A brief history of money
When money is created depends on how you define money.
Felix Martin, in his book Money: An Unauthorized Biography, argues that thinking of money as a "thing"—either a commodity, or a precious metal (metal currency) philosophies—the “metallist”)—missed the enormous civilizing power unleashed by this invention. Felix Martin called money "social technology" and pointed out, "Money itself is not money. Money is a system of credit accounts and settlements represented by money." , which provides a universal value system that allows the establishment of Forms of organization that transcend tribes, nations, races, and ideologies .
1. Barter phase
In the early stages of human society, people exchanged natural items, such as food, cloth, and metal, and each commodity was regarded as a value that could be exchanged for other commodities. This exchange method is very simple and straightforward, but there are also many problems. Suppose you grow apples on a certain mountain, and every day you toil in the orchard, your shoes are worn out. So, you go to the market to find a shoemaker and tell him that you want to exchange an apple with him for a pair of shoes. But the shoemaker doesn't know how many apples he should receive. Every day he would have dozens of customers come to him, some brought a few sacks of apples, some brought wheat, goat or cloth, and the quality was different. Intercede or help with his back pain.
Moreover, with the improvement of productivity, human beings entered the agricultural society, and the material materials produced became more and more abundant, and there was a specialization of labor, and occupations such as shoemakers, carpenters, blacksmiths, and doctors appeared. At this time, whether you are a shoemaker or an apple grower, you have to figure out the relative prices of dozens of commodities every day. If there are 100 different items in the market, 4950 items are needed.
2. General Equivalent Stage
In order to solve the problem of barter exchange, people have to find an item whose value can be accepted by both parties to act as a general equivalent , thus the concept of currency is born and enters the stage of currency commodity exchange . The emergence of currency is not a breakthrough in technology, but an innovation in thought. Regardless of any item, as long as humans are willing to use it and can systematically represent the value of other items in exchange for items or services, it conforms to the concept of currency .
(1) wheat yuan
There are many types of currency, including shells, horns, hides, salt, grains, beads, cloth, etc. Most of the currencies that were used as general equivalents at the beginning had actual value. For example, the earliest money system in history was the Sumerian "wheat dollar" system. The wheat-yuan system appeared around 3000 BC, exactly the same time and place as the writing appeared. The so-called barley dollar is actually barley, which uses a fixed amount of barley grains as a common unit to measure and exchange various other goods and services. The most common unit at the time was the sila, approximately equal to a liter.
(2) Gold and silver are naturally not currency, and currency is naturally gold and silver
The real breakthrough of money is that human beings began to believe that certain forms of currency have no inherent value in themselves, and their value is only given by humans, such as gold, silver and other items. "Gold and silver are not money by nature, and money is naturally gold and silver." On the one hand, due to objective factors such as small size, easy to divide, not easy to wear, limited output, and easy to carry, and on the other hand, due to the continuous strengthening of the human consensus on the value of gold and silver in the historical development, gold and silver have gradually become the general value of goods. The equivalent is the so-called "commodity money". Precious metals represented by gold and silver have been used as currency for a long time in human history. No matter in the West or the East, precious metals such as gold and silver have been used as the main value measure and means of circulation, storage and payment.
(3) National coinage
The original precious metal currency was made into bars, usually in units of weight. Before each transaction, the transaction parties needed to identify the fineness of the gold nuggets, and divide the gold nuggets according to the size of the transaction. However, identification, weighing, and segmentation all need to go through relatively complicated procedures, and manual operations can easily cause problems such as uneven texture of gold nuggets and loss of segmentation, which will affect the transaction of commodities. Moreover, with the expansion of the scope of commodity transactions and the emergence of cross-regional or even cross-country transactions, the weight and fineness of precious metal currencies require more authoritative proof. In order to better develop the economy, the country began to manage and cast precious metal currency, unified the shape, pattern, text and weight of the currency, and engraved with identification marks. The imprint first indicates how much precious metal is contained in the coin, and the second can prove the identity of the issuer, thereby ensuring the composition of the coin. The currency under state management and minting is endorsed by the state's reputation and is more standardized.
3. Credit currency stage
(1) Production of banknotes
With the development of the economy, the quantity and amount of commodity transactions increase, and the demand for currency is increasing. During the Northern Song Dynasty, the earliest banknotes in the world - Jiaozi appeared in China . The economy was very prosperous during the Northern Song Dynasty, and trade exchanges required a large amount of currency, which provided the soil for the emergence of banknotes; China's papermaking and printing techniques led the world, providing a solid technical foundation for the printing of banknotes; the most important thing is a high degree of centralization Rule, providing a credit endorsement for the value of paper money . It can be said that the emergence of banknotes is an inevitable form of currency development.
