The history of money: from barter to mobile payments

 

In ancient times, people used to barter using the items, livestock and property they had in hand to obtain the items they needed. It was not until 600 BC that people invented money to facilitate transactions and tried to set an etc. A fair limit on the amount that is truly deserved, and constantly evolving on this basis to try to create easier ways to buy and sell, especially after some countries opened up to each other, currency quickly became a political tool for taxation and rule to support elites classes and armies, but on the other hand it has also promoted stability and the peaceful exchange of goods, information, services throughout history.

Humanity has turned to paper money over thousands of years, and with the beginning of the Internet revolution, it has turned to digital currency. Although currency has different forms, it is still essentially a means of exchange, a measure of value, and Repositories of real wealth, such as gold and silver. But it has also begun to take the form of strengthening relations between countries and strengthening friendships, and on the other hand, it has also created clear distinctions between social classes, between developing and developed countries.

9000 BC: Bartering

Barter is a method of purchasing that relies on making the item itself its price. When a person needs a commodity, he needs to exchange it with another person for more than he needs. For example, if you need meat from your neighbor, you might need to provide him with a certain amount of fruit.

The quantity of materials used in bartering has established customs in various regions. For example, in one region, a sheep can be exchanged for 50 fish, while in another region, it can be exchanged for 4 chickens. In one area, an apple can be exchanged for two potatoes, while in another area, it may be four, and a bag of rice can be exchanged for two bags of wheat. Therefore, the value of an item will vary depending on its rarity, or how easy it is to obtain.

In the past, the process of barter also applied to services, so the value of the goods could also be exchanged for the labor paid by the other party. For example, if a person agreed to let another person build a house for him, then, in return, he would give The other party makes a statue, or gives the other party many bags of grain, or many livestock, etc.

However, such transactions were very energy-consuming and time-consuming, and caused some problems in transactions between people at that time. That is, it was impossible to evaluate the price of items when bartering, and the items obtained in the end may not be what they wanted. One more bartering process is required with another person.

One of the most famous substances used for exchange in the past, especially during the Stone Age, was a "black volcanic stone". In 9000 BC, people relied on livestock, grain, and crops as materials in the barter process, and later certain materials were identified as currency in the purchase process, including salt, animal skins, and weapons.

The oldest known barter process dates back to the Stone Age, when hunters exchanged flint weapons and other tools.

5000 BC: Central Market

As the population increased and products diversified, the volume of transactions between people increased rapidly, so much so that each village set up a common hut - similar to a central market, where merchants delivered their goods Give it to the central market management, which is responsible for conducting transactions. At the end of the day's trading, merchants and producers can get their due profits after paying taxes and fees.

As populations increased significantly and time passed, bartering became more difficult and the problem of calculating fees and taxes became more complex, explaining why people looked for new equivalents for the barter value.

5000 BC to 3000 BC: From barley to shekel

The shekel appeared in Mesopotamia and gave rise to the first simplified form of the concept of "property" - farmers stored their grain in temples and recorded their storage on clay tablets, They then receive a "receipt" recording the amount of shekels they deposited. The shekel was originally used as a unit of weight, with 180 shekels equaling approximately 11 grams, but over time it developed into a payment currency.

Barley, on the other hand, is primarily used to determine the value of these symbols, which are units of account. Over a period of time, people began to use copper, but the latter was quickly replaced by silver. In this case, the temples (the financiers and controllers of most trade) established the relationship between barley, silver and other currencies. exchange rates, thus offering the opportunity to make payments using any of them.

1800 BC: Ideas about banks

The Roman Empire started developing the idea of banks around 1800 BC, which could provide loans and accept deposits from individuals, so this is considered the first form of contemporary banking, but later, after the collapse of the Roman Empire, this Institutions also disappeared.

1200 B.C.: Shells

After the increase in product diversity and the general increase in population made the barter process difficult, people began to try to rely on a new unified valuable equivalent to determine the basic value of the barter process. So they began to try to use shells, animals Furs and even ivory, etc., and began to price products based on new equivalents, such as one ivory being equivalent to 100 bags of wheat, etc.

