It is said “money makes the world go around” and this couldn’t be truer in modern society where the earning and spending of money has become one of the most important ways we connect with one another.
However, money has not always come from cash machines and banks. Money has a long history and has developed over thousands of years. As our society has developed, so our need for more sophisticated types of money has developed in parallel. The latest Everyday Loans blog post explores the history of money, its roots and where we are now in 2016.
Where it all began
The term money, well, it’s hard to say exactly how old it is. But when you research the term you can find out that payment of some kind was used all the way back in 2200 B.C.
But the money that they used back then is not the same that we use today. Early forms of money included shells, stones, beads and fur. For example, if you were a farmer, you would trade your corn with a shoemaker for shoes. The shoemaker would offer shoes to a butcher in exchange for meat. This concept of trade was called bartering. This eventually got to be rather difficult.
For instance if I was a farmer and went to the shoemaker with my corn and he already had enough corn, then I was out of luck. I couldn’t get a pair of shoes. To solve this problem, the next logical thing to do was to develop a type of system that anyone could use, all of the time. This invention, so to speak, was our current system of money.
Banknotes and Coinage
The first coins date back to 700 B.C. by the Lydians, a group of people that lived in what is now Turkey. Coins then spread to Greece and Rome. The worldwide use of paper money and coins took a lot longer to occur. Even into the early days of the United States, bartering or trading was still a popular way to exchange goods and services.
Nevertheless, the US congress passed the “Mint Act” on April 2, 1792. This established the coinage system of the United States, and the dollar as the official U.S. currency. Conversely, the use of paper bills did not begin until the mid-1800’s, but flourished thereafter. The first recorded use of paper money was in the 7th century in China. However, the practice did not become widespread in Europe and the UK for nearly a thousand years. Due to their transportability, bank notes became extremely popular in the UK, however counterfeiting, the forgery of banknotes, became an inherent challenge associated with bank notes. This ultimately led to the development of credit/debit cards.
A Cashless Society
For the first time in 2014, cash transactions made up fewer than half of all the payments made in the UK. The use of physical currency has been steadily declining for years as the popularity of credit cards, debit cards, contactless cards and mobile payments has soared. Therefore while the concept and fundamental principles of money has not changed, modern societies are edging towards the use of only digital money. In fact, the Danish government has brought in a law whereby retailers, including clothing retailers, restaurants and petrol stations, will be able to refuse cash.
The latest development in money uses something sounding very futuristic called cryptology. A cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Put simply, cryptocurrency is a digital virtual currency that turns electrical pulses into a code with monetary value making fraud virtually impossible.
From shells to digital transactions, money has played a crucial role in the development of our society and modernised alongside technology. Will we one day pay just by touching a finger print to a device? Do we want that?