History of money — why crypto is here to stay 💸
Money communicates value and acts as a medium of exchange.
For something to be considered money, it must be durable, portable, have a limited supply, and be accepted by many.
Instead of thinking about the definition of money, have you ever thought about how it has changed?
Long ago, humans exchanged goods and services for other goods and services. This was known as the barter system.
Example of barter system: I trade you 1 goat for 25 bananas.
However, it became difficult to keep track of the different goods and services you were owed and indebted yourself.
Civilization eventually introduced new ways to communicate value in the forms of tangible goods, that were more bite-size.
Shells, rare rocks, and “precious metals, [like gold], quickly became the most popular way of [communicating value] because they’re scarce, transportable, divisible, and universally valued for aesthetic purposes” (Kernel, 2022).
This invention was adopted over thousands of years and over many repeat interactions.
Then nothing for centuries.
Due to the heavy nature of precious metals, it became difficult to carry large sums.
Instead of carrying gold, people eventually deposited their metals with someone trustworthy and received a paper certificate. This certificate was now used to trade.
The move to paper was highly controversial and took approximately 400 years for paper certificates to become globally accepted (Kernel, 2022).
In 1950, a diner in the USA debuted a card when a businessman forgot his wallet and couldn’t pay for dinner.
The businessman proposed the idea of a small cardboard card. Members could use this as a charge card and pay the bill in full every month.
The diner card sparked a history of credit card innovation. However, it took over 60 years for this method to be trusted and accepted.
The technology of money transforms as time progresses.
The first major technological evolution was to exchange something you can’t eat: shells, beads, metals etc.
Then came paper and plastic money.
Pause: Think about the definition of money.
Cryptocurrencies represent a new form of “doing money”.
Since its inception in 2009, there are more than 80 million crypto wallet holders, globally (Statista, 2022).
Despite this change from tangible expressions of wealth to an abstract medium, people are accepting it.
Instead of only believing in the CAD, USD, EURO, etc, 80 million people believe in crypto, a borderless way of transacting.
Cryptos that will withstand the sands of time will be digitally durable (strongly encrypted), portable, have a limited supply, and accepted by many.
Are you seeing the pattern now?
Comment below or just think about the following:
- When was the last time you used cash?
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