The History of Money

Practically every day we use money, either to transport us to our place of study or work, to feed ourselves, to buy what we like, or we also receive it, for example, as part of the remuneration for our work. But have you ever wondered what money is? Most likely not.

And it is also very likely that no one has taught us anything about what money is, or how to use it, store it, invest it, etc. And that’s a very interesting thing, because as we’ve been mentioning, money is something that absolutely everyone uses. And yet, very few people understand and know it in depth. The good news is that as part of the article it is necessary to know what money is. Understand its characteristics and thus agree on the most important information that we will make in this whole saga of articles and that is what this first part focuses on. And this is the fact that cryptocurrencies are indeed money. It is clear, as we have already mentioned, that upon hearing this statement, practically anyone, including you, who is interested in knowing more about the subject, will have a first reaction of rejection and disbelief. And it is not surprising, because we are very used to scams and we always try to cover ourselves and protect ourselves from deception, and even more so when it comes to money.

But the excellent news is that Bitcoin and cryptocurrencies in general are money, not because we are saying this as part of these last few articles, but because it caters to the characteristics of money. And more importantly, because right now millions of people around the world are already adding value and transacting with this new form of money. And this is one. It’s a big part of why cryptocurrencies are effectively a new form of money.

And is that all these people around the world are convinced of its use, its value and its benefits. But of course there are more important reasons why cryptocurrencies are really money and which we will be reviewing in this and upcoming elections. And to understand why cryptocurrencies are money. It is necessary to understand, first of all, what money is and what are its characteristics. Of course, there are those who believe they know the answer because they use it daily, but the truth is that it is very likely that despite having some idea, this is not the most correct and there is no need to worry. This is normal as it is not the subject of any class at school. And we never learn what money is. So let’s review the history of humanity and indeed its different means of interaction that have evolved and lead to what we currently use as money and specifically the currencies of different countries. And is that since ancient times communities were organized to carry out trade between them. Each individual and even each group has specialized in the elaboration or production of certain goods that serve another individual or another group and therefore this exchange of goods has always taken place. In this way, trade began to originate, but problems also began to arise. Let’s take as an example an individual who dedicates himself to the bakery preparing the best breads. He dedicates himself to his work and has to offer the fruit of his work, which in fact are all these breads that he prepares with great mastery. As the year progresses, winter approaches more and more. So the baker wants to prepare for the coming cold, so he checks the coats he has for himself and his family and realizes that these coats are already worn out and wants to buy new ones. Of course, he’s not very good at catching them with his bare hands, so he looks for a tanner who even has them ready to trade. During his search, he encounters several tanners. Unfortunately, he runs into the problem that none of them want to trade the coats he has prepared for the loaves the baker offers. This difference in expectation adds friction and complicates the entire process. They are almost certain to begin to understand more clearly the value of money as we know it today. Let’s take another very simple example to continue understanding this tool that is currently so complex and so important. The scenario now changes as we are talking about the case where the baker finally finds someone interested in being a part of this exchange and has coats for the baker’s family.

However, he just enters the negotiation process and starts a back-and-forth in which each party argues and tries to get the best part of the deal. Including having this exchange system where negotiations with goods are carried out directly. There are many clashes even for the indivisibility of these goods. That is, it is not easy to agree on how many loaves of bread a coat should be obtained. And when the parties finally come to an agreement and, for example, argue that they have five causes and that’s equivalent to half a fur coat, then it’s not easy to split the coat and therefore all this complicates the process again. and implies that no agreement has been reached and that the agreement has been broken. Again, I’m pretty sure they’re still very clearly identifying the value of money and different currencies as we know them today. In fact, it reached a point where it sought to eliminate all these disadvantages of having a system based on exchange, on the direct exchange of products, and it started to give value to an object that could precisely be used as a means of universal payment. The concept is simple: value must be given to an object that has been accepted as a means of payment in all transactions in which two individuals or groups wish to exchange goods or services. And indeed, different precious metals began to be used thanks to the fact that they met several of the characteristics necessary for a good means of payment. These features are very important. Let’s not mention each other yet. Indeed, they will be seen in the upcoming elections, but they are very important to understand in order to understand why Bitcoin complies with them. And of course, it’s a new form of money that’s really accepted all over the world. But for now, let’s continue to understand the evolution of payment methods to what we currently name, recognize and use globally as cash. And is that, as we commented, there was always distrust. And in ancient times. Of course there was too. In other words, all those people who started to accept precious metals such as gold and silver did not have a clear way of guaranteeing that the piece of metal they were receiving complied with the specified amount of material, that is, that it was in accordance with the weight. or quality necessary to guarantee the value of the transaction. Thus, coins began to be minted, that is, a central authority began to certify their value in each piece of metal to give confidence to people who then began to use them more and more. Here we are already starting to talk about something that nowadays we already consider quite disadvantageous, because there was talk of a central body that, through the certification process, now has some control over the means of payment. It is used by people in their daily lives. Subsequently, each country opted to use coins on top, but also banknotes in an effort to facilitate trade, as banknotes are created with materials that weigh less than these precious metals and, in fact, we must be mindful of this In fact, we are precisely talking about a change of mindset in which the money we use has value because we have given it to ourselves. We agree that it has a face value printed on each note. In fact, at this moment, the material with which this means of payment that we use is made does not even matter. You even think. This is one of the clearest examples of the acceptance by the majority of the world’s population of using pieces of paper without problems combined with other materials that pretend to serve as a safety measure, but actually have no intrinsic value. Wow, the stuff these banknotes are made of is not valuable in itself. We value it by accepting it as a means of payment for our work and also because different stores and businesses accept them when we want to purchase a product or service. And the fact is that the use of coins still had the back of the precious metal, but now banknotes no longer have this feature, which was essential before and we can go further. It is very likely that you have a bank account as well as credit cards and for example in some cases you are a little more extreme. It’s been quite a while since they used currency notes. Or at least not buying expensive products and services like a car or a long, expensive trip. We do all this, if any, with a check that is nothing more than a certified piece of paper. What’s more, we often do so-called wire transfers, which are nothing more than data on computer screens. That is, ones and zeros in the central systems of the banks in which you decided to store your savings and for which we give instructions.