Money can be perceived in many different ways, but essentially it is something of value that’s used as a medium of exchange. Everyone wants it, works for it, and then decides how they are going to spend it. Money is a type of good that functions as a currency, and although similar, is different all over the world. Usually what’s used as money is valuable but also portable, durable, and easy to store safely. For centuries, precious metals like gold and silver were used as money and were used as tokens of wealth based on people’s perception of them. Another form of currency in the past and still used today is simple and useful items such as animals, food, pelts, beads, and tools used as a form of trade called bartering. There has even been stone currency in the world. Rai Stones were used by the Yapese as a form of money and are essentially large circular stone disks with a hole in the center that were quarried and then used as a form of money on the island of Yap. Explorers from the island found limestone deposits on an island hundreds of miles away, which they carved into these disks and brought home on boats. There were many different sized stones, yet the whole in the centre allowed them to be transported when necessary. The chieftain was always the owner of the biggest stones and from there, regulated which were circulated.

In times past, governments and/or banks found that they could print and issue paper notes as a form of money.  This has become known as “fiat money”. At first it’s convenient both to carry and transfer, as well as for governments to superficially speed up their economy, as they control how much is printed and distributed, and can use it to pay for whatever they want/need. It is usually at first representative of real value and exchangeable for it. But over time it almost always becomes overprinted and detached from any real value, slowly (or quickly) depreciating in value, while the price of goods appreciates. Generally speaking, the stronger the country’s economy, the more fiat money will be sought after. So if the economy of a country drops, so will the value of it’s fiat money.

The change from physical money to fiat money happened at different rates throughout the world. For example in China, fiat money originated in the 11th century. In the Song Dynasty, paper money was first institutionalized, however the earliest written records of functioning paper currency, come from the Yuan Dynasty of the Mongol’s first Emperor of China.  Notes were valued at different exchange rates for different commodities. Marco Polo was even impressed by the Chinese paper currency, however later he recorded it’s demise and the national negative effects it had. In Europe, fiat money was introduced in the form of tally sticks, an ancient memory device used to record numbers and messages, originally made out of animal bones, due to a shortage of coins in Medieval times.

Sometimes it’s the case where good money goes through the process of debasement, meaning that it’s value drops, often times by lessening or getting rid of what made it valuable to begin with. One of the earliest known examples of debasement was where in Roman times, they would clip the edges of coins for resale somewhere else, however this would not affect the value of the original coin itself. There was also at least one case in Rome where the actual precious metal content in the coins themselves was lowered, which led the coins being almost unwanted. This happened in the case of the Roman Denarius where the silver content was gradually removed from minted coins. Although Rome was one of the first places in the world where this occurred, it was by no means the last.

As types of money have changed over time, so has how we store it and keep it safe. When physical commodities are used as money then individuals simply need to find places to hide or protect them. In today’s society it’s more common that people will keep their money stored in a bank account. This doesn’t always mean that your physical money is stored in a vault, but usually rather that a representation of your wealth is shown in numbers that are protected by the bank. Whether this is safer or not than keeping it yourself is largely debatable, and dependant on certain circumstances.

As online banking has hit the scene, no longer do you have to walk to a local bank branch in order to transfer or pay out money, all of this can be done with a few clicks of the button anywhere with an internet connection. It’s even possible to get a mobile app for some banks, and make transactions instantly using a mobile device. Of course the banks make sure that all of these methods are as secure as they can be, however people still worry about the fact that there are now more ways than ever for people to gain access to your funds through fraud and money laundering scandals. As technology for security becomes more advanced, so does hacking and fraud capabilities.  

One of the newest forms of currency is digital currency, aka cryptocurrency, which can be defined as an internet based, encrypted, form of currency recorded on blockchain technology). Digital currency began as being decentralised, meaning that it had no central government. Decentralization allows for inherent privacy as it enables people to make transactions while remaining anonymous. Cryptocurrencies are backed by the trust of users and are mined and distributed based on solver ever increasing math problems. The future value of these digital currencies is hard to predict, with some being wildly successful, and others crashing and burning. There has also been some security worries including the possibility of hacking or losing your digital currency eWallet – which stores them. Usually, these concerns have already been dealt with, but on the occasion that they do come up, usually the online community is quick to find solutions.

Digital currencies have many of the same properties as physical currencies do, however they can provide instant transactions from almost anywhere in the world, but they may be restricted to certain communities. The main reason for this restriction is the fact that digital currency is not legal in all countries, while others have strict limits in place. Some countries have accepted them as official forms of currency whereas many others choose to reject the idea completely or are still in the process of deciding whether or not to accept them (ie. regulate them, allow them to be used for certain kinds of purchases, tax them, etc). As personal financial freedom and anonymity increases,  it is easier for people to avoid paying taxes, and increases in money laundering can occur. Of course, when freedom is given, there’s always some risks involved, but it doesn’t mean that the freedom itself is bad.

Digital money is recorded on a blockchain which is essentially a public, distributed, ledger of all the transactions made with the currency. The first major blockchain innovation was Bitcoin, which is now used by millions of people for making payments, and is currently at record highs. Since Bitcoin came on the scene, many others have been introduced including Ethereum, Litecoin, Zcash, Dash and many others. These digital currencies are having a huge impact on modern day money as they are putting pressure on modern banking systems. If more and more people turn to digital currency and the technology around them (such as digital wallets) then the need for banks will quickly start to decline, plus they will have to bring down their costs dramatically in order to stay competitive. It seems as though money will become even more virtual as the world shifts into an ever more digital economy.

The future of money will continue to shift and change throughout the world as time passes, however with the advancement of digital currencies and their easy accessibility, making transactions and keeping your funds safe, is likely to become even easier and safer. Only time will tell what the future has in store.