Cryptocurrencies: Is It Necessary?

Money has always been a subject of love and hate for people.

But what is money? A tool of trade is money. The invention of money makes it simpler for us to exchange the products and services we produce.

The only use for money as paper is to exchange goods and services. They have no value by themselves. The dollar is valuable because of what it stands for and not because of what it is.

In exchange for the commodities and services that people generate, money is, in other words, the best that people have to offer each other. People can exchange their best qualities, talents, and any other offerings they have for money. If you give more to the world, you will receive more value in exchange, and if you give more, you will engage in greater trade.

Currency to Barter System

What existed before to all forms of money and currencies?

Have you ever questioned the origins of money?

Although the usage of metal as money may be dated to Babylon before the year 2000 BCE, it’s possible that standardised and recognised coinage didn’t appear until the seventh century BCE.

There would have been a barter system earlier. There were many different types of workers in the village, including farmers, tailors, cobblers, weavers, and others.

The barter system is the method by which one person could trade goods and services produced by him with goods and services produced by another. For example, imagine there is a cobbler named Vijay and a farmer named Raj. When Vijay needs vegetables, he goes to Raj and trades a pair of slippers for the vegetables he needs. Both parties are happy.

However, is the barter system usually successful? The double coincidence principle, which requires two coincidences to occur, is the difficulty with the barter system. The first is that you should locate someone who will sell what you desire, and the second is that the seller desires whatever it is that you are prepared to offer for sale. Direct satisfaction of both parties is necessary for the direct exchange of one commodity for another.

Now that Vijay needs more vegetables, he goes to Raj, but Raj doesn’t need any more shoes, therefore there is no exchange.

Now that Vijay wants a haircut, he visits Billu the barber, but since the cost of the haircut is far less than the cost of a pair of slippers and the slippers cannot be exchanged, there is no chance of a deal being made.

Since Vijay needs milk but cannot accept the amount required in exchange for a pair of slippers because it is too harsh and because milk is perishable, no barter takes place.

As a result, trading goods was difficult. Imagine the misunderstanding that led to the eventual termination of the barter system. However, what was the alternative at the same time?

The first coins that resemble modern ones first appeared in the sixth century BC. They were small metal pieces with fixed weights and values and bearing an official seal, which served as both a guarantee of their value and a mark of the government or kingdom that had minted them. Gold and silver were the first metals used.

After the establishment of the Central Banks, other metal coins eventually took the place of all the currencies. On behalf of the government, these banks produced currency.

Since then, thanks to innovation, society has advanced significantly and has become more cashless thanks to the availability of numerous digital payment choices including credit cards, wallets, and online transfer services.

Forget about returning to the barter system; today, even societies with paper money appear antiquated. Instead, a cashless society is the way to go.

Because of technology and advances, we have made great advancements in many facets of life during the past several centuries. However, there hasn’t been much development in one area of our economy that hasn’t changed significantly because of technology: our currency.

It would have taken a long time to switch from barter systems to currencies based on metal. Similar to this, the change from currencies based on metal to paper notes and then to digital currencies did not happen overnight. We weren’t able to change our economic course until we had access to the right tools and technologies.

So the current question is: are we in a period where we once more need to consider how we exchange our offerings with others? Is it time to switch from the fiat money of today to cryptocurrencies?

Are there any issues with the Fiat currencies of today? Is the future of exchanges in cryptocurrencies? In the following blog post, we’ll talk more about fiat money and cryptocurrencies. Remain tuned.

Fiat Money

What is fiat money?
Fiat money is money that has no inherent worth and isn’t backed by any real assets. Instead of being determined by the value of the raw materials used to make the money, the value of fiat money is determined by the relationship between supply and demand.

Fiat money is accepted as payment because it has been declared legal tender by the government. The US dollar, the euro, and the Japanese yen are the three most widely used fiat currencies.

Although fiat money has been existed for centuries, its use spread only after the early 20th century collapse of the gold standard.