Looking at the past can help us better determine the future. Here’s how money has developed over the centuries, and what we may be able to expect for the future of money.Money as we know it today has come a long way since the earliest forms of bartering and trade. What started as exchanging precious metals, beads and other special items has become a full-blown digital trade with cryptocurrencies such as Bitcoin, DogeCoin, Ethereum and Cardano – money you can’t even hold or see.
If you’re interested to see how far we’ve come when it comes to money, read on to learn more. And if you’d like to see what the future of money holds, you’ll find our predictions here as well.
The Major Eras of Money
The eras of money – including the future of money – rely very much on the complexity of society at the time. As humankind expanded and progressed, so too did our needs for new forms of currency.
Bartering and Trade
This is the earliest and most primitive form of exchanging goods and services. Ancient peoples and tribes traded things they had for things they needed. This system worked well when people had simple needs and few goods to exchange, but relied on the ability of each party to weigh up the value of the goods or services being traded.
Most commonly traded was food (different regions would have had different crops and livestock that others didn’t), animals, raw materials including copper, bronze, tin and iron, textiles such as wool and linen, tools and weapons, and even luxury items such as spices, perfume and precious metals.
It’s hard to say when the age of bartering and trade ended, and the future of money began to evolve. This is due to the lack of preserved records from such an old time period. However, historians suggest that bartering was the primary mode of currency for thousands of years until commodity money appeared around 3000 BCE.
Commodity money, which involved using specific commodities like precious metals, salt, or tea as a form of currency, was an important step in the evolution of money. It finally allowed for standardised values for goods and services, making it easier for people to engage in trade and exchange across larger distances and to better understand the value of what they were purchasing.
The transition from bartering to commodity money was not a sudden or uniform process, and it likely varied depending on the region or culture in question. Bartering most likely continued to be a common form of exchange even after commodity money was introduced. Additionally, the use of commodity money did not replace bartering entirely, but rather complemented it as an additional form of exchange.
Over time, just as bartering, commodity money began to evolve into a more modern form of money that was driven by advances in technology, changes in economic systems, and the need for more efficient and convenient forms of exchange.
Paper money eventually emerged in China during the Tang Dynasty (618-907 AD) and spread throughout the world. It allowed for easier transport and storage of currency and was backed by gold or silver reserves or government standards, making it a more trustworthy form of currency. It was so effective in fact, that we continue to use paper money to this day in a more modern form.
With the rise of computers and the internet, electronic money has become a common form of payment. In some places of the world, it is the preferred method of payment, whereas other countries such as Indonesia, South Africa, Cambodia and Japan still prefer to use cash.
Electronic money includes debit and credit cards, online payment systems, and mobile payments. It also set up the base for the development of cryptocurrency, which continues to shape the future of money.
The latest trend in the world of money, cryptocurrencies such as Bitcoin and Ethereum are digital assets that use encryption techniques to regulate the generation of units and verify the transfer of funds. They are decentralised, meaning they are not controlled by any central authority or government, which is attractive to those who buy and trade these currencies.
The volatile price history of digital currencies including crypto are a testament to the way it has been involved in society. According to Investopedia, between the years of 2016 to 2020, Bitcoin Prices slowly climbed through 2016 to over $900 by the end of the year. The following year, Bitcoin’s price hovered around $1,000 until it broke $2,000 in mid-May and then skyrocketed to $19,345.49 on Dec 15th. As of the time of writing this article, the value of one Bitcoin in Australia is $40,555.
Where Is The Future Of Money Leading Us?
Looking at the rise of digital and cryptocurrency, we can see that the future of money will continue to value the digital and online space.
A Move Towards A Cashless Society
As digital payments become more popular, we may see a move towards a cashless society where physical currency is no longer used. As mentioned, cash is preferred in many parts of the world, but even these countries may see a shift in preference towards card and other digital payments.
Increased Use of Cryptocurrency
As more people become familiar with cryptocurrencies and their advantages, they may become a more popular form of payment. New cryptocurrencies are emerging all the time, with the latest additions including meme, Shrekt, Blaze Token, Bruv and many, many more. There is no guarantee that any of these currencies will take off (especially those based on pop culture references), however some may surprise us in the future.
Rise of Central Bank Digital Currencies (CBDCs)
Some governments are exploring the idea of creating their own digital currencies, which would be backed by the government and regulated by central banks. The concept of CBDCs has gained increasing attention in recent years, driven by the rise of cryptocurrencies and the increasing digitalisation of financial systems. Some central banks, such as the People’s Bank of China, have already launched pilot programs for CBDCs, while others, like the European Central Bank, are actively exploring the possibility of introducing their own CBDCs.
The potential benefits of CBDCs include increased financial inclusion, lower transaction costs, and greater efficiency and security in financial transactions.
With advances in biometric technology, we may see an increase in payments made using fingerprints, facial recognition, or other forms of biometric identification. One of the main advantages of biometric payments is that they can provide a high level of security and convenience for users, since biometric data is unique to each individual and makes it difficult for someone else to access and spend your money without your knowledge.
However, biometric payments also raise important privacy and security concerns. Collecting and storing biometric data carries a risk of theft or misuse, and there are concerns that biometric data could be used to track individuals or invade their privacy. It is a form of the future of money that needs to be strictly regulated.