This kind of barter trade was evident in the Americas, where people relied on shells to complete these transactions, and deposit shells were also common in Africa, Europe, Asia, and Australia, thus giving rise to the first successful form of international trade. , and currency has also become a method or language of communication between people.

But with the beginning of foreign trade (exports and imports) between countries, the problem of value differences between specific things used in some areas and other areas arose, because things that are valuable because of scarcity in one area are valuable in another area. An area has no value because it is common, which paves the way for the emergence of coins.

1100 BC: The Origin of Coin

Humanity and foreign trade need something with the same value to be able to agree on its use, and this kind of thing needs to be recognized by the country, or made by the government to gain legitimacy. In addition, it also needs to agree on its scarcity and value. , making it generally difficult to obtain, the most important of which are its divisibility, wealth preservation and non-perishability, under such circumstances, coins appeared. This currency is used in most parts of the world. At that time, in addition to gold and silver, people also used substances such as copper, iron, obsidian (a gemstone), amber, beads, and lead as coins.

This practice first started in China. At that time, the Chinese began to use small objects made of bronze to get the things they wanted, such as weapons and arrows. The purpose was to make it easier to carry the value of the goods and to reduce their size and danger, especially if these objects were weapons. hour. That's it, until they grow to the size of a "money" - the latter being hollow to make it easier to bundle them together. And this idea came from Emperor Yongle during the Ming Dynasty of China.

600 BC: First official currency

Although the idea of using metals in buying and selling began to emerge, the first officially minted coins appeared in the kingdom of Lydia, located in what is today western Turkey, where king Aytes mixed silver and gold to create amber. coins to pay military salaries and to distinguish different currency denominations with different images. The emergence of this currency stimulated the country's trade and made it the richest empire in Asia at the time.

Overall, the idea of making coins out of gold, silver or even bronze was a good one as countries recognized their value, and what further increased their acceptance was the quality given to them by the seal patterns cast on them. Legitimacy, such as the casting of the image of the emperor or the symbols representing the country, were thus accepted and disseminated by states, and also facilitated their dissemination internationally, between empires and continents.

With the development of countries and changes in the world's political map, people's demand for coins has further increased, but the source of minerals has become limited, which has caused some countries to reduce the proportion of precious metals in their currencies, causing their value to decline. On the other hand, , as some empires collapsed and their currencies lost legitimacy and became worthless, the need for alternatives arose.

600 B.C.: The Origin of Paper Money

It was also during that period that the Chinese in the Tang Dynasty began to try to create another currency concept to facilitate merchants traveling between countries to store their money instead of being robbed and stolen, and to reduce its weight. In such a situation Next, they decided to use notes to prove the amount of money they owned without having to carry it around with them.

Made from paper made from tree bark, this note is another way of proving the amount of money a person holds. Its owner can deposit the money to one person and receive it from the other. Obtain a deposit guarantee, and when someone comes to withdraw the note, they can take away the corresponding amount. For five centuries, China adopted this method of trading.

In order to prevent forgery and fraud, China has established a complete financial system and designated a reliable institution to store currency, the government treasury, and stamped these bills with a scarlet seal to prevent forgery and manipulation. This is also the method used by modern banknotes.

AD 1250-1290: Paper money and its corresponding gold value

Between 1279 and 1367 AD, the Chinese began to fully use paper money to replace coinage and made it the official currency of the country. Later, paper money with a value equivalent to gold and silver appeared. Italian traveler Marco Polo commented on what he saw in the minting center of the time (now Beijing): "Chemists spent centuries turning metals into gold, while the Chinese turned paper into gold. It became money.”

When China stopped using paper money in the mid-15th century, coinage once again became the most popular form of currency in China and the world.

Later, also during that period, Florence also minted the gold coin "florin" and it was widely used throughout Europe, thus encouraging and paving the way for international trade. Marco Polo's trip to China introduced the concept of paper money to Europe and laid the foundation for its future application.

1400 AD: Bank

The concept of banking and commercial debt emerged during the Middle Ages, which is also when lending began, as Italian merchants began financing other merchants' commercial travels and making huge profits from it.

