Money is a fundamental part of our daily life and its history corresponds to the history of the human being itself. Let us take a broad look at how the evolution of money. Join us.
The evolution of money: from constant nomadism to bartering surpluses
It can be said that the history of evolution of money it is also the story of the evolution of man. The different stages through which the understanding of monetary exchange, savings and the physical support of profits went through ended up being a symbol of the level of development of a large part of the civilizations of our species, from the most remote times.
And the progressive abstraction with which human gains were understood was parallel to the abstraction with which institutional, philosophical or religious contents were integrated.
Social classes, the effective power of certain circles and influence over private and public affairs have historically been based on this order of accumulation and exchange to the point of becoming consubstantial with the human essence.
The famous verse by Quevedo that personalized money as a Powerfull knight capable of conquering the most closed of wills, it was full of validity in the XNUMXth century and continues to be so in the XNUMXst century. Despite the opposition of the great spiritual traditions that see it as an earthly element of unbearable temptation, money continues to sustain the world to unprecedented levels, for better and for worse.
Now, where did this closed order that continues to articulate our existence begin? We could even go back to the time when man was heading out of prehistory. Until now, an economic system of regulated exchange was unnecessary and inconceivable: nomadic human groups lived by hunting daily, consumed immediately, without the possibility of keeping what they had gained and without generating surpluses with future value.
The change comes with the definitive settlement through agriculture and livestock. The population increase forced to create methods of drying, smoking and salting to preserve the food gathered for times of scarcity. And part of these conserved resources were then available for commercial exchange for other products needed in the growing cities.
Barter was the first established exchange format and undoubtedly meant a major social advance. But the limitation of exchanges was too pronounced in this system, as well as irregular.
Nobody could assign a fixed value to animal or agrarian merchandise and it depended entirely on the interlocutor. The only way to make the transaction possible was to find someone interested in the merchandise that was being offered and who also offered the merchandise that was being sought.
These difficulties opened the door over the decades and centuries to a more stable system of trade. We were starting our way to the money. You might also be interested in origin of the tianguis.
The kingdom of Lydia: first coins and reference values
The first step in refining barter and continuing the evolution of money was to try a product that would serve as a reference value that would help appraise all the others. This could be an ox, a goat, or small bags of salt, the latter forming the basis of the etymology and practice of the wage.
Little by little, everything led to scarce elements of extreme durability and incorruptibility, such as pieces of gold and silver. These ingots began to be weighed according to a fixed measure called shekel, providing a necessary standard to the exchange, still based on weight rather than quantity.
But, although a more or less fixed reference value had been reached, the functionality of the methods to specify them and their transport capacity continued to be improved.
In the end, everything was based on a balance for each trading partner, not available everywhere and also susceptible to fraudulent manipulation. Lugging around a mass of bullion everywhere on trade trips wasn't the height of practicality either. The need for coins began to be acute to lighten and energize exchanges in various places in the ancient world.
Origin
The invention came from what would now be the country of Turkey and was then called Lidia. The sovereigns of Lydia, particularly the semi-legendary King Gyges, used their vast deposits of gold and silver located in their mines and in the fluvial course of the Pacífico River, where King Midas of mythological history bathed, to make and mint the first world coins in the XNUMXth century BC. C. The intention was to make it easier for royal institutions to receive taxes.
Composed of an alloy of gold and silver called electrumIt weighed 4,75 grams and featured a roaring lion on one of its faces, the traditional emblem of the monarchy. On the other side, the coin was sunken in the shape of a square, testimony to the forced impression of the lion on the other side. The crudeness and smallness of the object contrasted with its usefulness: the lion finally served as a guarantee seal on the correct weight and value, without the need for scales for each piece.
Soon the other empires took over the example of Asia Minor, firmly controlling the minting of coins to provide a uniform mercantile mechanism throughout their territories. The printed lion began to be replaced by other symbols depending on the nature of the power that put the piece into circulation, from augur staffs and plants to the effigy of the highest ruler.
One of the first faces to be recorded on a coin was that of Alexander the Great, in another of his acts of egocentric self-divinization. The material of its composition continued to be gold and silver for a long time in antiquity, due to its already mentioned durability and guarantee against possible forgeries.
If you have a special interest in traditional monetary mechanisms, you may find it useful to visit this other article on our website dedicated to exposing the main credit characteristics. Follow the link!
The appearance of commodity money: foundations of trust backed by the Treasury
The use of currency spread throughout the Greco-Roman civilization through mainly its two most widespread denominations, the drachm greek and the denarius Roman, both silver. This last Roman coin ended up giving the Hispanic etymology to the word money.
