The general definition of money is- something accepted by a person in exchange for resources, services, or goods. Meanwhile, each country has its own type of exchange system of paper currency and coins. However, this exchange system has been changing from the past many years.
Thus, in the history of money, there are numerous things you will get to know. If you are also interested to know much more historical parts of money, then this post would be great for you. Here we have discussed various aspects of money, its history, its types, and much more. So, keep reading my friend!
Commodity Money And Bartering
In the old age, people bartered. Now you will think about what it is, so don’t worry, we will tell you about the barter. Well, bartering is the exchange of services or goods for other services or goods. Let’s understand, with an example- a person may exchange a bag of beans for a bag of rice, or people may repair the wheel of a wagon in a swap of some coffee and blanket. These methods called bartering. But the critical problem with this system is that there was no standardized exchange rate. So, to solve this problem, people make another system of exchanging that was called a commodity currency system.
A commodity is a general thing that is utilized by people in a society. Some things like cattle, tea, salt, seeds, and tobacco were considered as commodities and since were people utilized as currency. But using the commodities system creates complexities. Therefore, this system was also not working well.
Paper Money And Coins
Around 5000 B.C, the Lydians are the first western world that creates coins with the use of metal objects as money. The reason behind using metal is it was accessible to available and easy to use an object as well as could be recycled. Shortly, almost every country making its own coins series with precise value. When coins had an exact value, then it became simple to compare the price of the product.
Non-precious coins and paper currency use, commodity money develops into the representative currency . Moreover, in the 19th century, mostly every currency was made by the representative currency system.
Well, after some time the representative currency has replaced by fiat money. Now, the currency’s value has declared by the government decree or fiat.
ERMA was stared with the bank of America project to develop the digital banking industry. Meanwhile, (MICR) was part of ERMA and MICR is a short of magnetic ink character recognition. MICR is able to read unique numbers that also make tracking and accounting transactions process easy.
Bitcoin is a cryptocurrency that was released in 2009 as an open-source application. Bitcoin is a digital resource that can be a swap for services, products, or other currencies. Meanwhile, it ensures the security of financial transactions and verifies the resource transfer. However, it is working with the help of blockchains that is designed for resistance to data modification.
Furthermore, in 2018, there were a number of online cryptocurrencies available, and the quantity continues growing.