How we make transactions has changed over time, until we got here, to electronic banking and to cryptocurrencies like the ultimate expression of freedom, security, and equality. Taking into account the resent global health crisis, our thoughts have also changed dramatically to face an idea that we may not have taken into account before. If banks were to fail, and if we can’t use cash anymore, if we have to remain at home and if our family is far away, How can I make transactions successfully while social distanced?
This is a brave question to make, and we shouldn’t be afraid of it because, just like in the past, we shall continue to find a solution. Those who were born in the 2000s have no idea what it is to play on the street without a phone to take a picture, with more reasons our generations have long forgotten what’s the story of money and why do we say that the blockchain technology and crypto truly mean innovation.
Let’s talk a bit about the story of money. Like I said before, many people just got used to how we use money today but they really have no idea how it was before. The truth is that in the beginning, people did something called “bartering” which consists of the exchange or trade of goods or services without the use of money. People who harvest corn could give the corn to another person in exchange for that person’s service or products he possessed. In other words, everything was about trust and mutual consent, where both parts had to give something that the other one needed or wanted, setting the price based on their interest and demand. It all depends on what is the price of such product for you, meaning that there was an intrinsic value that would subsist in time, because well if you are thirsty in the middle of a desert a bottle of water would have a huge value while a book with the knowledge of the world would have less value.
There was a problem though, what would happen if the parties involved couldn't agree that the goods they exchanged had equal value for each other? And what if the person in need of goods or services had nothing the person who had them wanted? Then the chain of exchange would automatically get cut.
Under the shadow of this problem, commodities came to life. A basic item that could be used by anyone. In the past, things such as salt, tea, tobacco, cattle, and seeds were considered commodities and therefore, were once used as money. Yet, using these kinds of commodities created greater difficulties, because lugging heavy bags of salt or dragging around a pack of tobacco could prove practical or logistical nightmares, also they were difficult to store and were highly perishable.
Later on, transactions continued to develop now into a smaller, easier to carry and less perishable item. The coins started to appear in different shapes and materials, but throughout history, gold and silver have been the most common forms of money. Even now, when you talk about silver or gold it is understood as a synonym of money or directly related to it.
Still the problems continued appearing since the coins were made with certain minerals, those minerals started to scarce and they also became more expensive. Metal-based coins had the advantage of carrying their value within the coins themselves but the exchange rates between the metals varied with supply and demand, imagine having to pay the money with money. Another step in the evolution of money was the change from a coin being a unit of weight to being a unit of value. A distinction could be made between its commodity value and its specie value. Once again, since the volume increased the money was difficult to carry and difficult to fabricate.
The changes we needed
Going forward in the story, gold and silver coins was changed by more common and easily obtained minerals, and their production was also reduced by the appearance of bills. But once again, it wasn’t enough. Finally, in the second part of the twentieth century, the development of computer technology allowed money to be represented digitally, this was a huge change as you can imagine. Many people at first didn’t want to accept such a thing was possible since they felt attached by the sense of security they had by having the bills in their hand, but the change was unstoppable and by 1990, in the United States, all money transferred between its central bank and commercial banks was in electronic form and by the 2000s most money existed as digital money in banks databases..
Digital fiat currencies allowed easier, faster, and more flexible payments than ever before, and we felt at ease. Now, when we find ourselves going through difficulties again, we looked forward to improvement, and we said welcome to blockchain and cryptocurrencies.
Fiat currencies have an immense flaw, they depend on a third party, government or bank, it means that they are just as fragile like the government could be, they could also fail to work if our online banking brakes down, and they can’t easily reach our family in a different or remote country.
Social distancing had us figure out that decentralization is exactly what works better when we can’t trust any organization to remain steady. Cryptocurrencies allow us to pursue goods and product in a person to person modality. Our transactions can easily reach anyone on the other side of the world and most of all, since crypto is based on blockchain technology, we don’t depend on a platform that can easily fail but in a platform that is supported by the effort of many at the same time that creates chains of trust, greatly simplifying the direct transfer of trade assets and increasing confidence in their provenance.
During this time of need, crypto is our best friend.
By Mary Schwartz