The term currency also comes from the Latin world, by the appellation currency (epithet meaning unique O well the one that warns) applied to the goddess Juno, whose temple was used to mint the pieces for circulation.
But with the advent of critical circumstances in each of these empires and city-states, there was often a shortage of the precious metals required to make the heavy coins of yesteryear. The production of coins of the same style then began, but made of much more affordable materials, such as bronze, copper or iron. A new stadium in evolution of money had just crossed.
Evidently, the value that had been attached to the drachma, denarius and other denominations was much greater than the new container of current material. How to ensure that the physical support of the currency continues to adequately represent the value that the State assigned to it? Well, making sure that each piece was backed by the gold and silver treasure that the institutions of the territory kept in their coffers.
The world was thus advancing one step further in evolution of money and towards monetary abstraction. The value was no longer in the hands, but far away, in the state deposits, while the piece only retained its value as a representation of the government edict that endorsed it. This constituted the appearance of commodity money, an effective symbol of a distant value that surpasses it. This format had several incarnations that finally moved away from the metal support.
Paper money: certificates of value and security
Another item for evolution of money that would appear would be the now ubiquitous paper money. The first examples of a role assuming the ancient role of the metallic piece as an element of value come from the Asian continent, in the medieval surroundings of the XNUMXth century.
A first model was implemented by the Mongol Empire under the iron rule of Emperor Kublai Khan. His system was modern to an unusual degree: the primitive, large bills represented the gold deposit in a Mongolian bank. This paper commodity money then resembled a cross between a bill and a contemporary check.
The gold standard was also practiced by the Ming and Yuan dynasties, also through the issuance of certificates legalized by the government seal that guaranteed their status as representatives of the treasury of the bank coffers. The paper money system would not stay in Asia.
Between the fifteenth and sixteenth centuries, European goldsmiths began to protect gold and silver in safes from those who could not safely transport their income through paths full of bandits, theaters of war or ships exposed to pirate attack. To assure the customer of his ownership of the stored precious metal, they also issued paper certificates. Over the decades, this also gave rise to the banknote backed by a central authority.
Between the XNUMXth and XNUMXth centuries, England gave the world the first check system, rapidly evolving the traditional and informal process of the promissory note until it became a method with a legal basis, being imitated by France, the rest of Europe and later America.
And precisely from American lands came the element that was missing in the modern economy, the credit card, launched for the first time by the Western Union entity. We then traveled the full path from ox to ingot, from ingot to coin, from coin to paper and from paper to plastic.
From fiat money to Bitcoin: the latest transformations in the evolution of money
The mid-1944th century saw a radical mutation in our modern understanding of money. The convertibility of the dollar with respect to gold and of most currencies with the dollar, already established since 1971, took a step forward with Richard Nixon's decision in XNUMX to pass the gold standard to a better life.
With which the value of the North American currency, of weight so important that it determines practically all the others, is determined solely by the confidence of the group that handles it in its viability and wealth. Without this, it is nothing more than paper or digits, with no reservation to support it. This system is called fiat money.
All of our current money is based on this trust system. In the security that the community feels that the currency in question can be received as a means of payment by all the members of said community. All the formats indicated above, in metal, paper or plastic, depend on this act of trust and its daily administration by the Central Banks of each country or continent.
The proposal of the Bitcoin cryptocurrency has been based on this notion to embark on the last great transformation of money, perhaps the most radical to date. This system is also based on the fiduciary concept of mutual trust, but with a crucial variation: there is no network of central banks to control the value or flow of currencies.
It is a total decentralization of the course of this type of digital currencies, with all users being at the same time beneficiaries, producers and administrators of consumption through the so-called block chain. This is a kind of electronic accounting book, well encrypted, where all financial movements executed by users are recorded in the form of a network of equal communication nodes, without hierarchies or controls from above.
This feature naturally raises concerns about illegal activities that may be incurred by those who pay or collect in Bitcoin. But undoubtedly it also opens a stimulating time in which the common citizen should not depend on state or private banking entities to define the value of their transactions. It is practically a territory of systematic anarchy, if both concepts can coincide in a sentence.
Accepted more and more by different companies and platforms, the Bitcoin system constitutes the last ethereal mutation of the currency created by the human being, the last digital limit until now of a path of enormous and amazing length that goes back to the exchange of bovines, seeds of wheat or bags of salt.
In the following video you can see an attractive cartoon with a good part of the history of money that we have presented here. Simple and eloquent, it can be a great resource to introduce this part of the human future to the little ones in a shorter way. So far our article on the evolution of money throughout the ages. See you soon and good luck in your finances and readings.