The concept of money
The concept of money
What is money? What gives it the value it has? The concept of money was displayed from the beginning of civilization. It was the concept of trading provided services, food, furniture, or animals for something someone else has to offer. This method worked well for a few hundred years, but then it started having problems. For example, imagine I'm a baker and I want a pig. If all I have to offer is bread, but you have a pig and don't want bread, then I'd have to find someone else to trade with. Problems like these slowly paved the way for money. Bartering (trading) vs. moneySpoiler: money always wins.But this comparison is subject to consideration. Thousands of years ago, money didn’t exist; people had to barter with each other. Bartering by definition is, “to trade goods or services without the exchange of money.”
What if I didn’t think an apple for an orange was a fair trade. If I thought my apple was more valuable, and you disagreed, we don’t have a trade. The process becomes long and clumsy. The civilization needed something everyone agreed had value so they could trade goods based on what sellers thought was worth something. That's how money came about. However, what if sellers set their prices too high for buyers to afford? The principle of price and affordabilityThe market keeps things at the correct price. As the market has grown, companies have had to keep their prices lower to compete with other companies who don’t charge as much.
The market balances out expense and affordability and therefore has been the cure for unreasonable prices. Although the two are almost never completely equal, the market keeps them closer together because of its competition and variety of brands. For example, if a restaurant charged $10 a hamburger, and a nearby competitor only charged $2 a hamburger, you can guess which place would get more business. Even if the more expensive one had higher quality meat or makes them with more love, the customers aren’t going to care. UNLESS, of course, the price is brought down to a very reasonable price. Then these minor differences would sway the customers to come to the other hamburger restaurant. This is how the market has balanced out price and affordability in our society.
Counterfeiting
Counterfeiting is a present-day problem in the world of money. It is where people forge real-looking bills and coins to use as “regular” currency for everyday use. In other words, counterfeiters try to defy the statement, “Money doesn’t grow on trees,” by making fake money print (or mint) off their machines. But even in the ancient days of the Aztecs, counterfeiting was abundant:
Currency then was cocoa beans, because of their rarity and value. (Other popular currencies in those days included salts, gold, and even cotton.) Although most were good citizens and traded with real cocoa beans, some devious members would scrape out the actual cocoa inside the bean, fill it with mud, use the cocoa, and act like the mud-filled bean was everyday currency. Counterfeiting even existed back then! In the future…
Cryptocurrency and Bitcoin have also become a large part of today’s market. In the future, will those two dominate the market? There are two main problems with Cryptocurrency:
- Volatility: It is not uncommon to see online money swiftly fluctuating in short periods of time depending on the market, because the software is just so new and not very trusted. This makes Bitcoin/Blockchain a risky option for investors looking to maintain consistent value. Bitcoin can’t guarantee a consistent value for customers because of its natural instability.
- Security difficulties: The digital nature of online currency entails the risk of hacking and fraud activity. Unfortunately, there has been plenty of online “cyberstalking” happening on cryptocurrency platforms. This means it is risky to invest lots of money into it, because who would want to threaten their money unnecessarily to hacking possibilities?
I don’t see cryptocurrency becoming a viable alternative to physical money. It is hard to imagine a world where there is no physical money. I just don’t see it happening anytime soon.
In conclusion, money is a funny thing. It really is just a card or some paper (well, to be exact, it's made from 75% linen and 25% cotton), but we have put value to it. It makes for a fascinating psychological discussion as well; how have these pieces of cotton and linen become so coveted and useful?