Below is a list of key events that happened throughout the history of money
The Stone Ages and Bartering as Money
- Starting from about 5,000 B.C. subsistence agriculture was the heart of the economy for civilations in the region of Mesopotamia.
- Early accounting was used to track who owned what amount of which crop. Communities would put their crops in a shared storage.
- Sumerian Temples functions as the first banks, storing some of the earliest forms of ledgers. “Cuneiform” tablets were used to track the movement of assets. Correspondence counting was used to track inventory for each asset.
- Loans were composed primarily of providing grain to the borrower as part of a barter system
- Primitive forms of contracts took shape using an intelligent invention called “Bulla”. These were hollow clay balls that were inscribed in such a way to enable the signing of transactions and create tamper-proof agreements.
- The Nigris, Tiger and Euphrates rivers used for long distance trading
- Earliest forms of money were livestock, salt, peppercorns, tea, cowrie shells, yap stones
- Starting around 1754 BC, the Code of Hammurabi is created as the first way to enforce laws, with half of the codes being based around enforcing economic contracts.
The Iron Age, Rome, Medieval Ages, Metal Money and Early Paper Money
- Gold, silver and bronze used for private and public trade. Before coins, these metals needed to be weighed and verified in order to determine their value.
- The first use of coins made of electrum were adopted in 700BC. The standardized weights of coins simplified trade. The original coins were unmarked.
- Lydian coins evolved to be stamped with an emblem. The first case of tying a coin to a ruling authority, enabling them to be more easily accepted by those members within the state during trade. Other kingdoms decided to follow suite and the era of stamped coins began.
- The Silk Road becomes the first series of trade routes, arguably the beginning of global economics. Merchant systems take place where highly available goods purchased cheaply in one region may be sold at a much higher value in another where they are more scarce.
- Paper money finds starts during the Tang Dynasty as a way to increase the ease and convience of trade. A trustworthy agent would store the coins of a merchant and be given a promissory note in return that could be traded for other goods.
- The Song Dynasty created paper money called the “jiaozi”, the first money of its kind that was completely regulated by the government.
- In the beginning, civilization used single entry systems to record transactions
- The double entry ledger is created in 1340 AD. Every entry is entered twice, once as a credit once as a debit. This way of record keeping was the foundation for thinking from a capitalist paradigm. Still used today.
Late Middle Ages, Enlightenment, Industrial Revolutions, Central Banks & Fiat Money
- The first modern central bank comes to exist, fractional reserve banking begins to become a standard practice of national economies
- In the 1530s, Sans Stock becomes the first stock market in Belgium. Lenders and borrowers congregated to trade promissory notes and bonds
- Dutch East India Company brings an evolution in the stock market with its “joint stock” operations. Shares could be bought or sold related to ship voyages that may succeed or fail in order to diversify investment risk and enable larger scale funding schemes.
- In 1931, Modern FOREX exchange markets are born as the world moves off of the gold standard
- Keynesian Economics becomes central to the development of modern economic policy in the capitalist world following the great depression. Used by the Federal Reserve today.
Information Age I, Modern Banking Systems and Electronic Money
- Bretton Woods agreement of 1944 creates new world order in the global financial system, replacing the gold standard with the U.S Dollar, with the dollar still being pegged to the price of gold allowing more flexibility to valuing currency.
- In 1950, The Diner’s club introduces the first business model of modern credit cards, with magnetic strips being adopted in the 1980s.
- After a “run on gold” leading to devaluation of national currency, the Bretton Woods system ends in 1971 and the world moves to a free floating currency system, driven by supply and demand. Smaller countries pegging their exchange rate to larger countries.
- SSL is publicly released in 1995, introducing a necessary layer of security for internet transactions to be viable at scale.
- Amazon is founded as an online bookstore in 1995, and paypal becomes the first purely electronic online payments system in 1998 using email as the identifier of account
- In 2008, Ecommerce accounts for 3.3% of total retail sales in the U.S. and becomes 8.6% of total retail sales in 2015. In 2020, this number is now 12.4%.
The Rise of Cryptocurrency
- Bitcoin is released January 3rd, 2009, born from the cypherpunk movement. The first truly “internet owned” currency to have successfully solved the double spending problem.
- Ethereum whitepaper is released in 2013, introducing smart contracts which in a simplified sense can be understood as “programmable money”
- In 2014 IRS provides guidelines that virtual currency is now a form of property
- In 2014, Credit card processor Stripe begins to accepts Bitcoin
- By the end of 2014 By year’s end, Paypal, Zynga, Overstock.com, Expedia, Newegg, Dell, Dish Network, and Microsoft are all accepting Bitcoin for payments
- In december of 2017, Bitcoin reaches an all time high of 20k per BTC
- Lightning Network v1.0 is released In 2017, as a layer two protocol to scale bitcoin from 8 transactions per second to potentially millions of transactions per second, with a single payment channel having approx 250TPS.
- In 2018, market cap of cryptocurrency space reaches 800 Billion
- Facebook announces the development of its own Libra cryptocurrency in 2019
- Amount of Ether locked in Decentralized Finance apps reaches all time high of 2.7 million ETH by the end of 2019 with approx. 3,000 decentralized applications created.
- In 2019, news starts to break about China working on creating its own Digital Yuan
- In March 2020, U.S. Government release “bill for all act”, as a step toward creating a digital currency
- In May of 2020, VISA applies for a patent to create a digital dollar, a sign that U.S. government is working toward leveraging Blockchain tech in developing a digital currency