Paper money is issued on the basis of national credit, so it is called credit currency . Without a strong credit endorsement, banknotes are just a bunch of worthless paper prints. The core of credit currency is trust . Currency is issued by the state and is also protected by national laws. It is the protection of national laws that makes people have confidence in banknotes, and the people's trust in the value of banknotes is based on the strength of the country. Confidence, almost all countries in the world currently adopt this form of currency. A note has no use value, but the piece of paper represents a written contractual agreement. One dollar, for example, contains a promise from the U.S. government that it can be used to pay for any goods and services.
(2) Credit becomes money
The modern system of currency management and exchange can be traced back to the Medici family during the Florentine Renaissance. In the early 15th century, Giovanni di Bicci de' Medici founded the Medici Bank, which made trade and commerce flourish. Essentially, bankers act as intermediaries, devising mechanisms for packaging excess capital from savers and releasing it to borrowers for a fee. By bringing all kinds of claims and debts in society into a bank's core ledger, a powerful new centralized credit system has been created. Between strangers, there was no way to trust each other to the point of doing business before, but now it is possible. Through the currency and banking system, human society is efficiently organized to expand and share social debts and payments.
Subsequently, his son Cosimo de' Medici inherited the bank and gradually expanded its business scope, establishing Medici Bank as one of the largest banks in Italy, and expanding its business to other European countries by establishing branches nation. The Medici Bank not only provided savings services and loans, but also created a better currency system through financial instruments such as packaging, bills of exchange and insurance, and gradually promoted the modernization and maturity of the European financial industry. Since before this, money can only represent some items that "actually exist in the present", limiting economic growth. Until people develop the money concept of "credit" based on their trust in the future , which represents goods that do not yet exist and only exist in imagination, forming a new system that allows us to advance the future, Build now. And there is a basic assumption behind this, that is, future resources must far exceed current resources, and credit is the price difference between "today's cake" and "tomorrow's cake". It is our belief in the future that allows the Bank, and the economy as a whole, to thrive . Since bank credit has effectively become money, it has promoted the exponential development of the economy and the explosive appreciation of capital.
4. E-money stage
In Keynes's "Monetary Theory", it is pointed out: "Accounting currency is the currency that expresses debts, prices and general purchasing power." It clearly expresses the fact that a form of **currency is "accounting currency"**.
With the rapid development of information technology, credit currency is gradually digitized, and bookkeeping currency is gradually concretized. Electronic money, represented by bank cards and mobile payments (Alipay, WeChat), has achieved a dominant position globally due to its high efficiency, low cost and convenience in transactions. More than 90% of the world's currencies are stored electronically in computers, and most business transactions, credits, and debts are just changes in electronic data in computers, without any exchange of physical money at all. The electronic form of currency is the mapping of physical legal currency in the network, and the issuer is still the national government.
5. Digital currency stage
With the development of the economy, the banks at the core of the centralized credit system have become more and more powerful, and strangers cannot do business without passing through them, and economic trade has become completely dependent on the intermediary services of bankers, which brings systemic risk. Systemic risk can shake the most important commodity in human society: trust.
With the gradual maturity of blockchain technology, decentralized digital currencies such as Bitcoin, Ethereum, and Ripple have emerged as the times require, and central banks in various countries are also accelerating the development of centralized digital currencies. Digital currency is divided into two categories: the legal digital currency issued by the domestic central bank and the new, untraceable, non-government-issued encrypted digital currency (private digital currency) represented by Bitcoin . Among them, the digital currency issued by the central bank is being piloted in many countries; while encryption (encryption is relative to non-encryption, encryption represents the characteristics of decentralization) digital currency (private digital currency) has realized free interaction with real currency. exchange, and even be able to purchase goods and services.
Trust is at the heart of any monetary system . The digital currency represented by Bitcoin is "creditless", and its basis is objective mathematical laws, not any trusted third party such as the government, banks, or enterprises . The creation of encrypted digital currency is. The operation and issuance of encrypted digital currency does not depend on the support or credit guarantee of institutions such as the central bank, the government, and enterprises, but is based on the trust mechanism of cryptographic algorithms, relying on network protocols, etc., which theoretically ensures that any individual, institution, or government It is impossible to manipulate the total amount of digital currency or create artificial inflation. In addition, digital currency also has clear personal control and privacy and anonymity.
The real point of digital currency is to liberate people from the centralized credit system and give credit to us - the people .