The exchange of goods, services, and produce between individuals started without the existence of money or any standard of value at all. Early men traded through a traditional barter system where one party had and wanted what the other had and wanted, to later expand to indirect barter where a third party was involved either as a provider of goods, or to simply keep a record of the transactions.
We all know the saying that ‘one can’t compare apples to oranges,’ and, naturally, people needed the existence of a certain medium to compare the value of the items they were exchanging. Starting with salt and cattle as an early form of currency and historical records from 9,000BC, and moving on to metals and the first metal-casts manufactured in India and China, and to the first minted stamped coins made of electrum, a naturally occurring alloy of silver and gold, and created by King Alyattes in Lydia, now part of Turkey, in 600BC, stamped with pictures acting as denomination.
As trade was blooming in China, merchants started feeling the weight of coinage accompanying large commercial transactions and circa 7th century, during the Tang Dynasty, merchant receipts of deposit were introduced, and the first true paper money appeared in the region within the next four centuries.
Nearly 200 years later, Marco Polo introduced the concept of paper money in Europe, yet the Old Continent kept its strong bonds with coins, with European bankers keeping those safe and issuing written receipt promising to produce the equivalent in coins on demand, which receipts were handled conveniently between traders.
Opposed to the promise to convert at a later date, real cash paper money originated as receipts for value held on account, with Europe’s earliest banknotes with each having a fixed value, introduced by the Bank of Stockholm in 1661 and least to say, the Swedish royal government was pocketing half the profits, on top of too many notes been issued without coverage, leading to the bank’s collapse.
The term banknote was first recorded in English in 1695, months after the Bank of England began issuing paper money. At that time, only the bank receipts issued by the most creditworthy European banks were accepted outside local markets. As the amount of international trade was rising, so was the exchange of money, and the first currency markets appeared, where a currency’s value was affected mostly by the stability of the monarchy issuing it, and along with military wars, countries started currency ones as well.
A real revolution, though without any casualties, was the first electronic fund transfer via telegraph by Western Union in 1871. In 1947, John Biggings invented the credit card, and 20 years later the first ATM was put into use by Barclays Bank in its Enfield Town branch in London to work with checks impregnated with carbon and to pay out a maximum of £10 at a time, paving the way for the rise of debit cards.
Telephone banking was first introduced in the early 1980s, offering customers to send transfers and pay bills by the usage of a television set and a telephone line, the interactive online banking followed in, with Wells Fargo becoming the first U.S. bank to add account services to its website in 1995, and two years later – the contactless payment was brought into use.
The new millennium shifted a significant portion of trade to the online market, with currencies and methods of payment in accordance, from Paypal, through Internet-based and digital currencies, most notably Bitcoins (first issued in 2009, and the first bitcoin transactions – the indirect buy of two pizzas for the amount of 10 000 bitcoins, which based on today’s bitcoin price amounts to nearly $40 million), to Apple Pay, letting customers pay using Apple devices since 2014, and to the currently rising interest of business and financial institutions towards blockchain technology, allowing everyone to hold and make payments in a completely transparent and secure manner.
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