Money Story: From Barter to Blockchain

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Money Story

The big bang led to the creation of the Universe 13.7 billion years ago, and life on our planet appeared 3.8 billion years ago. Approximately 1.9 million years ago, hominids appeared, and 7000 years ago money was invented.

History of money: origin and origin, evolution from barter to blockchain

Not everyone had it all. There was something abundant, and people always needed something else that the other person had. Thus, they began to exchange their surplus assets for what they needed.

Imagine that Vanya had extra apples, and Masha had extra oranges: they could just exchange fruits with each other.

There were several things in the world that used almost everything: salt, seeds, sheep and cows. They began to fulfill the role of commodity money. If our heroes had any of this, then they could use it to get what they wanted.

People knew that at any given time there were no people on earth who would refuse to offer commodity money. These were assets that everyone used, so they were valued. The system turned out to be quite simple.

However, commodity money is not without some drawbacks. Transferring bags of seeds to another city was difficult. In addition, their storage was also a huge problem. If stored for a long period of time, they will die.

The smartest of people again began to wonder: “Is there something that is easier to carry and store, and that it is useful?”

The answer is metals

Metals were easier to carry, share and store, and they were few on the ground, which added value to them. Countries and kingdoms began to mint their coins of different weights, on which there was a seal. The seal guaranteed the weight and authenticity of the coin.

By this time, people were no longer in such conditions when everything was done for survival.

The value of each coin was determined by the material from which it is made. Depending on the metal used and the weight of the coin, its value was determined.

The coins were mainly made of gold and silver, which were difficult to obtain and which did not corrode, which ensured a stable weight. Because they were easy to carry, people went even further by using them as jewelry so that they would always remain at their disposal. At the same time, others could see how rich they are.

But this caused another problem: the possibility of theft.

Temples came to the rescue

It was believed that the gods live in temples, and precious metals also found their home here. People began to keep money in temples, because no one dared to steal something from God. Thus, it was believed that the coins were safe.

As soon as people put their gold in the temple, the priest gave them a paper receipt, which indicated the amount of gold brought. The priest promised that he would not deny the contribution of coins and values ​​to the bearer of the receipt.

Temples came to the rescue

It was believed that the gods live in temples, and precious metals also found their home here. People began to keep money in temples, because no one dared to steal something from God. Thus, it was believed that the coins were safe.

As soon as people put their gold in the temple, the priest gave them a paper receipt, which indicated the amount of gold brought. The priest promised that he would not deny the contribution of coins and values ​​to the bearer of the receipt.

Exchange rate growth

Nowadays, there is no scarce amount of precious metal behind currencies and the value of money does not depend on the value of gold. It depends on the stability of the government in whose jurisdiction such money is issued and used. Now the value of money is given to the reputation of the government.

In fact, the role of money is played by securities for which we receive goods and services. But you won’t get gold if you go to the bank and present a paper bill (like a receipt in the Middle Ages).

Since central authorities, such as banks and governments, all the time controlled the value of securities, trying to make them more efficient, they were able to replace these securities with the valuable numbers stored on a computer.

Currencies become electronic

All this may seem ridiculous. Firstly, banks replaced gold with papers for presentation, and secondly, they added value to these securities, not backing them with real gold.

The same cycle was repeated again, and the banks said:

People can still steal your paper money – they are still in danger. Why don’t you hand over paper money to the bank, and in return we will make a record on our computer, which will tell you how much money we owe you? Each time you come to the bank for paper money, we will return it to you.

Such a proposal seemed reasonable to people. Behind these numbers on computers really were deposited paper money.

Banks make new money whenever they give loans. For example, you take a loan of $ 10 from a bank. The bank will not give you strangers $ 10. Instead, he will simply deposit $ 10 in your account in the form of a debt receipt. You will be able to spend a $ 10 debt receipt in the same way you would spend the actual $ 10 by creating a replacement money. This is similar to what happened when people replaced gold with papers.

But if each of us goes to the bank and at the same time requires cash from the accounts, then the cash in the bank will cease to be enough.

Money, which used to depend on the value of a rare metal, has now become just a number on someone else’s computer.

At the dawn of the XXI century, the smartest of us again began to wonder: “If money is just some kind of numbers in a computer, is there any way to compare them with scarce resources? And do they need to be stored on a centralized power computer? ”

Cryptocurrency Dawn

The world is now connected to the Internet – everyone has it at their fingertips. Computers make us more efficient at what we do. What used to take days now takes minutes.

An integral part of our life has become computing power, the value of which is increasing, like gold for our ancestors. And when smart people asked the question: “Can we make a currency backed by computing power?”, The answer was yes, and this led us to cryptocurrencies and blockchain.

So what is the money

People traded long before money appeared. They exchanged with people they trusted. These people believed in the same stories that we did: about the gods, about mythological creatures, etc.

Money is a story that everyone believes in.

We believe in this because everyone else believes in it. History and fiction add value to money, and they are becoming more abstract as the complexity of money technology has risen sharply for our generation.

Are cryptocurrencies a money grail

Yes at the moment! Until something better appears. Cryptocurrencies are decentralized, but this does not mean that everyone will get an equal share. This is one of the misconceptions that you often hear.

Question: “If cryptocurrencies are decentralized, will everyone get equal parts?”

Answer: “No!”

If the currency will flourish in the long run, then it must be provided with a limited resource. The disadvantage is not equally distributed among all, otherwise it would not be a disadvantage.

Thus, money in its structure and properties is such that in society there must be both rich and poor, so that there is at least some value. There must be some people who have excess, while others should strive for such excess.

With the advent of cryptocurrencies, power can change hands, but that will not change how society as a whole functions.

Kings come and go, and money remains forever.

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