal to see how many people believe in money, but this is wrong, because we are not trained to understand what money is, its origin and evolution. And all this makes us believe that we were born with the same money that has always existed.
The origins of money are as old as the history of mankind itself, but the first economic exchanges between people are far from the current reality. And among all this, the evolution of money played an important role. From barter, the appearance of the first currencies, the arrival of current paper money, to cryptocurrencies and digital currencies. Undoubtedly, this is a whole path full of achievements and huge evolutionary leaps of money, its form, usefulness and scale.
We will tell you about the history of money. A journey in which you will learn its origins, aspects and how the evolution of money led us to the emergence of Bitcoin, the money of the future.
What is money?
We will start with this definition, and then continue the story. It is best to define money as follows:
Money is a language, a way of expressing value for the exchange of goods and services between people. It is a belief, a technology designed to be able to trade and retain value over time.
Maybe some word seemed controversial to you, but read on. Now we will talk about their origin and evolution.
The beginning of the history of money
As we have already mentioned, the origin of money dates back thousands of years. The fact that a person began to live in society led to the division of labor, making people independent, and giving rise to the need to want what other people had. This led him to create exchange mechanisms.
Barter, the first form of money
You have probably heard about barter, the system of economic exchange in which you offer goods, products and services to purchase other goods, products and services that you need. This is the most basic form of money, but it is the least similar to what we know and regularly use today, and it is also difficult to apply. But, in the end, this is a way to exchange value. In addition, there are indications that barter dates back to the Paleolithic era, that is, around 15,000 BC, which corresponds to the appearance of the first form of exchange of values or money.
The idea of exchanging products such as salt for copper or hides for wheat was theoretically simple when barter appeared in the history of mankind. But the truth is that such an exchange is difficult to implement. Moreover, the parties to the barter sought to ensure the best exchange for their products. The famous “bargain” was born with the first barter, and with it its long history.
This eventually turned into a situation full of unfair exchanges. Especially because there were relations or disagreements in power between the parties, or because the goods exchanged were difficult to store, transport and negotiate in other places. All this makes barter a very inefficient and unfair form of money.
The appearance of coins: the first monetary revolution
However, the difficulty of bartering for small value exchanges began to engage human ingenuity. As a result, around 700 BC, the first coins began to be minted. A small town called Lydia is a city that houses the oldest archaeological evidence of the first coins in the world.
Later, with the conquest of Lydia by the Persians, they began to mint coins, and from there the spread of coins in the world began to grow. Peoples such as the Greeks, Romans, and Chinese served as the epicenter of the use of coins as a system of exchange for their neighbors and the peoples under their rule.
These early coins were usually made of precious metals. The Lydians minted their coins from gold and silver weighing from 4 to 60 grams. All this depends on the quality of the material, the alloy and the size of the minted coin.
Currency expansion in the world
The currency quickly became a very desirable medium of exchange. This greatly simplified the purchase process and eliminated a certain injustice that barter used to have. This is due to the fact that the value of the coin was determined by its circulation and the value of the material, the work of which was difficult to perform.
On the other hand, the appearance of coins also allowed the creation of the first binding schemes. A gold coin could be used by the king to mint a certain number of copper or even wooden coins. This is how the concept was born, according to which we can protect value, and use other representations of money to mobilize value.
In Europe, for example, Roman coins marked the point of evolution of coins that were subsequently used by the peoples of these regions until today. While in China, its currencies will do the same with the peoples of today’s India, Japan and the rest of the Asian continent.
But, despite all the antiquity behind it, today currencies are still widely used. Their practicality makes them ideal for those small exchanges where gold, silver or other metals are impractical. And although these coins were originally made of precious metals, the concept of fixing has evolved to turn coins into alloys with a small value, or production cost, compared to their exchange value.
The Origin of Today’s Money
Although the concept of banks goes back to the very principles of money circulation as such, during the Mesopotamian period of providing loans at interest, it was in the Middle Ages that they played a fundamental role in the evolution of money with the advent of paper money in Russia.
Although it is true that paper money was attributed to China in 1280, with the journey of the Venetian Marco Polo, this instrument became known outside of China.
It will take centuries for it to really be used in Europe. In the modern sense of the term, banking originated in the rich cities of northern Italy, such as Florence, Venice and Genoa, during the late Middle Ages and early Renaissance. The Bardi and Peruzzi families dominated the banking sector in Florence at the end of the XIII century, and opened branches in many other parts of Europe. Perhaps the most famous Italian bank was the Medici, founded by Juan Medici.
