Evolution Of Money
The evolution of money is one of the remarkable factors in the history of mankind. It is impossible to restrict humans to geographical boundaries because they have evolved throughout centuries.
Basic necessities are required needed by people for sustaining life at an early time. Necessities were gained through trading. Bringing people together for mutual benefit, through gatherings at cultural and religious events is a system of trading in that era.
The Origin: Barter System
In the Stone age that began 2.6 years million ago, the Barter system was used for trading; where individuals exchange goods and services without the use of cash. Stone was used as a tool for hunting. They traveled a short distance place for search of food and shelter within the smaller communities. Farming and Merchanting has not existed in the Stone Age whereas prehistoric people trade through bartered goods and services which includes hunting equipment and stones; which have great worth at that time.
The First Trade: Commodity Money
Commodity money was used as a medium of exchange. Obsidian was used as a tool for trading at a distance of 900 kilometers within the Mediterranean region. After the new stone age starts, agriculture started developing. Trading was done in the form of commodity money which includes livestock, metal, salt, stones, etc. However, people search for a better medium of exchange for sustainable living.
End Of 19th Century: Metallic Money
At the end of the 19th century, metallic coins were used as a medium of exchange for trading instead of a commodity medium of exchange. At the end of the 19th century, business was stepping into the agricultural and industrial levels. So, traders need such a medium of exchange that has great worth, while doing payments for purchasing raw materials. Silver and Gold were used as metallic coins. The mobility of metallic coins is very easy from one place to another.
Matured Trading: Paper Money
When it found difficult to carry metallic coins, Paper money was invented. It was used as a medium of exchange in trading. The country’s central bank regulates the printing of paper cash within the monetary policy in order to keep the flow of funds. Paper cash is used as a medium of transactions in acquiring goods and services. Transactions were done easily through paper cash.
In this type, cheques are used as currency. They function similarly to paper cash. But there is a slight difference between a cheque and paper cash. A cheque is an order written for a specific amount and expires within a single transaction. It is used for large transactions nowadays. Small transactions are done with paper cash. Banks issue credit cards or debit cards for the transaction also known as bank cash or plastic money.
For making smooth transactions, banks issued credit cards or debit cards for transactions also known as plastic money. It is used as a medium of exchange.
E-Money is a new-age cash system, generally known as online banking. Through online banking, it is easy to conduct bank activities such as transferring funds, payment of bills, online transactions, purchasing financial instruments, or viewing your bank account. etc
Cryptocurrency is a digital currency that is designed to function as a medium of exchange through a computer network, not depending on any authority like the government or central bank.
So, nowadays money is the provision of everything in life like food, shelter, water, and clothes, and it keeps going on. As the years pass away, the medium of exchange got better and now we have the option of credit cards and online banking which includes online transactions, payments of bills, investment transactions, etc. Many countries are moving towards a cashless economy where all the financial transactions are electronic