The Evolution of Money from Start To Now

The money story starts way back when humans traded instead of fighting for stuff. This switch had big effects on how we organize our society. We went from a situation with winners and losers to one where everyone could gain something from trading.

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So, money is super important in our society. It's how we tell each other what stuff is worth.

In history, we had different ways to use money. But all of them did specific things. Before we chat about the kinds of money, let's look at what makes something money.

Money's got three jobs:

• It has to be something everyone agrees to use for trading.
• It needs to keep its value over time so you can save it.
• It should easily show how much stuff is worth.

And money's got some features:

• It should last a long time.
• You should be able to carry it around.
• You can break it into smaller pieces.
• It should be hard to fake.

One big reason we left bartering is the "double coincidence of needs." It's like if you have bananas but want oranges, you need someone who has oranges and wants bananas. That's tricky on a big scale. So, we had to find a better way, and that's where our money journey began.

As we moved through history, we found better and better ways to do money stuff, so we had money upgrades.

First, we had money goods

People realized some things would always have value because they had value for a long time. Gold was a winner, but things like alcohol, cannabis, salt, or tea could also be money.

People knew these things would work as money, so they used them. This made it easier to trade without needing a perfect match between what you had and what you wanted. The cool thing about money goods is that the value is in the thing itself.

Then, gold became even cooler because it got made into coins, and kings started controlling how much money was around. This made things easier since you didn't have to weigh gold all the time.

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But this had some problems. Because the process was secret, the kings could put less gold in the coins, and people still accepted them as if they had more. People also started tearing off bits from the coins to trade. So, we needed an upgrade.

That's when we got representative money

It was even less clear because it was just a promise that you could exchange it for something valuable. We used banknotes and coins made of cheap stuff to show value. You had to trust the banks to have enough valuable stuff to back the money.

The most famous type of this was the gold standard, where you could exchange a banknote for actual gold. But it still had problems because banks often made more money than they had gold. So, we got state-issued notes through central banks.

Then came FIAT money

This is the money we use the most now. It doesn't have its own value, and it's not tied to anything like gold. The government says it's money, and that's that.

But it's got issues too. The government can print more money whenever they want, which can make prices go up and hurt the value of your savings. So, it's not very stable, and it depends a lot on trust.

With the digital age, FIAT money became digital too, and banks can create new money as debt. This can also cause inflation, which is when prices go up a lot.

But, even with these problems, we've seen a lot of economic growth during the FIAT money era. So, it's not all bad. Just remember, it works because we trust a not-so-transparent central authority.

Cryptocurrencies

And now, we have cryptocurrencies, a totally digital kind of money. We won't get into all the details here, but different kinds of money have different effects.

Key things about money:

• Money can take many forms, but it must do certain jobs and have certain features.
• We should be concerned about inflation that doesn't serve the majority's needs with FIAT money.

Thank You for Reading