By the early 19th century, banks had become reliable organizations, and the concept of reserve banking began to emerge—a system that supported only a small portion of bank deposits available for withdrawal as cash. Given that individuals typically don't withdraw their money all at once, banks also discovered the possibility of lending more money, which was seen as a huge step in monetary history.

After banks established credit business, bills of exchange and bonds followed. This was also the second major revolution in the rise of currency. Governments and large corporations issue bonds as a way to borrow money from a wider range of people and institutions than banks, and over time they have become part of the global economy.

By the mid-18th century, London's bond market was booming. UK government bonds are among the most traded securities and have strong appeal to foreign investors - especially the Dutch - so this is considered a major financial expansion.

1660 AD: Printing of Europe's first paper money

Due to lack of credibility, paper money was not used in Europe until the 17th century AD. At that time, because Europe had colonies all over the world, it also had many minerals that could be used to mint coins.

But the first paper money issued by European governments was actually issued by their colonial governments in North America. They often ran out of cash due to long shipping times between Europe and its colonies. Under such circumstances, the colonial government did not resume barter, but instead issued bonds as currency into circulation.

On the other hand, precious metals are regarded as currency in the world and are sometimes exchanged in the form of financial paper bonds. If they cannot be exchanged, it means that this financial security is "fake." The first banknote printing in Europe occurred in 1660 at the Bank of Stockholm, but the bank declared bankruptcy within just four years because it could no longer honor the value of the gold notes it issued.

In 1669, the Bank of Scotland also issued banknotes and successfully managed the process, which helped facilitate the transition from metallic currency to paper currency, thereby increasing global trade, while some banks and governments began to switch from other The state purchased currency, which is also considered the first currency market.

Paper money derives its value from the guarantee of the government of the country in which it is issued, rather than from its ability to be converted into commodity currency. Therefore, it acquires the status of "fiat currency" because it is like a promise provided by the issuer and can be used at the holder's discretion. Convert it to any "currency" when you want. The Industrial Revolution also promoted the circulation of currency, making its circulation scope wider and wider.

1797 AD: Britain and Paper Money

The United Kingdom announced the issuance of the world's first one-pound and two-pound banknotes, and set February 26, 1797 as the first issuance date. But the specific theory remains to be elaborated on. Was China the first country to issue banknotes, or was it, as the UK claims, the first to print banknotes in the form we now know and make them globally recognized? What about the countries within the scope of circulation? You know, the mechanics and concepts of both banknotes are almost the same.

The transition to paper money in Europe increased the volume of international trade, so banks and the ruling class began buying currency from other countries and in doing so established the first currency markets. The political stability of some European governments affected the value of the currencies they issued, which in turn affected those countries' ability to trade in growing international markets.

Competition between countries often leads to "currency wars," in which one country attempts to change the value of its opponent's currency by either appreciating its currency and making its goods more expensive, or by devaluing its currency and reducing its purchasing power, or even The purpose of completely eradicating this currency.

1871 AD: Remittances

The Industrial Revolution brought major changes to the global currency circulation. Based on this, Western Union began to facilitate remittance transactions and send these funds to all parts of the world.

AD 1944: “Price in Gold”

Deposit bonds soon turned into banknotes. In 1944, the Bretton Woods Agreement was reached under the auspices of the United States, using gold as the basis for determining the value of each country's currency. The basis for each country to print a large number of banknotes was the gold it owned. , therefore, the exchange of banknotes began to be based on a clear and stable value basis.

During that period, the United States emerged from World War II as the world's dominant military and economic power, giving it enough weight to force other countries to accept a system that pegged all currencies to the value of the U.S. dollar. , it pledges to keep the value of its currency stable relative to gold, while other countries need to commit to adopting the dollar as their reserve currency.

Under this agreement, the International Monetary Fund was established to ensure that member countries had access to funds to help anchor the value of their currencies. Member countries contribute capital to the IMF based on the size of their economies and withdraw funds from the IMF in proportion to their quotas when reserves are needed to support their currencies.

1946 AD: Credit Cards

The credit card function began with a man named John Bigkins who worked at Flatbush National Bank in Brooklyn. He used the "charge-and-charge" card he invented to provide important customers of his bank. Offers privileges that can be used within the local community and between specific individuals, and since this is an experimental card, it will only be used for specific transactions between stores and banks.

