From Pigs to Plastic - The History Of Cash

The barter system existed before the cash system but as society evolved and changed the barter system was no longer adequate as a currency. Two basic innovations resulted in the earliest currency.

A system that could store value that was not spent was needed. Counters were used to ensure that the shipments that arrived where the same goods that had been shipped. Then silver bars or ingots were used to represent payment for those goods. This system was in place as early as 2000 BC.

Metal were the first form of currency or cash. Each ingot of metal represented a specific value. This system was use for more than 1500 years. But it had a flaw which eventually led to its collapse. The problem was there was no safe place to store accumulated value or the equivalent of cash. And a merchant’s stored value was only as safe as those who guarded it which more often than not was fraught with dishonesty.

This lead to the development of coins made from copper, silver and then gold. Metals were mined, and then they were weighed and stamped with a value. So each coins assigned weight had a value stamped on it. However counterfeiting remained a problem which led to the Archimedes’ Principle a method which allowed the coins to easily be tested to ensure they contained the correct weight of metal for the value impressed on them.

Each metal coin had a predetermined usage. Copper coins were used for everyday transactions while silver coins were used for common transactions such as taxes that were large in value. Gold coins were used for large purchases and mainly by government for military and state activity.

The fluctuating value of metal and the growing demands for currency soon found coins to be inadequate as a cash system. Paper money soon followed. This was a very advantageous move as it reduced the amount of gold and silver that had to be transported. This meant lenders kept the gold and silver in their possession and what traded hands were the notes.

What followed was the creation of central banks and currencies around the world underwent many significant changes. Prior to the central bank many nobles could legally print money which created a great deal of instability. The creation of the central banks eliminated this problem and created stability in the currency markets.

The central bank still exists today. It still controls the gold reserves of a country which dictate how much paper money can go into circulation. But technology has taken cash even further.

Today we no longer have to carry physical cash in our wallets. Instead we carry a debit card which has a black magnetic strip on the back that contains all our banking information. A communication system is used to send the information to the central control center where the information is un-coded and then access to your bank account is granted providing you have entered your secret pin number correctly.

Some believe this is the first step towards a cashless society. Where it leads remains to be seen but one must admit it offers convenience and a great deal of additional safety.

No longer is there a need to carry large amounts of cash while we worry about being robbed. And it’s so convenient for record tracking. You pay with your debit card and the transaction instantly shows on your bank account. It’s easy to keep track of where you are spending your money.

From pigs to plastic. History has shown that anything is possible. The history of cash is quite an interesting journey. One can only imagine what the future holds for cash based currencies.

Aura Mirchandani is the Editor and Publisher of Article Click. For more FREE articles for your ezine and websites visit ArticleClick.com. Article Click is a free content article directory.