The History of Money

In order to understand why bitcoin is crucial in our societies, let’s go back in time and understand the mechanics of money.

Here are the important historical events that existed long before we truly understand the secret of our monetary system, the banks, and important figures that crafted currency and trading in our society, by which we believe and trust that everything around us happens for the common good.

We will break it down into 3 chapters to expose to you how money works….

Chapter 1.

In ancient times people generally exchange values whenever meeting someone or another individual through different objects as a form of monetary exchange. These practices were treated as normal which were the first form of a systematic process of giving and sharing commodities. Tally was a method used by the Sumerian people to record daily transactions as the population grew in multitudes people had to record how much they owed to their neighbor or to another trader. Throughout the practice of giving and sharing, everyone became responsible to craft something valuable to interchange with one another. Sharing objects became a demand more than a privilege. Leaders learned to impose taxation in response to the growing population as demanded massive accounting. They learned that valuable objects can be stored and became re-tradable tokens. By accumulating a large number of these items, rulers earned respect from the people. Objects are kept secured in the center capital of the community.

Indigenous People
Indigenous People

People started to realize that trading their goods in exchange for a different one does not seem fair as some items lack equal value in which made some objects less valuable than the other. Most objects were easy to produce and is not scarce. A third item was necessary to be invented as an intermediary to the arising conflict between high-value objects and less valuable objects. An object that is highly regarded by everyone, an intermediary medium for exchange in cases where the interest of the other party is not agreeable to the other. They created metal money where it is durable, divisible, and able to be transmitted for long-distance trade”.

If you like this article, read and find out how Bitcoin protects you from InflationIs Bitcoin A Safe Haven in Times of Crisis? By Aaron Koenig

Early types of money

It is important to remember some remarkable nations of the world who use objects that were significant to the history of money. One of the honorable mentions was in the year 1027-256 BCE China used a metal knife as a kind of money.

Chinese Metal Knife Money
Chinese Metal Knife Money

China created the first invention of the coinage system. Rulers forge metal coins stamped with faces of the authoritarian figure, they are durable, portable, divisible, and legitimized by the authorities and is also considered with intrinsic value. They created coins with holes run through strings. The number of coins were based on the length of strings with a standardized value given per strings. Then, people learned trading with the use of metal money.

String of Chines Cash
String of Chines Cash

Another one is the Island of Yap who uses Gigantic limestones as their money.

Gigantic Limestones
Gigantic Limestones

Some have used cowry shells made by indigenous people of East Coast North America which was nearly comparable to gold. It is durable, impossible to counterfeit and not easy to acquire like silvers and metal coins.

Cowry Shells
Cowry Shells

As the economy revolves around trading, long-distance travel would cost piles of coins that were too heavy to carry. It exhausted people to drag tons after tons of metal money and thus moved them to re-invent a new form of money.

Stay tuned as we move to the next chapter of the history of money where metal money was replaced by a new object that is much lighter and is easy to carry.

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