Money makes the world go round. You work, earn a salary, and it bolsters your way of life as you know it!
But as humanity makes huge strides in personal finance – through smart financial apps, spending insights, and cashback rewards, to name just a few examples – it’s questionable if money, cash in particular, will have any role in our day-to-day lives in the future.
Here we take a look back at the history of money to see if we can predict the direction of money in the future 💰🚀
One of the first premises of economics is that everything involves a trade-off. The basis of economics is that we, as humans, have , but we have limited resources. So we must allocate these limited resources to choose what we desire most. In short, by choosing to buy or invest your time in one area, you inherently must make the conscious decision to forego another allocation of your resources.
In our infographic above, you can see the notion of trade-offs, that took place thousands of years ago. Now let’s take a more modern example. Let us call ‘good A’ a pizza, and ‘good B’ a burger, and assume that they cost the same. So, say you have a finite amount of money that you must spend on one or the other. If you choose pizza for you food, that means you are intentionally choosing to forego the burger, and vice versa. This is similar on the macroeconomic scale. Let’s say a country had a finite number of resources, and they had to choose which goods they should focus their efforts upon. So, let’s call ‘good A’ butter, and ‘good B’ guns. If a country chooses to produce more butter, then they produce fewer guns, and vice versa.
This led to the emergence of trade. Voluntary trade – in an economist’s mind – is what we call a positive sum game (aka non-zero sum) . This means that everyone is made better-off when people choose to engage in trade. Despite the notion of trade-offs, trade seems to be the exception to the rule. The concept of trade is as old as civilisation itself, and without it, it is reasonable to assert that humanity wouldn’t have evolved to become what it is today.
But money as we know it, did not come into fruition until much later in the history of civilisation. We started off with bartering. Bartering describes the direct exchange of goods without a medium of exchange (in this case, money). For example, say you needed some potatoes, and your neighbour had them. You would approach your neighbour, disclosing your desire to obtain their goods. Cue – ‘Those chips looks tasty can I have some please?’ The first instances of bartering can be dated almost a million years ago, where people would trade various useful rocks for tools or weapons. As various communities began to grow, bartering became increasingly important, especially with the emergence of long-distance trade. As most goods were produced by farming, the most common trades were livestock for corn, and vice versa.
Someone may want some of your ears of corn, so they might say that they value one ear of corn to two potatoes. This led to the emergence of early trade. In reality, this actually benefited humanity for millennia, but as the population grew, and people migrated across the globe, bartering was shown to be less and less effective as time went on.
Bartering, in order to be effective, inherently requires a double coincidence of wants. This means that, when engaging in trade, the other person needed to have something that you yourself desired, otherwise the process was rendered redundant. Society came up with the solution of a medium of exchange. Essentially, this is a way to facilitate trade, using a currency that is widely used. This meant that people could accumulate this currency over time, and buy goods with value that exceed the value of the goods that they personally had. This is where the idea of saving was founded. Since before 11,000 BC, we see people began to allocate different values to different media of exchange. For example, a gold piece was worth more than a silver piece, a silver was worth more than a bronze piece, etc. This came to be know as commodity money – its value was tied directly to the material out of which it was made.
In ancient societies, such as India or China, we see standardised coinage used on a widespread level from as early on as 1,000 BC, when the rest of the world was still young. So, a trader would trade tobacco for coin, and in turn, trade that coin for tea, perhaps. Come 600 BC, in the Greek Empire, we see the first widespread government-issued unit of currency “the drachma”. This had the monarchs face on it, much like our money today, which acted as a symbol of authority and legitimacy.
Fast-forward a thousand years, to Amsterdam in the 17th century, we see the emergence of the first stock exchange. Although the likes of China and India had been trading in a similar way for a while, we see this as the first occurrence of a stock market in the west. Around this time, too, we see the emergence of paper money, or fiat currency.
This money itself had no inherent value- it’s just paper after all. But, it represented a promise. When paper money, let’s say the pound for argument’s sake, was first introduced, people could go to the bank and actually take out the amount of silver that was promised on the note itself. The term “pound” refers to the weight of silver that it represented.
Almost 300 years later, we see the emergence of the first credit card. Founded by John Biggins in 1946, this “Charg-It Card” allowed people to make purchases at any establishments within a 2 block radius of their bank. This was closely followed by the Diners Club Card in 1950, which allowed people to spend via credit at all available stores.
In 1980, we see the rise of electronic trading in New York, which is what you think of when you think of a stock market – loud noises, some profanity, and lots of intensity.
In 1999, at the founding of the smartphone, banks started to offer mobile banking via SMS.
In 2007, Barclaycard started issuing contactless cards to their customers.
And that’s our whirlwind tour of the history of money right up to the present day.
But what might the future of money entail? Well it’s reasonable to assume that, within the next 5 years or so, in the developed world at least, cash will be made almost entirely redundant. That means farewell to those bulky, cumbersome wallets as they will start to lose their relevance in day-to-day society and most people will practically only use digital banking to pay for their expenses.
There will be much more emphasis placed on the cloud in general, in particular with finance. Already, we can see how much emphasis is being placed on the cloud in terms of data storage and through collaborative tools used in the workplace like Google Drive.
Remember how at the start of this article, we discussed trade-offs? If you choose to buy one good, you inherently choose not to get another good – and this is almost the incorrigible truth.
That is, until you choose Curve. The reason why Curve is so revolutionary is because we’re challenging the foundation of economics. You really can have it all. We’re here to make your life easier, so asking you to make difficult decisions, like choosing which banks to use, is not part of our ethos.
That’s because Curve is not a bank. We are better. We are mission control for your money. We are an Over-The-Top Banking Platform that moves banking to the cloud. Curve uplifts your banking experience and makes it transparent, personalised, secure, rewarding and real-time.
Find out more about how Curve can help simplify and unify the way you Spend, Send, See and Save your money.