Right up there, stands a question that if you find an answer
to your whole perspective of life, the world and money will never be the same.
Lucky you, the Buckologist has you covered and for free. Now, take the front
seat and enjoy the ride.
The story began way back in the rich history of our human
race. Some sources say about 3,000 years ago. Which means that this subject of
money is like an old man in the eyes of your great grandfather. Yet it is one
of the most avoided and misunderstood of all subjects critical to a person’s
life.
It all started with what economists call Comparative
advantage. Don’t worry we will simplify it. We are cool like that.
Comparative advantage is a situation where one party
(country, individual or state) can better make or produce a certain commodity
than the other. An example would be what we have with the modern world China
and the Uncle Sam (the USA). The USA has a higher cost of production per
product or per unit time as compared to the Chinese counterpart. So when it
comes to industrial production, China currently has a comparative advantage
against the USA.
Now with this comparative advantage baby in our Buckology
bank account, let’s look at how the issue develops. Comparative advantage, in
many of its perspectives means that one party will have a certain commodity
that the other party does not have. The other party may also have something
that the other party doesn’t have as well. This created an imbalance in the
ecosystem of human existence.
A solution was developed and it is today called TRADE. Trade
at its simplest is when one party gives up something they have so as to receive
something else that they want or need. You can almost guess from the simple
definition that the first and closest way to trade was to exchange mutually
agreed commodities. Here, a singer would have to spend his time entertaining
and singing for the King in exchange for food for himself and the family. This is
today coined BARTER TRADE. The process would be called Bartering.
Bartering was a blessing to human existence but then it
started to have shortcomings. Imagine what you would need to do if you needed
medicine of some sort but the physician needed a bag of maize. It is rare for
two parties to mutually be prepared to trade the same products needed by the
other party in the same manner acceptable by both parties at the transaction
time. One party would now need to go around and barter what they have for something
they don’t need (goats for a bag of maize) and then come back for what they want.
Now this is a simplified scenario. It is way complication than this and the
process could take months or sometimes years to complete one transaction. This
was around 9000BC and records of this process were first recorded in Egypt.
Well, the trade ‘problem’ continued to grow as life also
evolved. Around 1200BC, the coastal regions around the Indian Ocean started
using Cowrie shells for trade. So there you have it. The first currency ever –
cowrie shells. Trade became way simpler and faster. All you needed to do was to
keep some shells under the bed and you can buy anything. For the first time,
there was need for PRICING.
However, there wasn’t enough of the cool shells to facilitate
trade around the world. Around 1100BC, some replicas of goods started to be
developed from bronze. Progress, the first PRODUCTION of money!
I know you can tell we are getting closer now. Good guess!
600BC, First official currency was minted by King Alyatters of Lydia in Modern
Turkey (standardised coinage). This improved trade across unrelated communities
(international trade). This was awesome. Next was The Florin (1250AD), a gold
coin minted in Florence which was widely accepted across Europe, encouraging
international trade. The House Medicci were some of the first great bankers.
They were loaded.
From that time we were already in the ‘money’ era. The
travel of Macro Polo to China in 1290AD introduced the idea of paper money to
Europeans. However notes didn’t catch on fast and the first bank notes were
printed in Sweden. What a first. It ain’t first if it ain’t Swedish! Now, paper
money was good for business, it could be produced without the need for relying
on raw materials like gold and silver. This was around 1661AD or just 1661. Now
sounds sane and familiar right. Right!
Welcome to your comfort zone names and dates. By this time.
Almost all economies now have their own CURRENCIES and Central Banks to control
and print money. Good progress. Now, moving ahead, in 1860, Western Union spearheaded
e-money with Electronic Funds Transfer (EFT) via telegram and the first credit
card was invented by John Biggins ‘Charge-it’ in 1946.
By the time when almost everyone was born already, in 1999
European Banks began offering mobile banking with primitive smart phones and in
2008 – Contactless card (UK).
Today, we have money in almost any form thinkable including
others that are still in the process of being thought or developed. Our generation
has seen the development and use of the world’s first non-centralised currency,
Bitcoins.
Wow what a history lesson, now you can go and impress your
date with your knowledge of money before you show them your bank account!
Be sure to take the quiz.
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