Have you ever wondered why do we work? Or look up for a job? All our endeavors in terms of work are perhaps in order to earn money. This in turn is used to fulfill our other needs or to avail services of different types.
Money is the representation of a value that we attach to a product for economic exchange. Money is directly proportional to power and serves as a link between the past and the present.
The Barter System
As we throw a glance on the history of money, we notice that the most popular and ancient system of trading goods has been the barter system. This system is as old as the mankind itself. Though it is very much in use today also in the form of informal dealings between people especially for the exchange of services. This system is actually the backbone of our societal structure.
In order to add variety to his life in terms of food, necessities and luxuries, man started exchanging his products and services with that of others. With the passage of time and progress of civilization, man realized that under this system there was no standardized measure for exchange. Hence, the need to rectify the system was felt.
The Age of Metal Coins
And that was the time that the metal coins came to forefront in different forms as gold coins, silver coins, bronze coins, etc. Now man started dealing in things with coins. This was the beginning of standardization of money. Coins proved to be a major breakthrough at that time. It allowed people to settle the business by count instead of weight as was prevalent in the barter system.
The formulation of a currency also helped people to perceive an apt price for their goods. It came along with an opportunity to invest in something that had the potential to become big in future. But this system again had a major drawback. That was the weight and the cost of currency itself as real metals were used in minting of the coins. It was really difficult to carry a large amount of coins for big transactions. So this system was not sufficient to cater to the growing abundance. Moreover, keeping a check on the purity of metal was another area of concern.
The Legal Tender
As our indulgence in the things increased with the increase in the world population, the need to restructure the monetary system became all the more evident. This was the genesis of the money that we popularly use today in the form of a legal tender. A legal tender is basically a kind of money that can be recognized as a suitable payment for any type of debt. Currency/ Bank notes are generally the legal tenders used in a country. They are controlled by a central monetary agency in all the countries.
It was only in late 19th century and early 20th century that the dollar became popular as a new currency. In 1865, the world standardized printing of notes for the first time. Different countries across the globe follow different currencies, so much so that almost 180 currencies are in use by 195 countries. This actually means that while transacting globally in cash we need to exchange our currency with the currency of the area where it is to be used.
The Digital Payments
The cash was then backed up by plastic money or digital payments. It became a vogue at the very outset to carry ATM cards in the wallet in the inception of the 21st century. But the last decade has seen a major shift. Now the use of cash is substituted by digital payments in the form of credit cards, debit cards, online banking and apps.
The internet boom has paced up the e- commerce. Digital payments like UPI, Google pay, Paytm etc. allow intermediary monetary institutions like banks to expedite transactions. Thus digital payments have accelerated the process of online transactions. The invention of QR code has further eased the procedure. Finally the internet is successful in roping the common man who was earlier scared of using online mode for business proceedings.
The use of technology to pay for various kinds of goods and services has revolutionized the world on monetary front. It saves time and helps in timely delivery of goods as the payment defaults are not there. However, all these transactions are still under the control of centralized agencies of the state. In India it is controlled by The Reserve Bank of India.
The Digital Currency
But today we are witnessing the rise of a new mode of dealings in the form of virtual currency widely known as Cryptocurrency. Crypto coin originated somewhere in 2008 in the form of Bitcoin. Today it is the most intricate type of currency in the ages. Since then it has influenced our lives to such a great extent that some experts now refer to it as the Future of Money.
Cryptocurrency is ready to sweep the whole world as it is powered by the possibilities which will put an end to the loopholes of the existing one. The use of Cryptocurrency will magnify in quantum with the advent of NFTs ( Non Fungible Tokens) – i.e. collectible digital creations/ assets that are unique and irreplaceable.
The transformation of money from barter to Cryptocurrency i.e. Bitcoin and Altcoin and NFTs i.e. Non-Fungible-Tokens is all set to open up a whole new world of possibilities for the mankind in the global economy.
Though it is yet not known how much time will it take for Cryptocurrency to overpower our centralized currencies, but the day is surely not far when we will be trading everything in Bitcoins or some other modified crypto units instead of dollars, pounds or rupees. For those who don’t believe, the words of famous economist and political thinker Karl Marx can be read again: “Bring paper money into a country where this use of paper is unknown, and everyone will laugh at your subjective imagination.”
