Money is an essential and indispensable part of our daily lives. But have you ever wondered where it comes from and how it developed? Let's take a journey through the exciting history of money.
Money, a concept we often take for granted, has undergone a remarkable evolution throughout history. It all starts with bartering. Our ancestors only had the option of acquiring something by bartering goods. But what if nobody in the village wanted what you had to offer? Travelling from village to village until you found a suitable barter partner was exhausting and time-consuming.
The introduction of currencies revolutionised trade and the economy. Almost 3000 years ago, the first coins were invented, which had as much value as the material itself. The idea of metal coins spread quickly, but also had disadvantages such as weight and transport. For this reason, people began to exchange gold coins for a receipt. This gold note could be used for payments as it reflected the value of the money; the first paper money!
Today's monetary system: the fiat currency
However, the gold standard has one major disadvantage. Only as much money can be produced as there are gold reserves. Over time, however, the need arose to issue more money than the gold reserves could provide. A more flexible monetary system was therefore needed: the fiat money system.
For the first time, governments now had the freedom to control the money supply by printing currencies or creating them electronically.
What are the functions of money?
Means of payment: Money is used to pay for goods. Money is therefore the basis for "bartering" in our modern society, in which money is exchanged for products and services. However, money is also used to grant loans and pay off debts.
Standard of value or unit of account: In order for money to be exchanged for goods, the price must first be determined. Money therefore serves as a unit of account with which the value of a good can be measured and compared.
Store of value: When you earn money, you don't have to spend it immediately. You can also store the money - i.e. save it - in order to spend it at a later date or in a different place
Today, there are more than 180 different currencies used in 195 countries around the world. This currency diversity reflects the political and economic diversity of our world. All of these currencies have their own history and value, which is influenced by a variety of factors, including political stability, economic performance and trade relations.
Are cryptocurrencies the monetary system of the future?
The current fiat money system is being criticised and there is a debate as to whether it should be replaced by another system. At the same time, technological progress is opening up new possibilities. Cryptocurrencies have been strongly promoted in recent years and are being accepted by traders and companies in more and more countries. Whether cryptocurrencies replace the current monetary system or remain an alternative will become more and more of an issue in the coming years. The fact is that digitalisation is gaining ground in this area.
Electronic age:
The bank acts as custodian, even if the money is credited to me.
Digital age:
Cryptocurrencies come back as a bearer instrument, you can store them independently (ledger).
Digital gold - what makes Bitcoin valuable?
One of the reasons for this is that Bitcoin has a limited supply. In addition, the cryptocurrency is "mined", just like the analogue precious metal. Bitcoin is a digital "peer-to-peer" currency based on blockchain technology. Instead of being controlled by a central authority (such as a state or central bank), Bitcoin is controlled by a constantly growing network of participants and is therefore considered to be extremely decentralised and resistant to censorship. Furthermore, bitcoins also represent a secure exchange system. Members of the network can transfer money to each other worldwide and check all transactions themselves without the need for a bank.
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