Negosentro.com | What is Money? It’s Evolution Over The Year | Every person must be familiar with the age-old adage, “Money makes the world go round.” If we take a close look at human history, there’s no denying that money has always been an integral part of society. From the times of our ancestors up to the modern era, it has served as a medium of exchange, shaping the world as we know it.
Along with the rapid evolution of technology, money has also advanced over the years. Compared to the past, when people were limited to barter, coins, and banknotes, the latest innovations have given birth to electronic forms of payment.
Today, any person can sign up for a credit card, use mobile banking applications, apply for loyalty programs and get a digital wallet to send or receive payments.
But before we dive deep into the evolution of money, let’s start by answering the question, “What is money?” To give a formal definition, money is what people use to acquire goods or services. For a medium of payment to be considered money, it must first meet the following three criteria:
- Medium of Exchange – It must be an item you can use to trade or acquire something. Both parties must agree that the said item has value.
- Store of Value – Money must hold its value over a specific period. Unlike perishable goods that have an expiration date or depreciate in quality with age, money should be stored and used at a later time.
- Unit of Account – Lastly, money must be able to serve as a unit of measurement. It should have the ability to determine the value of a particular product or service and be a baseline for both sellers and consumers
Before money was formed, people had to rely on barter to make transactions. For a trade to be valid, both parties must agree that the two items being exchanged have equal value. Even though this method may sound simple, it can be chaotic since not all things are created equal. At the same time, goods come in different shapes and sizes, so item portability can also hinder exchanges.
Luckily, bright minds from Europe and Asia were able to come up with the idea of coins. These small objects made transactions a lot more convenient and eventually paved the way for paper currency and the birth of financial institutions. Apart from making trade easier, these innovations have also given people a stronger sense of security.
Fast-forward to the present, and one notable development in recent years would be digital currencies. Ever since its creation in 2009, Bitcoin, along with the other coins that came after, is continuously gaining traction amongst investors. Since it’s an unregulated form of currency free from third-party intervention, it’s been hailed as an asset that can potentially revolutionize the finance industry.
Today, the cryptocurrency industry is more active than ever. With more individuals and institutions developing interest, and with COVID-19 boosting digital transformation across all fields, the prices of coins are reaching all-time highs. To give you a better idea, Bitcoin currently boasts a price tag of $34863.96 as of January 2020.
Given the points above, it’s evident that money will always be here to stay. The world may constantly be shifting towards the digital space, but it will always find a way to adapt to our ever-changing needs. While the mainstream adoption of crypto will take some time, trends suggest that it will continue to gain the public’s favor.
If you want to fully understand the benefits of digital currency and how it can affect the finance sector, you can start by taking a closer look at the evolution of money.