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For as long as we’ve known, trade has been used as a means to get what we want or need. 

Take, for example, the invention of money. Today, money is the primary medium of exchange in most societies. It has value because people believe they can use it to acquire goods and services they need or desire.

Money has taken many forms throughout history, from coins to paper cash and plastic cards. But the way money has existed and been used has evolved throughout history. 

**Let’s go back in time, shall we?**

Background

Bartering, which dates back to around 6,000 BCE, was one of the earliest exchange mediums used. For instance, if Kristie produced bread but wanted silk, she could go to Mark, who is known for manufacturing silk, and ask for it. If the transaction were to take place without any currencies, Mark might agree to give twenty loaves of bread in exchange for some silk. 

This gives you a rough idea, but there are 3 core issues at the heart of the bartering system as a medium of exchange:

- A “double coincidence of wants” must occur
- Divisibility issues arise
- Valuing the goods being traded are problematic


The Barter Era 

### Double coincidence of wants
Well, fundamentally, this means that both parties involved in the exchange must be willing to make the trade at that point in time. 

You probably wouldn’t want to give up a luxury item like a house for a commodity like a bag of rice. Right?

Even if two parties were willing to make the trade, it would take time and energy to search for the other person. 

Here, finding the right person to trade with would take up a lot of time and effort, which is not practical in today’s modern economy. 

### Divisibility issues
This refers to problems with the divisibility of the goods being traded. 

Essentially this means that some goods are only useful when they are one whole unit, and useless if they are broken down into smaller units. 

If you decide to split a car in half and trade it for half a TV screen, it would be useless for you and the person you decide to make the trade with. 

In this case, neither of you will be able to watch your favorite movie on Netflix or drive around town in your car. 

### Problems with valuing goods

It is difficult to value the goods being traded since there is no fixed standard unit of account respective to the different goods it is being traded for. 

For example, three apples could be traded for four oranges, two oranges for one pencil, and five  pencils for five bags of rice. But maybe during this time, you need to trade two oranges for three bags of rice. 

This is the fundamental problem of valuing goods under a barter economy. Who is to say which is more valuable? 

Money introduced a new way of valuing goods and increasing financial interactions between strangers on a larger scale. 

Currency doesn’t look the same everywhere. 

### Fun fact: Rai Stones

Rai stones are donut-shaped rocks that were used as a form of currency on the Yap islands in Micronesia. 

The rocks were extracted from a neighboring island called Palau and were sought after because of their scarcity and the involved risk of transportation from the island. 

Each rai stone weighed about 4,000 kilograms and could be used for jewelry.

![raistone.png](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/raistone_aeba15e9a9.png)


Challenges of Barter Systems

Over time, transactions were carried out through different forms of physical currencies around the world. 

### Coins

The history of coins as a form of currency stretches back to the BCE era. One of the oldest coins in the world was created by China around 770 BCE, used to imitate the cowrie shells as a medium of exchange. 

![image2.png](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/image2_65612abcf9.png)

The Lydian Empire, many years later, also started introducing their own coins as the official currency with stamped inscriptions around 600 BCE. 

The coins were made from a mixture of silver and gold and were stamped with pictures that gave information about the kingdom, language, and economy under the ruler that introduced the supply.

### Paper Money

Paper money was first issued in China by the Song dynasty in the 11th century due to a copper shortage. Over time, the government started recognizing the economic advantages associated with printing paper money:
- It uses materials that are cheaper than valuable metals 
- Paper money is faster to print compared to mining and smelting coins
- Paper money comes in many denominations which also makes it transportable — paper is much lighter than metal coins

But at the same time, there are also some noticeable disadvantages. 

For one, it can easily be damaged or fully destroyed over time. Additionally, the rise in technology has increased the threat of fraudulent behavior, since it is now easier than ever to “print” your own money and try to scam other people. And due to its light weight, well, it can be easy to drop or misplace without realizing it.

Now that we understand the problems associated with bartering, it’s easier to paint a clear picture of how useful money can be as a medium of exchange.

- It solves the problem of having to search for someone who has what you need and is willing to exchange it for something you already have.
- It is easily interchangeable (also known as fungible) — for example a $1 note can be split into 100 cent coins or four quarters.
- It has a predetermined value which makes it easy to price goods and services

And with the way the world is changing, most things are becoming even more digital.


Transitioning to Physical Currencies

### Credit Cards

The concept of credit itself can be traced back thousands of years ago to ancient Mesopotamia.

The idea itself has not changed much since then: you can go to a lender and ask for a loan. Back then, the transaction would be inscribed onto a clay tablet to keep track of what is owed. 

But today it usually involves filling out forms with relevant information (the assets you own, your salary, etc) and waiting for the lender’s decision to approve or reject the request.

Once approved, you are given a card that can be used to purchase items in stores.

> 🗒 Side note: Now that more people have access to credit, some economists refer to payments made by debit and credit cards as “plastic money”.

### Beyond Physical Objects: Contactless Payments

Contactless payment services are something that we are seeing more and more of from financial institutions. Here, customers can make a payment without having to insert a physical card into a reader. This is possible because of “near field communication” (NFC) technology. 

This technology allows two devices to communicate with each other through short-range wireless connectivity within a few centimeters of each other. 

