The evolution of money
Cashless transactions have dramatically increased with the arrival of the pandemic, leading many to wonder whether coins and notes are going to disappear.. But what is the history of money?
What do we mean by money?
Money is what we use to buy and sell things – we need it to buy lunch, to pay for a bus ride or get a school uniform. But as an object, money itself has no actual value. Whether it is a metal coin or a piece of paper, its value is symbolic. In reality, money is only valuable because we trust that it is worth something.
How did it come about?
Humans have been using money in some form for around 3,000 years. At first, people would directly exchange goods they had for the goods they needed. This system was known as bartering. But it was a slow and imprecise way to deal.
Eventually, people began exchanging precious items for goods. The Aztecs used cacao beans, while traders in Africa, South Asia and East Asia favoured shells. King Alyattes of Lydia minted the first official metal coins in 600BC.
What about banks?
By the 11th century, there were hundreds of systems of money in use. This made life difficult in Italy, the trading centre of Europe. Merchants were constantly exchanging coins with each other. These exchanges commonly took place outside while sitting on a bench. We even get the name “bank” from the Italian word for bench – banco
To make things simpler, they set up buildings where they fixed rates for currencies and exchanged and lent money. These were the early versions of the banks we use today.
What is bitcoin?
A system of electronic money, used for buying and selling online. It is an entirely digital currency, not attached to any bank. Held in digital wallets, it is a cryptocurrency
made secure by means of computer code. As a result, it is nearly impossible to forge. Digital currencies are popular with many people because governments do not control them.
Is bitcoin safe?
It is almost impossible to trace the ownership of a bitcoin wallet, so payments are equally hard to trace. That makes it an attractive form of currency for criminals. It is also a common way of purchasing illegal goods. But most bitcoin payments are not suspicious. And they’re getting more common. You can now buy a Burger King and an Xbox with bitcoin. Even the British lifeboat charity RLNI accepts bitcoin donations.
So, will cash disappear?
Maybe. More and more people use their credit cards, phones and watches for cashless payments. Worries about social distancing during the pandemic have made contactless cards even more common. Meanwhile, digital currencies like bitcoin have become so popular that central banks are designing their own, with China already trialling its digital yuan.
According to experts, though, it is unlikely that money will go completely digital anytime soon. Money will surely continue to develop with the times, as it has throughout history.
- Is the future of all money digital?
- Design your own cryptocurrency. Come up with a name for it and design a logo.
- To be a symbol for or to represent something.
- The opposite of precise – it means inaccurate, or inexact.
- Systems of money are known as currencies. They are different in different countries. For example, dollars ($) in the USA, pounds (£) in the UK.
- “Crypto” means secret or hidden.