Money is the most important invention of modern times. It has undergone a long process of historical evolution. Human beings passed through a stage when money was not in use and goods were exchanged directly for one another. Such an exchange of goods for goods was called Barter Exchange.
1.Commodity Money
The inconveniences and drawbacks of barter led to the gradual use of a medium of exchange. If we study the history of money we shall find that all sorts of commodities like seashells, pearls, precious stones, tea, tobacco, cow, leather, cloth, salt, wine, etc. have been used as a medium of exchange (i.e., money). It is called Commodity Money.
2.Metallic Money
Inadequacy of commodity money led to the evolution of metallic money (gold and silver). The problem of uniformity of weight and purity of precious metals led to private and public coinage. For its advantages, as the possibility of treasuring, divisibility, easy of transportation and beauty, metal became the main standard of value. It was exchanged under different forms. In the beginning, metal was used in its natural state, and later under the form of ingots and, still, transformed into objects, from rings to bracelets.
The metal traded required weight assessment and assaying of its purity at each transaction. Later, metal money gained definite form and weight, receiving a mark indicating its value, indicating also the person responsible for its issue. This measure made transactions faster, as it saved the trouble of weighing it and enabled prompt identification of the quantity of metal offered for trade.
3.Coins
In the 7th century B.C. the first coins resembling current ones appeared: they were small metal pieces, with fixed weight and value, and bearing an official seal, that is the mark of who has minted them and also a guaranty of their value.
Coins reflect the mentality of people and their time. One may find political, economic, technological and cultural aspects in coins. Through the impressions found in coins, we are able to know the effigy of personalities who lived centuries ago. Probably, the first historic character to have his effigy registered in a coin was Alexander the Great, of Macedonia, around the year 330 B.C.
4.Paper Money
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| The First Banknote |
In the Middle Ages, the keeping of values with goldsmiths, persons trading with gold and silver items, was common. The goldsmith, as a guaranty, delivered a receipt. With time, these receipts came to be used to make payments, circulating from hand to hand, giving origin to paper money. In Brazil, the first banknotes, precursors of the current notes, were issued by Banco do Brasil in 1810. They had its value written by hand, as we today do with our cheques.
5. Bank Money
As coins and notes ceased to be convertible into precious metal, money became more dematerialized and assumed abstract forms. One of these forms is the check that, for simplicity of use and security offered, is being adopted by an increasing number of people in their day-by-day activities. Cheques, by which one orders payment of a certain amount to its bearer or to a person mentioned in it, aims mainly at transactions with bank deposits.6.E-Money
Electronic money refers to money that exists in banking computer systems, which may be used to facilitate electronic transactions. Although its value is backed by fiat currency, and may, therefore, be exchanged into a physical, tangible form, electronic money is primarily used to transact electronically, due to the sheer convenience of this methodology.
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7.Cryptocurrency
A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. Many cryptocurrencies are decentralized systems based on blockchain technology, a distributed ledger enforced by a disparate network of computers. A defining feature of a cryptocurrency, and arguably its biggest allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation. (ie: Bitcoin)
