Money Through Time

What Is Money?

Money is central to daily life. Whether you are balancing finances, saving for a vacation, paying your mortgage, or simply trying to whip rising egg prices into your weekly menu, money plays a major role in day-to-day living. Hailed by some as humanity’s most remarkable invention and by others as the worst invention, money is a universal language that drives people worldwide. 

There is a monetary price tag on life, also known as the cost of living. That cost demands money for basic needs, including food, healthcare, and shelter. Finances play a role in our ability to establish a home, acquire an education, earn a position in society, and gain access to power.

But when did money become so influential? Who made money a key factor in determining life outcomes and the standard of living in the world? Was it the same for those before us? Let’s have a look….

The Exchange Value of Money

Commonly described as a medium of exchange, value measure, or wealth storage, all modern economies are based on money. The goal of generating money prompts strangers to collaborate in the workplace, and nations to unite.

Dating back to ancient times, currencies have evolved from commodity money to modern-era fiat money. The Oxford Dictionary defines fiat money as “inconvertible paper money made legal tender by a government decree.” Most modern societies use fiat money, printed on paper that doesn’t have much value except the value assigned by the government or treasury.

In contrast, when people use commodities as cash, the underlying product — the commodity — holds some intrinsic value other than its role as a form of money. In the past, commodity money was based on whatever things were sought after during a specific time or location. For example, during different eras commodities have included gold, silver, guns, beads, pelts, food, and even alcohol.

Trading in Tangible Goods-Barter Exchange

Picture yourself as a community leader in a world where money doesn’t exist—no dollar bills, credit cards, or digital cash. You and your people’s lives revolve around what you can get out of your environment. In this imaginary, earthbound economy, your community enjoys fair weather with an abundant harvest of corn. But what happens when nature brutally shocks you one year by delivering an extremely cold winter? With no swift action, the entire village will freeze to death. In a Eureka moment, you realize that village Xhathu, which is not too close but a distance worth traveling, has an excess of the pelt (fur), which will come in handy to keep the body warm.

You set up a convoy; pack some of your excess corn, and embark on a five-day journey to village Xhatu. You return from a successful trip with enough pelts for your people to survive the cold, thanks to your ability to trade excess corn for fur. This trade represents a successful barter exchange.

Barter trade is the earliest form of trade, where people exchanged things according to their needs and based on what they had in excess. Many communities of the past were self-sufficient but did not always have everything they needed; as they started discovering a more expansive world beyond theirs, curiosity and desire grew, and people would go further to acquire things that were not quickly within their reach.

The barter trade had challenges. Some of its challenges included traveling long distances and carrying many items for exchange, which wasn’t always convenient. One well-known southern incident in Southern Africa involved King Lobengula “selling” the entire country for some sugar and sweet treats. In this barter trade, he gave mining rights in exchange for sugar, a few arms, and other enticing things from the West. This example highlights the largest problem of barter trade-exchange value, namely inequity.  This trade medium of exchanging items based on sentimental value wasn’t practical, and people had to explore other ways of leveling the playing field.

Bartering also involves the exchange of labor for goods. This form of commerce still happens in some societies today where people work on farms and receive food or clothing in return for hours of labor.

Money that Grew from the Ground and, Later, From Trees

International trade gained momentum as horizons became wider and people sought more favorable trading solutions in place of barter. Historians credit Lydia-Mesopotamia (modern-day Turkey) for developing the first coins around 5000 years ago. Additionally, ancient India, Babylon, and Greece were some of the earlier users of coins as money.

The coins, minted in different shapes and designs were predominately made of sought-after metals such as bronze, gold, and silver. Their weight determined the value of the early coins. They were more convenient than bartering but posed problems because they were heavy to carry around, and precious metals weren’t always readily available.

A significant turning point occurred when China developed money in 7000 BCE. We could easily say that money grew on trees because merchants made the first paper money from mulberry tree bark. At a time when China’s economy was exploding due to the silk road and because of the renowned European traveler Marco Polo, the use of paper money gradually spread to the rest of the world. The development of paper money didn’t cancel the use of metal coins, and modern society continued to use both currencies alongside each other. Paper money went through many evolutions as it was assigned value in different currencies, standardized against various currencies, and finessed for seamless transactions.

 As a centralized commodity, money is controlled, printed, and distributed by government treasuries via their Federal Reserves or Reserve Banks. Counterfeiting or trying to print your own money is a criminal offense.

It may sound like an easy concept; governments can print money on paper and give it value, but the idea is more complex. Printing too much money may cause the currency to lose value and cause hyperinflation. Zimbabwe learned about hyperinflation the hard way in the economic crisis of 2008 when the government printed out too much paper money, resulting in individuals becoming trillionaires. Yet, a trillion of the country’s currency could only buy a loaf of bread.

In its evolution, most countries adopted currencies to suit their countries and printed their leaders on their particular coins. Queen Elizabeth II became the face of the British Pound; Benjamin Franklin, the face of the US $100, nicknamed the Benjamins and South African Rand with Nelson Mandela’s face, nicknamed the Randella.

Credit Cards and Debit Cards

One night, legendary businessman Frank McNamara forgot his wallet and lacked the cash to pay for a restaurant meal. His wife drove home for money to save him from washing dishes. As a result, McNamara vowed this would never happen again, and it didn’t. He helped launch a plastic card called Diners International Club, a form of money that you could take everywhere without problems.