The first banknotes appeared in Sweden in 1661, which were issued as a “receipt” to those who put gold or other precious metal in the bank.
This is where paper money is born, backed by gold. That is, people’s gold coins, which were heavy and difficult to separate, are stored in well-protected safes in exchange for papers on which something like “This document is equivalent to this amount of gold in Bank X”was written.
Little by little, the bankers realized that few people come to demand gold, people feel comfortable trusting bankers and using securities. In this situation, bankers began to lend gold to other people, receiving interest for it.
The Swedish Parliament felt the power of the bank, and decided to establish the first central bank in history: the Swedish State Bank in 1668 with exceptional banknotes. Years later, this institution changed its name and was renamed the Central Bank of Sweden, which in 2018 celebrated its 350-year history as the oldest in the world. Only 26 years later, in 1694, the Bank of England was created, the central bank that served as a model for most of the world’s central banks.
In other words, the creation of paper money was privatized and institutionalized in governments, making it impossible to issue money to anyone. Only the central bank of the country will be able to issue valid money, taking care of the existence of the gold underlying the banknotes.
But central banks could not keep this promise for long either.
Until recently, banknotes were backed by gold, which was known as the gold standard, that is, each monetary issue produced by the country’s authorities had to be backed by a certain amount of gold. This continued until the 1970s or so, when the United States officially abandoned this promise, ceasing to use gold as a support currency in 1971.
Although there are those who think that rubles, euros or dollars are backed by gold, this is not so. Money in the form in which we know it today is not provided with anything. They are issued by the central bank of the country, which determines from its position of power that this is exactly the money that people should use.
Fiat, uncontrolled emission and loss of purchasing power
The arrival of the Bretton Woods Agreements changed everything. Since then, paper money has become the new standard of money. Money has no intrinsic value, but it has legal value. These actions, which were supposed to lead to a higher level of well-being for everyone, eventually led to the beginning of serious economic imbalances around the world.
The central banks of many countries began to issue money out of control, and we faced the first problems of the aggravation of the devaluation of purchasing power. Even the dollar, the reserve currency, has faced this reality to the point that $ 100 in 1956 would be equivalent to $ 956 today.
This problem, along with other unhealthy practices in the economy, led us to economic crises similar to the crises of 2008. Faced with this reality, there was a need for a new type of money that was not controlled by governments and central banks. No one would have thought that this would come true in 2009 with the launch of a new evolution of money.
The birth of Bitcoin, Decentralized, Private and Secure Money
The birth of Bitcoin on January 3, 2009 represents the greatest evolution of money to date. We have always considered money to be something physical, tangible, but Bitcoin has changed everything. And although we had digital money for a long time (in our bank accounts or in systems such as PayPal), the truth is that these systems were just another representation of the same model of fiat money that we were already used to.
On the other hand, Bitcoin is something completely new. A system whose value is determined by the work invested in the creation and operation of the system. And this is in addition to the trust and the dynamics of supply and demand, which depend on users. In other words, there are no central banks, there is no government that controls it. Bitcoin is autonomous in every way.
Now you just need to get a crypto wallet, the choice is great: Atomicwallet, Trustwallet, SpaceBot, Chainode Tech, Exodus, Expresscrypto, Wetez, GoFantom, Huobi Wallet, MathWallet and others, or use the services of exchanges and exchangers such as Binance, Coinbase, BITT.TEAM or WallBTC to purchase cryptocurrency.
We have witnessed a new monetary revolution, and we have the honor to become its participants. For several millennia, money has been something tangible, and now we have turned it into a digital entity in which there are no borders or restrictions. Some might think that this is a passing hobby, but now even the central banks themselves have realized their mistake by rejecting the technology and remaining in dead-end systems.
Central Bank Digital Currencies (CBDC)
They are a means of digitizing money, supported by technologies such as blockchain. But, despite this, it is still the same money that is at the mercy of the world’s elites. On the other hand, Bitcoin is absolute freedom, the spirit of anarcho-capitalism embodied in life, it is the spirit of cipherpunks, which encourages you to always respect your privacy and earn money fairly, transparently and democratically.
At this stage, seriously ask yourself: which one will you choose?