What is Money?
Money, some call it Doe, some call it bucks, others may refers to it as dollars, in other places, the pound and in others, the euro; whether one calls it peso, francs, mark, yen, yuan, shekel or rupees, money has the same function in the world we live in. Money is a medium of exchange for either goods or services in the form of a transaction. Money is in fact a placeholder for said product or service; for money, whether paper or gold, is easier to carry than a chicken or cow and the likelihood of your barber needing a shoe shine every time you get a haircut is very low. Since this is a reality, money was formed. The origins of money will be discuss more later on, for now, let's discuss what the core functions of money is.
Why would a man trust-in a placeholder for actual physical goods and services? How can he trust such an abstract concept of a piece of paper or gold, something that cannot used outside of exchanging for actual goods and services, as opposed to having actual goods or services he can use other than for exchange; such as chickens which he can eat; unlike money? The answer comes from the very nature of man himself. Man is a social & tribal species which relies on the good faith of other humans in order to survive and advance in life. One man alone up against a stronger animal, such as a woolly mammoth or lion; without weapons, is very weak and highly unlikely to win a duel with such creatures. However, when man is with other men, they are the ultimate life forms, and the superior animals in the world. This instinct in men to work together for a common goal of survival is the pivotal reason why money can work in humanity. The natural trust humans tend to have in the good faith of one another, makes money trustworthy as a placeholder for actual goods or services that would have an alternative function than that of exchange.
Another factor in man that makes money work, is intelligence. Trust in a pack alone, does not sufficiently lead an animal of that nature to trust in currency such as money. This is why after millions of years of evolution, wolves, sheep, goats, cattle and elephants do not have a form of money like humanity does. While yes, the monkey who scratches another monkey's back, will inevitably get his own back scratch by the same monkey, this is still a service and not a form of exchange alone that placeholds another good or service. Even when a mother elephant takes care of her infant elephant, this is still not considered money; for the mother elephant expects the baby elephants to grow up and have children of his/her own in order to continue the genes of her family of elephants into the future. The carrying on of the genetic line of her family, is the service the baby elephant will provide to the mother in exchange for that mother taking care of him/her as a youngling. Whether the elephants are self-aware of this fact, is beside the point, a, exchange of services outside of just transactional purposes has occurred. The fact that humans can tell that a piece of paper is worth a certain amount of chicken eggs that have more than just transactional value, is due to both self-awareness and intelligence. While money has not always been a part of humanity, it is a distinct thing that separates humans from other animals in the world.
The Origins of Money
Before money, humans use to barter for goods and services. For example one cow may have been worth 4 chickens, a pot could have been traded for a goat, or shoemaker could have fixed a man's shoes in exchange for a dozen eggs. The possibilities were endless. The problem with this system however, is it inefficiency and inconvenience. A man cannot carry a cow or 4 chickens or a goat everywhere he needs to go for trade without great effort. Commerce was slow with barter system and therefore economic growth was just as time-consuming. However, a breakthrough occurred around 3000 B.C. the first form of commodity money was created. This currency was known as The Shekel, and it was used in Mesopotamia. The Shekel was measured using the weight of barley, 180 liters of barley for one shekel, barley was the form of currency in Mesopotamia before the invention of the shekel. The Shekel is a historical coin that is still used today in the nation of Israel. Without The Shekel revolutionizes trade, would we even be in the position of economic growth that we are in today? Imagine trying to start an industrial revolution without coin or paper currency. Other Ancient Civilizations in The Bronze Age would also form their own form of commodity currency such as India was their Cowrie Shells or China with their Ban Liang.
Money Through the years
Money has evolved from the simple shekel and sea shell throughout the years. Other currencies that developed are The Roman Coin, The Greek Coin, The Lydian Stater, The Persian Daric, and Chinese Knife Money. Throughout the years, all of these currencies developed into more efficient currencies like paper currencies such as the dollar and now digital money.
Today, we still use commodity currency like: The Dollar, The Pound, The Euro, Yen, Peso, Yuan, Rupee, The Shekel, Francs, Marks, Roubles and The Real, but we as human are moving away from using physical paper and coin, and moving toward digital forms of these currencies and new currencies such as Bitcoin. The more our civilizations become online entities, the more we exchange goods and services using the web and in turn use digital forms of currency. Some economists believe that one day all currency trades will be done online and that we all will have one unifying form of currency. Now is this a good or bad thing? Only the future can tell us, till then, keep trading.
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