First used in the 1950s, debit and credit cards have been hailed for their convenience, which is superior to other forms of money. Also called plastic money, this small card with a unique identifier, enabled you to have the world in your pocket. From booking flights, accommodations, food, leisure activities, or a seat at a business convention, consumers can enjoy trips worldwide by simply swiping or tapping their card, with no need to carry large amounts of money or gold. Debit cards are different from credit cards in that debit cards have a pre-loaded amount that you can use, and credit cards work on a buy-now-pay-later premise.

However, the concept of credit arrived long before modern times. Prior to the industrialization era, merchants allowed people to buy goods on the promise that they would pay later after a harvest. Another precursor to the credit system was Western Union’s Metal Money, which came into use in 1914. Not to be confused with coins, metal money was a system that allowed a select few to get goods and pay later with the metal card issued as a promise to honor the deferred payment.

Credit and debit cards continued to evolve from plastic cards and now take on other forms. New innovations include Apple Pay in 2014, followed by Google Pay the following year. These payment methods allow users to store card information and pay with their phone or other devices without presenting a physical card. Other apps enable people to send or receive from their digital devices.  These apps include Zapper, PayPal, and Cash App.

Security measures for credit cards have also led to the recent development of virtual cards. Virtual cards are credit cards with details that are generated and used for a fixed time. Digital money goes further to allow people to use their platforms and devices for shopping and complete transactions such as money transfers to other individuals, buying stocks, and paying bills.

Digital-Forward Money: Cryptocurrency

Cryptocurrency is the newest form of money. As a digital currency system, cryptocurrencies are not tangible; they are a form of money that lives in the digital space and is governed by sophisticated algorithms. Developed in 2008 by Satoshi Nakamoto, these currencies are decentralized and not controlled by any government institutions. Bitcoin, Ethereum, and Binance Coin are some of the most well-known cryptocurrencies.

Digital currencies have been met with doubt, apprehensiveness, and controversy. Recent controversies include the November 2022 bankruptcy filing of FTX, a leading exchange for cryptocurrencies, according to Reuters and other news outlets. Roughly 9 million FTX customers and other cryptocurrency investors lost billions of dollars, according to news reports.

In connection with that scandal, authorities arrested Sam Bankman-Fried, the founder and former CEO of FTX, and a New York grand jury indicted him for fraud and other charges.

As the latest form of currency, cryptocurrencies are used by 5% of the world’s population and just over 21% of Americans. It remains to be seen if this type of money will stand the test of time. Not only is it a sophisticated system, but it seems to be exclusively used by a small population in current times. In hopes of moving with the times and curbing inflation, Venezuela introduced a national cryptocurrency, the Petro, but whether this money will be permanent and successful remains to be seen.

The Pros and Cons of Offshore Banking

Offshore banking is a system that allows people from one country to bank and store money in another country. This financial system is usually utilized by wealthy individuals, ex-pat workers, and companies. Switzerland, Mauritius, and Singapore are leaders in these types of banks. Offshore banking has advantages such as seamless trading where international currencies are involved. It also helps to store one’s money in favorable currencies such as the US dollar, the Pound, and the Euro, especially if one’s own country of residence has an unstable economy.

Offshore accounts offer a high level of privacy and secrecy. But financial privacy can shield unsavory or illegal activities. The Panama Papers, Pandora Papers, and other revelations have drawn attention to offshore accounts that serve as a gateway or cover-up for undesirable and illegal activities. These activities range from tax evasion, money laundering, and related illegal acts by corrupt business people, political leaders, and crime syndicates.

Changes that Came with the Evolution of Money: The Good

Today people enjoy many conveniences that exist because money has evolved into the state we know today. These conveniences are beneficial both to individuals and to businesses. The banking system is one of these. The banking system provides a store of money, regulators, and physical structures such as ATMs, payment gateways, and foreign exchange, facilitating seamless monetary transactions. Non-physical forms such as banking apps and the blockchain were also developed along with modern money. The blockchain is a digital record of digital transactions, a virtual ledger.

The Uncertainties: The Bad

The state of humanity drastically changes with new forms of money. The value of money fluctuates from time to time, sending people into panic and sometimes plunging countries into economic chaos. Modern communities are no longer close-knit as people use most of their time working to earn money for survival and basic needs. With some amassing more money than they need, the gap between rich and poor people also widens.  

Social identities and respect are somewhat tied to the sum of money owned by individuals and countries. Integrity can take a backseat to money, with individuals carrying out shocking things for cash. Likewise, some businesses operate with distasteful tactics, including unfavorable contracts for their workers and consumers, in an effort to make money.


The Universal Language of Money

“Money is more open-minded than language, state laws, cultural codes, religious beliefs, and social habits,” says Yuval Noah Harari, a prominent historian, educator, and author. “Money is the only trust system created by humans that can bridge any cultural gap and does not discriminate based on religion, gender, race or sexual orientation.”

From ancient periods to the modern digital era, money has had the power to bring people together or to cause massive rifts. Money facilitates explorations and innovations beyond what the human mind can conceive. Money will continue to evolve and reshape life as we know it. Unfortunately, throughout history, countries, empires, and individuals with more money have held more power, influence, and authority, based solely on the size of their fortunes and financial resources.

Edited by Sharon Rosenberg