The evolution of money is long and storied. As we all know, the monetary system of today has come a long way from the traditional bartering system used in the classical and pre-modern ages. From simply trading goods, to an entire global network of banks and people, money is the driving factor making the cogs of society turn.
But how did we get here? When did people decide to put so much faith into the monetary system that now seems to run the world? The answer lies in the slow but efficient evolution of the system, and its tailoring over time to suit different societies’ specific requirements. Let us talk about the evolution of money.
The Origins of Money
As has been previously discussed, the system and concept of money began quite rudimentarily. The first creation of a ‘modern day’ coin was back in 770 B.C. in China and, despite initially taking many shapes, circularity was found to be its most practical design.
In approximately 1600 B.C, in what is now known as western Turkey, the first official currency was minted. Made of a mixture of gold and silver and imprinted with images of animals to establish denominations, this currency helped the country grow its trade, both internally and externally, to become one of the richest countries in the world at that time. A great benefit of the creation of currency was that it allowed the speed of business to increase dramatically.
China decided to take this system, but innovate upon it by introducing paper money. Even the emperor approved and legitimised this form of currency. Though coins were still used as the main form of currency in Europe up until the 16th century, banks decided to use paper money as currency.
The main difference in the system used then, was that these paper notes could be taken to a bank and exchanged for their face value in gold. Secondly, in most systems around the world today, the government issues the currency, whereas in the past the banks were the designators. Different currencies tended to be legitimised when governments got involved.
When the use of paper money became universal, international trade increased massively. This allowed banks and ‘high society’ to start buying currencies from different countries, and the worth of currencies began to be based on the stability of respective governments and monarchies.
As always with the human race, this led to rivalry and what later became known as ‘currency wars’ developed. This would occur when rival countries would try to devalue each other’s currencies by driving them up, making their goods too expensive, or down, reducing the buying power of that country. In some cases, rival countries would go as far as to eradicate their neighbours’ currencies. To combat this, joint currencies were created, such as the Euro or Dollar.
Modern Currencies
A new concept that came into fruition in the late 2000s were virtual currencies, such as Bitcoin. Virtual currencies do not have any physical coinage – so why is there such an appeal for them? Well, they tend to offer lower transaction fees, as well as being regulated by a different authority to the government. However, there is still a lot to be discovered about virtual currencies, and it is hard to predict where they will go.
Regardless of the type or form, it seems that the evolution of money has all come down to the evolution of people. After all, the value of money depends on the importance people place on it, whether that be a unit of measurement, a show of wealth, or just a medium of exchange.
Regardless of the type or form, it seems that the evolution of money has all come down to the evolution of people.
This post was written by Ben Timothy & Murray Caldwell.
Consider how this history of money is evolving with our visualisations of the future of cash, here, and situate these accounts within the context of the bartering system, as described by another GIS author here.
For an alternative reading of the history of money, check out this post by another GIS author.