Currency is a centralised valid tender that is used as a medium of exchange in a country or a state. It helps to foster and validate transactions between a buyer and a seller. Also, currency alters the economic state of a nation.
When we are talking about currency, we are in no doubt talking about money. However, a question elicits my mind "How did we come to this stage of having money?". This is why I'd like to say a few things about the historical development or transition of currency.
BARTERING
Regardless, bartering has a lot of limitations for it couldn't sustain the trading of business or commercial transactions on a levelled ground. Take for example a fisherman who has loads of fishes is willing to get a yam and hoping to trade his fish for the yam. What if the yam seller doesn't want fish in exchange for the yam but instead wants maize, then the fisherman would have to go through the stress of offering the fish to someone who has maize and is willing to exchange it for fish before getting back to the point of taking a yam with maize. This couldn't sustain a levelled mode of business for it has no stipulated exchange rate.
- Merchandise Money: Bartering evolved into merchandise money also referred to as commodity money. Some goods and entities became more valued than others due to their efficacy and scarcity in society as compared to other commodities. Hence, they are regarded as currencies. Instances of these commodities are Cattle, Tobacco, Salts, Animal skin, Cowries, Cocoa and more. Also, this couldn't maintain the level of the medium of exchange because of the mobility absence of some of the merchandise.
Another point of why merchandise money couldn't be maintained. Think of a farmer who owns cattle and cocoa hoping to use them as a medium of exchange someday. If by any chance these two commodities got affected by some diseases and pests infections, then this is as good as losing your hard-earned money out of the blue. For these reasons, merchandise money became obsolete.
METAL MONEY
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A transition came from merchandise money into metal money when human beings discovered the durability, treasuring and beauty of metals. However, metals were considered to be very scarce as compared to other commodities and it was discovered to be exceptionally good in making weapons as compared to stones, it was also discovered to be useful in making various utensils like cups, pots, knives and spoons. Metals then became the legal tender to make transactions between a buyer and a seller. The initial method of knowing the value of your metal was purity and weighing. Over time, a development came up when each metal gets a defined weight and receives a constant value on it issued by a central body. This was how metal money was transformed into the use of coins. This makes it very easy for people to trade without having to worry about weight and purity, as it has received a definite value from the government body.
- Gold & Silver: These two precious metals fall under METAL MONEY. The discovery of gold and silver made us realise the intrinsic values of these two metals. The ability of gold and silver to possess immense and incredible properties like high ductility, high tensile strength, malleability, corrosion safety and lustrous beauty has made them have intrinsic values in society.
Also, some ancient religious beliefs stipulated that gold and silvers have some spiritual power ingrained in them which prompted the majority of these notions to carve their idols in gold and silvers.
However, the intrinsic values of these two precious stones kept glowing which prompted some countries to adopt them as the materials to be used in carving their coins.
FIAT MONEY
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All the money we've stated above could not sustain a high fraction of business or retail transactions. Hence, the invention of paper money came into play which is also known to be FIAT MONEY. Paper money which can also be called a bank note or a bill according to Northern American English is a type of money which is minted, printed and licenced by the central bank of a nation.
Fiat money has no intrinsic values ingrained in it as it's just a mere paper, but it became a valued tender because the central body that controls it declared the authorization. Thus, holding a dollar or a pound note prescribes a form of receipt of how much you own at the moment.
The invention of technology banking made paper money a little bit easier for mankind to trade with by converting your money into digits. Hence, people won't have to move around with loads of cash whenever they intend to buy goods or services.
VIRTUAL MONEY
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Talking about virtual money, this is in no doubt talking about cryptocurrency. Cryptocurrency is a digital currency which is secured by a technology known as blockchain technology. This is a currency which isn't controlled by a centralized body and it is hence totally decentralized.
The first cryptocurrency to be invented was Bitcoin. This was supposedly invented in 2009 by a man/group of people called Satoshi Nakamoto.
He/They structured the technology system such that every member of the network possess an evenly distributed equal amount of ledger copy which makes the network almost impossible to be tampered with or even hacked because by trying to hack or change details of one of the ledgers, the blockchain technology automatically recognizes that one of the copies of the ledger has shown quite a different statement as compared to the others which will therefore knock you off the network.
A current study says the blockchain technology can only be successfully hacked if more than 50% of the members of the network all over the world conform together to defraud the network because by then the technology would see the statement changes in almost all the ledgers which are nearly impossible.
The motion of the virtual currency has spanned the entire universe which has prompted some top companies to adopt it as a means of payment in their organisation.
CONCLUSION:
This article doesn't give the full details of the evolution of currencies. However, the evolution of currencies has shaped and assisted the economy of the human race in all ramifications and this is to say that TIME IS SO KIND.
PEACE!!!