The payment method is that when a customer uses the card to make a purchase in a store that cooperates with the bank, he only needs to present the card to complete the purchase process, and then the store takes over the rest of the work. The merchant goes to the bank and deposits it into the bank customer's account. Vouchers are purchased and the bank will then pay them before invoicing the customer.

Since then, large banks such as American Express and Visa began to introduce Bigkins' invention in the early 1950s, and the "Diners Club" started in New York used hard materials to make cards for the first time and began to cooperate with them. Merchants charge a fee, and demand increases over time.

Within a year, credit cards began to be made of plastic, much like today's cards, and IBM developed enhanced security measures for the cards, including a magnetic strip on the back, along with the customer's basic data, card expiration date and account number. This idea was further developed and spread, and became recognized worldwide.

1971 AD: The dollar’s peg to gold is removed

This standard existed until gold was adopted as the value for the amount of banknotes printed by each country until it was abolished in 1971. At that time, countries abolished such standards and began to complete transactions based on confidence in a country's government's economy. When the United States experienced a series of economic problems in the early 1970s, then-U.S. President Richard Nixon It was decided that it was necessary to end the existence of the system 30 years after its establishment.

Since then, the value of the U.S. dollar, along with other currencies, is no longer pegged to gold, but has entered a new stage, the "floating exchange rate" stage, which allows currency exchange rates to change freely according to the market supply and demand mechanism.

The beginning of the new millennium: “fiat currency”

A currency that is not backed by gold or any other precious metal or any other currency, such as the US dollar, is known as a "legal currency", i.e. a currency whose legitimacy is declared by a government, and its priority is increasingly evident around the world. 

The value of a currency is affected by many factors, which in turn affect the foreign exchange market, such as the price of precious metals such as gold, central bank credit or a country's public debt, etc.

The most important factor in this market is the confidence brought by the currency itself, and this confidence usually depends on the market's overall impression of the country and its currency, as well as the laws of supply and demand, which will cause the value of the currency to change.

This is why the value of currency is regulated, the state needs to monitor the amount of currency in circulation and take steps to devalue or appreciate the currency if necessary.

1997 AD: Digital Payments

The emergence of the Internet has brought another revolution to the field of currency circulation, and thus the concept of "digital payment" has emerged, that is, electronic transfers and e-commerce through the Internet.

With the advent of the new millennium and the large-scale use of smartphones, this type of payment has gradually become a "mobile wallet".

2008 AD: Digital Currency

The increase in the amount of money printed in the market causes the value of goods and services to rise, and due to the increase in demand for paper money, prices will rise, leading to a decrease in the value of paper money, and the phenomenon of "inflation" occurs. The existing financial system will "restrict the flow of funds between individuals" to achieve tax control and combat money laundering. When the external transfer of funds is regulated by a country, digital currencies emerged in response to the situation to evade such control and restrictions.

In 2008 came Bitcoin, a cryptocurrency developed by an unknown group under the pseudonym "Satoshi Nakamoto", which was created within the framework of a process called "mining", which Conducted by computers equipped with high computing power, these devices form a decentralized network that guarantees the conduct of transactions and the verification of buying and selling operations through known means, the so-called "blockchain technology".

This type of currency is designed to electronically transfer funds from one person to another without the need for a central authority to verify the validity of this transaction. This cryptocurrency is traded on specialized platforms at prices determined by the laws of supply and demand. Bitcoin is not the only digital currency, but just the beginning of a series of others.

2014 AD: Mobile payments

In line with the huge developments witnessed in the new millennium, many users wanted simpler and faster ways to pay online, so Apple launched the "Apple Pay" service to enable users to complete purchases through mobile payments, while Barclays Cards followed suit, introducing a new way to make electronic payments using smart bracelets, and this method began to spread across major companies and various smart devices.

Then came the near field communication technology (NFC) - as a mobile electronic payment method, users only need to bring their mobile phones close to the "card readers" in stores that support this technology, and they can use their mobile phones for contactless payments. Payments are deducted very quickly and can be unlocked via fingerprint or face recognition to complete the payment process.