Evolution of Money is probably one of the biggest inventions in human history. Money, as we know it today, was not invented but it evolved with the passage of time according to the changing requirements of economies. It is not a result of brainstorming of some economist rather there is a long process of evolution since the start of civilization to this modern complicated credit system.
It is generally believed that evolution of money has passed through stages namely Barter, Commodity Money, Metallic Money, Paper Money, Credit Money, Electronic Money, Crypto Currency.
Barter is believed to be the first exchange done by mankind. At the beginning of civilization, the needs of people were very limited and therefore they used to Exchange their goods with other people’s goods or Service.
Such a system of exchange where goods and services are directly exchanged for each other without the use of money is called the barter system. And so gradually this system of exchange was replaced with a money system of exchange. Then comes Commodity Money, which was meant to remove difficulties of barter.
The money evolution was a response to the urgent needs of the various stages of economic growth. Moving on Metallic Money was introduced. This was money made of metal.
In the beginning, the pieces of gold and silver were used as money but it did not solve the complicated problems of exchange. It was very difficult to measure the value with these jaw pieces of metal. Another problem was transportation and storage of precious metals.
This problem was solved by making standardized coins. In the beginning, full-bodied coins of gold and silver were introduced but later on, these were replaced with token coins. Now a day’s different alloy is being used for the minting of coins.
The metallic coins have a specific weight and shape. Coins are only used for smaller retail payments because it is difficult to count, transport and store them.
Paper money then followed. The start of paper money was issuance and acceptance of receipts of goldsmiths who were acting as the money lenders in old Iraq. However, it created confusion and were not generally acceptable.
The Central bank removed this confusion by taking over the power of issuing bank notes. Paper money is now used in many countries with sound economies to date. However, people nowadays have their money in credit cards which is credit money.
Present day modern economies or bank money is used for making personal business payments. In developed countries, transactions are taking place with the help of deposits or checking accounts with paper money.
Demand deposits or money sited in current accounts are easily convertible cash, therefore they are convenient and safe. As evolution is a process it keeps on going, so is the evolution of money. Thus, brings us to Electronic Money.
In Zimbabwe, due to economic hardships hence cash crisis, this is the evolution we are experiencing. It is sometimes duped plastic money. The invention of the computer and its application, the form and shape of business are changing fast.
The concept of commerce is gaining vast popularity. The mode payment is being transformed from cash or quest to electronic transaction from one account another. Thus, today we talk of Ecocash, Telecash, OneMoney, RTGs to mention but a few.
There are many problems with this type of transactions, but it aims at popularity day by day. As economies of the world are changing features and shapes, money is also changing with the due course of time.
Globalization of the anomies and expansion of e-commerce has given a new dimension to modes of payment and has angled the nature and features of money. Evolution of money has not come to an end, it will never come to an end.
Thus, today we are talking of CryptoCurrency. A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
Cryptocurrency is a kind of digital currency, virtual currency or alternative currency. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems.
The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database. As of May 2018, over 1,800 cryptocurrency specifications existed.
Within a cryptocurrency system, the safety, integrity and balance of ledgers are maintained by a community of mutually distrustful parties referred to as miners who use their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular time stamping scheme.
Most cryptocurrencies are designed to gradually decrease the production of that currency, placing a cap on the total amount of that currency that will ever be in circulation.
Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies can be more difficult for seizure by law enforcement. This difficulty is derived from leveraging cryptographic technologies.
In the 1st Quarter of 2018 according to the National Payments System of Zimbabwe, payment stream of internet value grew by 3% from the 4th quarter of 2017 from 2,620,735,563.1 to 2,701,929,526.960, showing that we are slowly getting into other forms of transacting thus crypto-currency.
The cash crisis prevailing in Zimbabwe can be a blessing in disguise for those who are understanding the evolution of money, Even through Central Bank has banned the trading of bitcoin but we project that in the coming years the RBZ will lift the ban.