“Money” an extraordinary Journey from stones to computers
“Money”, we are all familiar with that word and the definition behind that, but how do we get here? If we take a look at the history of Money, we will perceive that our definition is not completely true!
In the early days, when the very first signs of transition to civilization were taking place, humans felt that they need a “Trustful and Provable” way to exchange their assets with each other like exchanging knife with bread!
So they’ve decided to exchange “Product to Product” but after a while, they’ve found out some products, regarding how much hard it was to produce them, worth more than the others! You need to wait a whole year to harvest wheat or rice in addition to the continuous care and hard work for that, compared to a knife which could be built in a day!
This was potentially the very first “Economical Challenge” in Mankind history:
“How are these two worth equally?!”
There was a tremendous need for something which had a specific value for everyone and had the power to declare the level of “hard work to produce” for every asset, so people decided to use “Ring Rocks”, a little piece of rock with a hole on that! But even at that time, Rocks haven’t had a tangible value; they were backed by the hard work of building them! After discovery of the copper and silver, the Economy had faced a remarkable change! With these new elements, which were very practical in real life, people realized that these elements might be the most optimum choice for being a “Currency”, but the value still came from the hard work of mining these elements! Similarly, we had golden age too.
Then comes the paper money, which was backed by the same elements humans had used back then! How this paper money creation differs from the past? If you follow the clues, you’ll discover that the source of value wasn’t changed in structure, it was still based on the hard work of mining.
The main difference at that time was that you could exchange your paper money with silver or gold.
In this particular time, politicians decided to add another value to Money called “Supply Ratio” which was totally in the hands of government!
US government had actually gone beyond that! On 1964, US government stopped exchanging silver for dollars, they’ve done the same thing to gold on 1971 too! It means that the US dollar as a currency is no longer backed by anything at all!
According to Investopedia report “the US dollar is fiat money, which means that it’s not backed by a physical commodity and the value of that money is derived from the relationship between Supply & Demand”
In other words, the US dollar is backed by people’s faith & credit of the Economy!
Published at Sun, 08 Sep 2019 08:38:43 +0000
Bitcoin Pic Of The Moment
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By trendingtopics on 2019-04-07 21:07:01
