Have you ever thought, what was it like to live thousands of years ago before money was invented? how did people trade? What was used as money?
Money has got a long history from food grains to stones/shells to metals to paper and now as we know about cryptos, the 0z and 1z which is almost invisible.
I will not go into the prehistoric era when human civilization had just started for some reason (no one really knows how, nor might ever). But the first money system was food grains along with other items like fur or meat or anything one can trade for. I would not call it "Money", but would call it "Barter System"
Ever seen the movie "Book of Eli" or "Water World"? These movies are based on what happens when the world is destroyed and very little is left? The human nature has always believed in Barter system, where they exchange things for food and water or things for things or food for food, depending on either weight or value in the eye of the beholder be it for clothing or some thing. As most of the hobbies like coin collecting or stamps collecting, are still based on this system but i wouldn't call it barter, would call it exchange.
Later on using the barter system, people also started trading in livestock for food grains or livestock for livestock or clothes, home made pottery, etc. This system carried on for many years this was called "Neolithic period" or the "Period of Stone Age"
Neolithic Age and other currencies during this period
According to the historians, during Neolithic Period, things like Pottery, tools, etc. were considered the most important forms of objects that could be exchanged for food, cattle and other necessities.
But later on, this system started having loads of issues as humans started travelling to different parts of the world and portability was a major issue since howmany food grains or cattle or tools one could have carried with themselves?
This led to use of something that was portable and beautiful, and the Age of "Shell Currency" started.
The age of "Shell Currency" was actually the first step to a smaller and portable alternative to exchange for other commodities. Shells were rare and pretty. The smaller shells were often beaded together and worn either as jewelry or were also used as smaller currency, just like cents. Since there were many colours, sizes, etc., Shell Jewelry was considered a sign of wealth and power.
The shells used were Cowrie shells and sometimes even bigger Shells were used in form of currency. As they were durable and portable and would last like forever. However some evidence suggest that the use of cowrie shells as currency was in fact started in China, Arabia, India and Africa before or during the stone age.
During the shell currency age, pottery and other useful stone tools were also used as currency. However during this period, the metals like bronze, copper, iron, gold and silver were discovered, which led to the beginning of "Metal Age".
The Metal Age - The period of Metal Currency, Coin Age and Metal tools.
When the metals like Bronze and iron etc. were discovered, soon they were used as the next form for money. But as time passed, more metals were discovered, and due to the durability of metals, people started making tools using them, and often started using it in exchange for food, clothing, etc. just like barter system.
But, when gold and silver were discovered, humans got fascinated with it. Nobody knows the exact reason, but many believe it is because of their colour and rarity. However there are a lot of conspiracies surrounding gold and silver, but i will not go too deep into that. (maybe in another post). People started using gold and silver chips as currency, but later started marking them as currency regardless of the shape, which later were shaped as squares, rectangles, round coins, etc. Not only gold and silver, but even metals like copper, bronze, etc. were used as coins with markings. This was the start of "Coin Age". I would also call it "The Age of Greed and love for power" Gold and silver gave birth to rulers, conquerors, mass murderers, territories, borders, etc. Before this age, it was all about coexisting and exploring.
As the territories, kingdoms, governments were built, so was the loot and greed for silver and gold. People were getting robbed for gold and silver when they travelled and so the New age of "Trade Bills" started. I would also call this as the begining of the age of "Paper money"
The Age of Paper Money
Paper Money which were called "Trade Bills" or "Tallies", were first started by the Chinese. Basically all one had to do is go the the bankers, give them gold or silver of food grains, etc. and for they they would give you a bill of exchange from the banker, This bill could be exchanged for buying goods and the supplier can then go to the bank and exchange for gold or silver or etc. of the same value as the bill. It was mostly based on trust. After a while the taxation began due these services from the bankers
But soon All changed when the bankers discovered, that they can easily create money by simply printing more Tallies, even when the resources exhausted. This gave the "Goldsmiths" an idea of giving receipts for gold, just like the bankers.
The Goldsmith Bankers.
At an age when robbery of gold, and other precious metals was common, And the transfer of heavy coins and metals for business was difficult, the Goldsmiths in Europe started their own banking system by giving receipts for the amount of gold/silver depending on the quantity and quality. Soon this idea spread across the world, and the bankers became the largest accumulators of gold, even owing the kings treasure. Soon the goldsmiths realized that the other bank receipts were useless as they did not have any the treasures which they had and made them seized by the kings, taking over the entire banking system in their hands.
This gave immense power to the Goldsmith bankers who later formed genuine banks and instead of receipts, they created paper money called "Bank-notes"
Paper money was introduced by the Chinese in the 11th century as bills. As explained above, that the goldsmiths across Europe and many across the world followed them and produced bank notes backed by gold. There were thousands of different types of bank notes as each bank had their own notes. The notes could be exchanged for silver or gold.
After a while, many banks started printing way more bank notes then the gold they had in their vaults. This led to the loss of public confidence on banks, and many banks led to bankruptcy.
As the governments were being formed in those days, The government decided to form centralized banks that would control the other banks. The first bank was "The Bank of England" that got sole rights to issue bank notes, after which it was the "USA Federal Reserve Bank".
However all this changed, and the the backing of gold was removed from the currencies. Today its just backed by "Full faith and credit" of the governments. Anyone who tries to go against this rule or tries to make a gold backed currency, is killed or bared.
Today our currency are all debt driven, we cannot exchange/convert them for gold or silver directly from the banks. Which is why its called fiat money.
However this is changing after the "Age of the Internet" and discovery of cryptocurrency named "Bitcoin". I would call it the "Age of Cryptocurrency"
The Age of Cryptocurrencies
I guess anyone who is reading this now, knows about the cryptocurrency Bitcoin, "The Internet Money". The cryptocurrencies uses the blockchain technology. This currency is completely decentralized and cannot be tracked nor controlled by any governments.
However many countries like USA are trying to ban it, and some countries like India are planning to start taxing them, some big companies including some banks are trying to use this technology and create their own cryptocurrency.
Well if we see the history of money, it shows how innocent and simple the living life was. Food, shelter and exploring the world. There was more happiness and no complication. But it never stayed that way since the metal age. Gold and greed took over our minds completely. I did not mention about the wars, but you can see the video i shared above, which explains it briefly.
So the journey of money that was just simple barter to a gold backed money to just paper and trust in the governments and now zeros and ones (crypto). Whom do we blame? Are we really civilized? Are we really modern?
"People had more than they needed. We had no idea what was precious and what wasn't. We threw away things people kill each other for now" From the movie "Book of Eli"
""Cursed be the ground for our sake. Both thorns and thistles it shall bring forth for us. For out of the ground we were taken, for the dust we are... and to the dust we shall return" From the movie "Book of Eli"