NFC technology also works on most modern phones. If you own a smartphone, you either use it or have the ability to pay for items using your very own phone!

Now, modern money sounds great, doesn’t it? It’s light, convenient, and easy to use.

But as with any technology, comes its disadvantages. We’re now facing a value crisis: modern money is losing its worth.

**Wait what?**

### Money, You’ve Changed…

Up until 1971, the US dollar was backed by a fixed amount of gold in what was known as the Gold Standard.

This gave the currency inherent value since gold has been used as a store of value for thousands of years. However, President Nixon abandoned the Gold Standard on August 15, 1971, meaning that the US government would no longer convert dollars into gold.

This move enabled central banks to start printing money without the need for an equivalent amount of gold. But the more of something that exists, the less valuable it generally becomes. 

Over the past few decades, this has resulted in many problems associated with inflation, which is the increase in the price of items over time. This means that consumers lose their purchasing power as the value of money declines.

To put it into perspective, let’s take an example of a hamburger, which in the 1980s cost only 15 cents. But today, you probably wouldn’t even be able to buy chewing gum with that amount.


A Cashless World

### Cryptocurrencies: An Encrypted Digital Currency

So we’ve explored how money and currencies have evolved as a medium of exchange over time, and we can start to see how cryptocurrencies can be used as a form of currency. In essence, these are the features of cryptocurrencies: 

- They are virtual and intangible 
- They exist on a decentralized network known as the blockchain
- Transactions can be made without intermediaries

But one question remains: how are cryptocurrencies valued? 

Put simply, it comes down to supply and demand. Like any other asset, its value depends on two factors: 

1. How much is someone willing to pay for it?
2. What can I use it for? (Does it have a practical use?)

When there is high demand and low supply, the price of a cryptocurrency can surge. Conversely, when there is high supply and low demand, prices are likely to fall.

Take Bitcoin, for example. Its supply is relatively low with only 21 million coins that will ever exist. This is in contrast to national currencies, which have billions or trillions in circulation.

Various metrics, such as trading volume, circulating supply, and market capitalization, are also used to determine the value of a cryptocurrency. You can find this information on websites that track these metrics.

But what does this mean for all of us?

Money is changing. How we pay, save, spend, transfer is shaping this new wave.

Cryptocurrencies are one piece of the puzzle, but there are other significant changes too.

Decentralized finance (DeFi) is showing people a different way to earn and save. (We’ll cover this later!)

Online banking has made finance more accessible to people from all backgrounds.

Cryptocurrencies offer a new way to store money digitally.

It's difficult to predict what the future holds, but it's clear that the next decade will bring unprecedented changes to our relationship with money and finance.

**Excited?**


Future of Payments

Wallet.svg

History of Trade and Currency 

Wait, what’s web3? 

<h3 id="cryptocurrenciesanencrypteddigitalcurrency">Cryptocurrencies: An Encrypted Digital Currency</h3>
So we’ve explored how money and currencies have evolved as a medium of exchange over time, and we can start to see how <a class="glossary-term" data-tooltip-id="term-30">cryptocurrencies</a> can be used as a form of currency. In essence, these are the features of cryptocurrencies: 
<ul>
<li>They are virtual and intangible </li>
<li>They exist on a <a class="glossary-term" data-tooltip-id="term-32">decentralized</a> network known as the <a class="glossary-term" data-tooltip-id="term-8">blockchain</a></li>
<li>Transactions can be made without intermediaries</li>
</ul>
But one question remains: how are <a class="glossary-term" data-tooltip-id="term-30">cryptocurrencies</a> valued? 
Put simply, it comes down to supply and demand. Like any other asset, its value depends on two factors: 
<ol>
<li>How much is someone willing to pay for it?</li>
<li>What can I use it for? (Does it have a practical use?)</li>
</ol>
When there is high demand and low supply, the price of a cryptocurrency can surge. Conversely, when there is high supply and low demand, prices are likely to fall.
Take Bitcoin, for example. Its supply is relatively low with only 21 million coins that will ever exist. This is in contrast to national currencies, which have billions or trillions in circulation.
Various metrics, such as trading volume, circulating supply, and market capitalization, are also used to determine the value of a cryptocurrency. You can find this information on websites that track these metrics.
But what does this mean for all of us?
Money is changing. How we pay, save, spend, transfer is shaping this new wave.
<a class="glossary-term" data-tooltip-id="term-30">Cryptocurrencies</a> are one piece of the puzzle, but there are other significant changes too.
<a class="glossary-term" data-tooltip-id="term-32">Decentralized</a> finance (DeFi) is showing people a different way to earn and save. (We’ll cover this later!)
Online banking has made finance more accessible to people from all backgrounds.
<a class="glossary-term" data-tooltip-id="term-30">Cryptocurrencies</a> offer a new way to store money digitally.
It's difficult to predict what the future holds, but it's clear that the next decade will bring unprecedented changes to our relationship with money and finance.
Excited?

### Cryptocurrencies: An Encrypted Digital Currency

So we’ve explored how money and currencies have evolved as a medium of exchange over time, and we can st...

Future of Payments

Cryptocurrencies: An Encrypted Digital Currency

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What is web3?

What is the Blockchain?

Future of Payments

Cryptocurrencies: An Encrypted Digital Currency

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What is the Blockchain?