We use money every day. It seems like the world would simply screech to a halt if it were to vanish, but how did it come into our lives in the first place? What did people do before money? How can we expect it to change and make our lives easier in the future?
The history of money begins with barter of objects and services, leads to currencies, credit, and today even the bitcoin. It is a simple means by which goods and services can be bought and sold, and is now regulated by treasuries, government, and to some extent the markets as well. Money has been an integral part of how our societies have developed, sustained, and grown. It has been a driving force behind progress, international exchange, and the explosion of business that we have seen even within our own lifetimes.
Trade Prior to Money
Prior to the use of money, goods and services were procured through exchange. A dentist’s service might be bought with a chicken and some clothing, while a steady stream of vegetables might be offered for an equal exchange of milk. People offered what goods and services they could in exchange for those that they needed. While it worked, it was not always an effective system. Not only did a person need to seek out the service or items that they needed, but they also had to make sure that the person they were purchasing those from was willing to take what items or services they had in trade. It led to a time consuming, complex, and not always straight forward method of obtaining necessary services and items.
To learn more about how trade and bargaining worked, you can visit any of the following links:
- Intuit Mint: Barter system history past and present
- Public Broadcasting Service: Ancient history, money
- New World Encyclopedia: Barter
- University of Maryland: Bartering
- Mises Institute: Barter in prehistoric times
Introduction of Money
We haven’t always had money in its current form, so when did it first come into use?
Coins as currency:
Money first came into use in China as far as historical records can tell us. In around 1,100 B.C., the Chinese began using miniature bronze replicas of tools to represent and trade for services. Eventually, these small oddly shaped metal items were replaced by simpler to make circles, which became the world’s first coins.
In 600 B.C., China would make another important leap. This time, it would be to a paper currency distributed by the dynasty of the time. Meanwhile, in Europe, coins and precious metals finally caught on, and continued to be the preferred means of payment until the 1600s (A.D.). It wasn’t until paper currency was issued in the United States that it began to be used by Europe.
To learn more about the history of the introduction of money, you can visit any of the following websites:
- The Telegraph: The history of money from barter to bitcoin
- Investopia: Roots of money
- Exeter University: A comparative chronology of money
- Columbia University: Money
- Institute of Electrical and Electronics Engineers Spectrum: A brief history of money
How Money is Used Today
Today, money takes the familiar forms of currency (paper bills and coins), credit and debit cards, and digital currency such as the Bitcoin. We use it to trade for virtually everything from a pack of gum all the way up to large scale international services and shipments. The idea of going back to a trade-only economy, while nostalgic, is unrealistic after the great increases and ease in trade that currency has given us. No longer do we have to find a dentist who needs a chicken so that we can get a cleaning!
To learn more about modern money, you can visit any of the following links:
- United States Federal Reserve: Frequently asked questions
- United States Treasury: Currency denominations
- International Monetary Fund: Back to basics, what is money?
- University of North Carolina: The two functions of money
- The Smithsonian Institute: What is innovation in money today?
Money in the Future
The future of money involves more mobile payments, cryptocurrencies, and block chains; with the blockchains being a method by which we can make sure that cryptocurrencies and traded items are not being fraudulently used or replicated. While we cannot completely predict the future, we can make projections based on methods that are currently being adopted, designed, and planned. With the internet, and the internet of things, our options are becoming more dynamic, easier, faster, and nearly limitless as well as seemingly instant.
Cryptocurrency is an option that did not have a chance to come into play until wide-spread use of the internet. It is dependent on a block chain, and is pseudo-anonymous by default. This type of currency effectively turns computing power into a means of producing currency. The more computing power is available to solve problems, the more currency is added to the chain. In most cases, each “bill” is harder to print than the last, as the computerized problems become more complex with the blockchain’s continued growth. How it is distributed amongst the machines’ computing varies from system to system, and we are likely to see an even more extensive array of options as time moves on and technology continues to progress.
Mobile payment use will also continue to expand, along with more cashless peer-to-peer options. We can expect to see an increase in mobile wallets, card-based payments, carrier billing, NFC contactless options, and direct transfers. We can already send payments directly between mobile devices and bank accounts. This can be expected to continue with an addition of faster and more secure options as we head into the future.
To learn more about the various ways our monetary future may take shape, you can visit any of the links below:
- Financial services Committee: Financial services committee begins in-depth look at “the future of money”
- World Economic Forum: What is the future of money?
- Organization for Economic Co-operation and Development: The future of money
- Technology, Entertainment and Design (TED): The future of money by Neha Narula
- Forbes Magazine: The future of money
- Tufts University: Future of money