Guest article by BitcoinSampo
See also: La historia y el futuro del dinero
This article discusses the history and future of money. Since history is an endlessly complex subject, it should be noted that this article omits many important developments and makes quite generalized oversimplifications about the myriad of historical developments in order to form a cohesive narrative.
The main argument here is that trade, and different forms of money used as mediums of exchange, are an essential part of human interaction. They are a natural means of communication and value-transfer between individuals and a system of trust essential in forming stable communities, nations, and societies.
Nations without a stable form of money have been, and still continue to be, ridden with distrust, disputes and corruption. Today, like it or not, we live in a global world with trade between all continents and for the first time in history, the world needs a global money that doesn’t serve the interests of any single nation-state and that friends and enemies alike can trust.
In the new digital age, a network and a neutral form of money based on code and absolute mathematical truth, is vital as a single source of trust. Bitcoin was created for this purpose and it represents the future of money.
The history of money starts before written history and due to the complexity of ancient history, it is impossible to know conclusively which form of money appeared first.
However, experts generally agree that barter is the oldest form of trade. For example, grain and cattle were exchanged between individuals. Barter is a good way to trade in small communities but whenever there are more than a dozen people involved, and more than a dozen commodities up for trade, barter becomes impossible since supply and demand rarely meet.
Money as a medium of exchange was invented to solve this problem, and earliest forms, for example shells and beads became money mostly because they were visually attractive.
The history of money is a continuous balancing act between scarcity and value depreciation due to excess supply. Forms of money that were too scarce were impractical because as communities grew, it became impossible to use them in everyday trade. On the other hand, an excess supply of said money caused value depreciation and in some cases even made it completely worthless.
From early on, metals were commonly used as money since they were durable, divisible, and relatively easy to transport. The authenticity of these coins was enforced with the pictures or seals of contemporary rulers, and this tradition continues to this day.
The earliest metal coins were made out of bronze and appeared around 2,700 years ago in India, China and in Southern European cities. However, it was soon understood that gold, as one of the most durable metals, that was also attractive and scarce, was the superior choice.
The first gold coins also appeared around 2,700 years ago. Gold’s scarcity soon proved a problem and less valuable silver and bronze coins continued to be used alongside gold. They weren’t as durable and the risk of counterfeiting was especially high with inferior metals since other metals could be added to the coins to increase their weight.
Even governments were forced to add other metals such as copper to the coins as, for example, the Roman Empire expanded and a more readily available material for the common currency was needed. The balancing act between scarcity, authenticity, and sufficient supply continued.
One way to solve this problem, at least temporarily, was the invention of credit and debt. Astonishingly, the oldest discovered tally sticks, memory aids to keep track of numbers, quantities and messages are 44,000 years old.
It is clear that trust-based monetary agreements between individuals are a very old invention. Furthermore, the earliest recorded systems of credit and debt were used in the Mesopotamian civilization about 5,000 years ago and in ancient Babylon around 4,000 years ago, both thousands of years before the invention of metal coins.
Thus, it is an oversimplification to state that credit and debt systems were invented to solve the problems caused by the scarcity of money such as metal coins. However, from a Eurocentric historical narrative this statement makes sense since tally sticks continued to be used in medieval Europe to record bilateral exchange and debts.
Moreover, while various different settlement systems appeared as early as seven thousand years ago, it is generally agreed that modern banking systems appeared around a thousand years ago in Italy. Since the modern monetary system is largely ruled by central banks, it is also important to note that the earliest central bank is considered to be the Swedish Sveriges Riksbank, established in 1668.
For centuries, banks and central banks have been trusted as the issuers of modern money. However, the recurrent financial crises have waivered this trust, perhaps irrevocably.
As Satoshi Nakamoto, the inventor of Bitcoin states: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”
The most notable breach, the so called Nixon shock, happened in 1971 when Richard Nixon cancelled the convertibility of US dollar into gold, effectively turning the dollar into a fiat currency without anything concrete backing it up.
This event is rarely discussed, and most people do not even know about it, but it is perhaps the most significant financial decision in the modern age. Most major currencies followed suit, and since 1971 all fiat currencies have, slowly but surely, been losing their purchasing power.
In effect, this discourages saving and incentivizes spending, and increases the so called Cantillon effect where those that are closest to the money source, in this case the central banks, benefit most from new money that is added to the market. Therefore, for example the recent US stimulus packages, while providing a temporary fix, only work to increase inequality and wealth concentration in the long term.
As societies are moving into the digital age at an unprecedented pace, the age of physical money is coming to an end. Just like everything else, money is going digital. This change provides a unique opportunity for individuals to reclaim their financial sovereignty and to remove the chance for market manipulation and the recurrently broken trust needed in the centralized system. It is crucial to understand that this threshold of digitalization is a crossroads in the development of financial freedom of individuals.
Some digitally advanced countries are already almost completely cashless and use digital money. Nation-states and central authorities want people to continue using their centrally created, value-depreciating fiat currencies, and want to control and monitor people’s finances while doing so.
China, for example, already uses the digital yuan for these purposes. For example, some individuals are not allowed to travel because of their unhealthy spending habits or simply because they have different opinions than the CCP. They have also suggested an expiration date on the digital yuan to increase spending. It is clear that the trend with government issued digital money is increased surveillance and manipulation.
Bitcoin provides a superior alternative. It is a neutral platform and a digital medium of exchange between two sovereign individuals, who do not require, nor desire, any state interference. History has shown that such interference has negative consequences as money and power inevitably falls into the hands of the few, due to human desires such as greed and the desire to control others.
Bitcoin provides a way to fight overly centralized power and these desires. It is the most democratic, and the most equal form of money. It encourages saving instead of spending and brings scarcity back into money. Buy bitcoin now!
Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://blog.localbitcoins.com/the-history-and-future-of-money-acab75c88d9c?source=rss——-8—————–cryptocurrency
