The Evolution Of Money, From Barter To Bitcoin

By Author: George Philip
Total Articles: 5
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If necessity is the mother of invention, money surely is its favorite child. Money as we know it today wasn’t invented by the stroke of a genius, but years and years of a process that stemmed from a need.

Barter – A tradition as old as time

In the olden times, a person harvesting corn could exchange his surplus to obtain some milk. Or a fisher-man could exchange some fish for a pair of shoes from a shoe-maker. This practice of trade-off prevailed since the primitive years of civilization. This trade off, also known as bartering, was a direct exchange of goods and services that depended on a mutual agreement of trade. For instance, if one party wanted to exchange their wheat for the hunting of a deer, they had to engage with a party who deemed this as fair-trade, making this whole arrangement a little difficult to execute.

Commodities – One step forward

Eventually, a type of currency involving easily traded items, such as, animal skin, salt, weapons, etc., took over. Also known as ‘commodity money’, these goods served as a medium of exchange. This circulation also gave way to the assessment ...
... of value of the products being traded. However, these commodities became inconvenient for commercial trade, as their value wasn’t universal. Items were also perishable in nature at times and had to be traded as a whole.

Metal – A move in the right direction

Metal was the next big thing in the world of money. At the beginning, metal was used in its natural state, and later it was transformed into objects such as rings and bracelets. The trading of such metal required its purity and weight assessment with each transaction. A way to deal with this was to give metal money a definite form and weight, along with a mark authenticating its value and indicating the person responsible for issuing it.

Coins – The start of something new

Around the 7th century BC, the first coins that resemble modern-day coins appeared in the region of Lydia, now western Turkey. The coins were made from electrum, a natural mix of silver and gold, and stamped with pictures that acted as denominations. This was the first time an industrial facility called a ‘mint’ was used to manufacture coins to be used as currency. This process of creating currency is called minting.

Currency notes – The penultimate transformation

In the Middle Ages, another practice of keeping valuables with a goldsmith was also in trend. The goldsmith issued a receipt as a guarantee against the valuables. With time people started exchanging these receipts hand to hand, giving rise to paper money. The rise in paper money allowed for an imminent increase in international trade. The technique used for printing paper notes also underwent massive evolution to bring it to its modern-day form, assuring its security and durability.

Digitization – Shaping up the modern world

The 21st century brought with it the era of digitization, and like everything else, money was also digitized. With the option of mobile payments one can render money for a product or service through a portable electronic medium, using a card or a payment transfer platform. With the click of a button and tap of a card, money can transfer from account to account anywhere across the world.

All countries developed a monetary system and appointed a central authority of issuing coins and notes and mediating trade between two parties. The government also controlled the counterfeiting of currency and secured the power to pay.

Cryptocurrency – The new world order

To challenge this notion of a centralized authority governing all transactions, a decentralized currency - Cryptocurrency was born with early efforts starting from 1983. Cryptocurrency does not exist in a physical form and is not issued by a central authority. It is a form of digital asset that is distributed across a large number of computers. It uses blockchain, which is a decentralized ledger of transactions across a peer-to-peer network. In 2009, Bitcoin became the first established cryptocurrency.

Regardless of the forms it takes to suit the need of the hour, money has and will remain the median of mankind's existence.