Quite likely, you use the money on a regular basis and perhaps every day. These days, anyone looking to spend money has more options than ever before. We don’t mean this just in the sense of what you can buy, but also how you can actually spend money. Cash is no longer king, or at least, the throne room is now pretty crowded with alternatives.
Whether you’re looking to send money abroad or to pick up a soda at the local store, you can now use various services, including online payment platforms, debit cards, credit cards, checks, physical cash, cryptocurrencies, and more. You can also use your phone to make payments in-store, various wire transfers to send money abroad, and much more.
More payment options add many conveniences and make it generally easy to purchase something or to send money to friends and family across the country or even the world. Even cash marks a major development in payment platforms, however.
Before money, folks often had to barter. You might have a shovel and someone else could have an ax. If you need the ax and the other person needs the shovel, you could trade. However, trading involves a lot of friction. If the other person doesn’t need a shovel but you still need the ax, you can’t simply trade the shovel for the ax.
Likewise, barter systems were mostly limited to local areas. Sure, you might trade rice for salt the next town over, but if you had family members move many miles away, getting anything to them often meant going on foot. Conducting trade throughout a large area, like a modern country or region, was impossible.
Fortunately, various money systems popped up early in human history. Today, we can use card payment networks, wire transfer networks, SWIFT, and much more. Let’s take a quick look at the history of money.
Commodity Money Becomes a Hot Commodity
As societies grew more complex, people began to use commodity money or a physical item that had value in and of itself. Common commodities used as money included shells, salt, and cattle. You’ve probably heard the term “Take it with a grain of salt.” People say this because once upon a time the Romans used salt as a form of cash. Salt was always in high demand and wouldn’t break down with time. This made it useful as a commodity-based currency.
The use of commodity money made trade easier because it provided a standard measure of value. However, it was difficult to transport and store, and its value could fluctuate based on supply and demand. While commodity-based currencies made things easier, further innovation was needed.
Because of this, precious metals like silver and gold became widely used as currency. They were scarce, durable, and easy to divide into smaller units. The creation of coins was influenced by the usage of precious metals as money, which had a standardized weight and purity. Coins were first developed in Lydia, in present-day Turkey, in the 7th century BCE. Now, they’re found the world over.
Compared to cryptocurrencies, debit cards, wire transfers, and other modern payment methods, a coin may not seem especially impressive. However, coins marked a major milestone in human civilization. Currency made it much easier to trade across vast differences. In some ways, coins helped to usher in nascent globalization.
Paper Money Was No Paper Tiger
Paper money was first used in ancient China, starting sometime around 600 AD. Paper money was also a technological revolution. Carrying precious metals (including coins), salt, and other things was difficult. Paper money is much lighter and easier to carry, further making trade easy. Initially, most paper currencies were backed by gold or silver reserves, and they were easier to carry and store than metal coins. However, paper money was only as valuable as the gold or silver it represented, and if governments printed too much paper money, it could lead to inflation.
Enter the Era of Electronic Money
These days, most money exists electronically. This includes not just things like cryptocurrencies, but also money held at private and central banks. Using wire transfers, SWIFT, card networks, and various systems, it’s possible to quickly send money to and fro. This means sending money abroad, even to the far side of the world, often takes only seconds.