Today we are rushing into a new world where the money is becoming digital and a society that could go cashless. Sometimes other developments spur our ideas about money, but there are key moments when innovation in money drives broader changes–and we’re experiencing one of those moments today. But what is money and why does it play such an important role in our lives? How is it shaping the big issues of the day, from geopolitics to questions of equality, fairness, and opportunity? Understanding its history is an important device for making sense of today’s headlines, and what might come next.
- Barter as we imagine it never existed: someone always had to play the intermediary. Enter the need for money.
- Once the ancient Greeks began using coins they stamped them with the images of their city-states. Coinage turbocharged markets and Greek civilization.
- Rome introduced fiat money, that is, coinage without intrinsic value other than the power of the state – which led emperors to debase the currency.
- Chinese merchants invented paper banknotes in the Tang Dynasty to help move cash safely. Printing money supported China’s expansion into the world’s largest economy.
- Crusaders copied Arab and Indian financial innovations, which eventually Italian bankers industrialized into bond markets.
- The conquistadors brought so much gold and silver from the Americas into Europe and Asia that it led to inflation and “financialized” the Spanish economy into obsolescence.
- Sir Isaac Newton helped establish the English pound, part of many landmark reforms following the 1688 Glorious Revolution that would make London the world’s financial capital.
- Richard Nixon took the United States off the gold standard and ushered in today’s era of pure fiat currency.
- The financial derivatives innovation starting in Chicago in the 1970s was not as original as you might think.
- Cryptocurrency is one of several big trends that are redefining money – and our civilization.
Illustrations from Cowries to Crypto: The History of Money, Currency and Wealth by Jame DiBiasio and illustrated by Harry Harrison, published by OANDA, a global leader in online multi-asset trading services. The book is available now from amazon.com, priced at $31.99.