The world as we know it has changed quite a lot over the years. We have moved from using coins to cryptocurrencies. Today, you are learning about Cryptocurrencies and using them. A few years ago, you probably wouldn’t have imagined that you will be talking about a concept called ‘cryptocurrency’ and be investing in virtual money. There’s been water under the bridge, right? Let’s look at money from a historical perspective.
What is money?
Money is generally anything that is accepted as a medium of exchange for goods and services. Money is an idea created by man and has been in existence as long as man has existed. Over the centuries and years, money has evolved through different forms to its current form today.
Stages of the evolution of money
The stages of the evolution of money include:
– Trade by barter
In the olden days, money was simply traded by barter. If you wanted something, you needed to find someone who has what you want and who is willing to collect what you have in exchange for the item. So if I needed palm oil to cook my soup, I will have to carry my fish and search for someone with palm oil who is willing to accept my fish and give me their oil. This was a stressful form of payment.
Man discovered metal and realized that he can use the metals to exchange for goods and services. So gold, silver, diamond and other precious stones became money. But then the issue of carrying heavy metals around brought a need for a new form of exchange.
Man fashioned out circular shapes called coins from the metals and began using them for payments. So we had Gold coins, silver coins, pennies, nickel, etc. However, the issue of the weight of coins was persistent as one needed to carry them when doing huge transactions.
The coin system gave rise to the introduction of paper notes. The paper notes were light and easy to carry around. Countries around the world developed their paper notes and made them the official medium of exchange.
– Digital currencies
With the advancement of the internet and sophistication of financial systems, online banking became a norm and man could pay for goods and services using the internet. Digital currencies then were simply the electronic versions of paper notes. While paper notes are in circulation in the physical world, digital notes are in circulation in the virtual world. SO you can simply credit the bank account of an individual with N50,000 using your mobile banking app or any internet-enabled device.
Cryptocurrencies are the new form of digital money. A cryptocurrency is a form of currency that removes the regulatory authority and circulates between two parties. They are not controlled by the government or banks. Cryptocurrencies instead are created using techniques that are cryptographic in nature and enables people to do transactions with them in a secure state. Cryptocurrencies use decentralized control which is different to centralized control of electronic money and central banks.
Cryptocurrencies are now a new form of money that will gain mainstream acceptance. In the nearest future, you will be able to make most of your everyday payments using cryptocurrencies.
So that’s how fast the world is changing and how money has evolved and continues to evolve from coins to cryptocurrencies. We must evolve with it by understanding and trading Cryptocurrencies today.