The history of money is fascinating. It is incredible to think of how much humanity has evolved in this aspect over the ages, moving from a primitive form of barter to a model of complete digitalization of financial assets. This development allowed society to become more productive and even more complex. But how did all this happen? What were the most important milestones in the trajectory of money?
At the invitation of Ripio, a company that is opening new paths for the digital economy by facilitating the purchase and sale of cryptocurrencies, TecMundo tells a little about the evolution of money to the present day. In addition, we explored how digital currencies, such as Bitcoin, can solve flaws in the modernization of the financial system.
Did you find it interesting? Then read on to learn more about the subject.
How it all began
In the early days of humanity, when the concept of money did not yet exist, people cooperated in a model of division of labor to produce goods; in this process, productive activities were simpler, and everyone could help. That was how the direct exchange, better known as barter.
However, as society became more complex, with the emergence of trades and professions, for example, the exchange of goods did not prove to be a sustainable model. It was based on this problem that the definition of a means of exchange was necessary, something that was easy to negotiate and that had practically universal value. Then came an initial concept of money.
At first, wheat was the currency of the
primitive societies, but other means of exchange have already assumed this position – meat, leather, salt and even precious metals, such as bronze, silver and gold. It was only around the 7th century BC that metal coins began to be minted, a pattern that still exists today.
From then on, societies managed to become even more complex, and the divisions of labor became more evident. If in the past a person needed to produce what he wanted to consume – which took time – today he can purchase goods and services using a common medium of exchange. This significantly increased productivity, which enabled great economic prosperity.
But not everything is perfect.
The problem with this model
Although it allowed a great evolution in the financial system, the use of coins still generated problems. It was difficult and dangerous to accumulate large amounts of this asset, as well as impractical from the point of view of mobility. It was because of this that the custody house emerged, a kind of primitive form of banks.
In these places, people kept their coins and received a certificate equivalent to the accumulated amount. That was how paper money was born, another that lasts until today. At the time, the ballast was still metallic coins or precious metals that were deposited, something that only changed in the 20th century.
Instead of being linked to gold equivalents or other physical assets, so-called fiat currencies had their value based on the confidence of the population and investors in relation to the issuing government. This is the model still in force today, which allowed for major developments in the financial system, which no longer depended on a ballast to grow. However, this does not mean that the model is perfect.
Modernization of the financial system
The financial system has undergone major changes in recent decades, but nothing compares to the recent changes made possible by the internet. Today, money is not just a piece of paper or currency, but also numbers on a computer or smartphone screen. Because of the internet banking systems, it is possible to make large transactions without leaving your home.
The credit market also allowed for an increase in the complexity of financial systems. Today, you can apply for loans, obtain financing or buy without the money actually existing in your wallet or online account.
But this economic model has also brought problems. The expansion of the credit market, for example, generated great indebtedness for citizens, companies and governments. The concept of virtual and “unlimited” money also enabled speculation and the application of various scams, which ended up forcing a new step in the financial system.
In the current model, money can be printed based on subjective criteria, which has the undesirable consequence of the increase in inflation with the devaluation of money. In this sense, the “scarcity” of gold represents an advantage, since it cannot be produced artificially. This is one of the reasons why metal is still highly valued even though it has not been the “official currency” for many decades.
In addition, historically, the implementation of this system has brought about some financial collapse precisely because of the characteristics of fiat currencies. What has happened in Venezuela (and what has already happened in countries with a solid economy, such as the United States), for example, is proof that this model has serious flaws and needs to be corrected.
How is this possible?
Bitcoin and digital currencies
The next major evolution is the one we are experiencing today: the emergence and popularization of digital currencies. Bitcoin is certainly the biggest representative of this new phase, being the first cryptocurrency created – in 2008, by someone known as Satoshi Nakamoto.
Although it seems complex, it is not so difficult to understand the workings of Bitcoin. This digital currency works like conventional money and can be used to buy goods and services; the big difference is the fact that it is money without intermediaries, decentralized and scarce, since there is a finite amount.
The fact that Bitcoin does not have intermediaries makes it possible to send money anywhere in the world easily and cheaply. In addition, it is possible to carry out transactions without having a bank account or credit card. But one of the main advantages is being able to trade this money through a network that no one controls, which is especially important in countries with authoritarian regimes.
Another important feature of Bitcoin is the fact that it is limited (i.e. scarce). In countries with high inflation, such as Argentina (Ripio’s country of origin) and Brazil a few years ago, this digital currency represents a savings tool and an efficient store of value, as it is anti-inflationary by design. There are currently 17 million bitcoins, and only 21 million will be produced (through a process called “mining”). This cryptocurrency is already considered by many as “digital gold”.
In the current state, Bitcoin has already earned the nickname “universal money”. This is because it is possible to make transactions easily and without exchange rates. This means that you can use this digital currency in Brazil in the same way that you would use it in Japan, on the other side of the world, for example. Several products, services and platforms already accept Bitcoin in their negotiations.
It is worth mentioning that Bitcoin is a protected and safe form of money. Since governments and financial institutions do not have access to it, they cannot manipulate, freeze or even confiscate it. The owner of the coin is its “own bank” and has full control over Bitcoin.
How does Bitcoin work?
The technology behind Bitcoin is called blockchain, a system through which new digital currencies are also created. The process of creating Bitcoins is called mining and is described in detail in the original document prepared by Nakamoto.
In a very short form, blockchain is a complex cryptographic network that uses mathematical functions to validate all transactions. This ensures the reliability of the system and makes Bitcoin open source software, public and that no one controls. This means that anyone can be part of Bitcoin.
How to get started in the Bitcoin universe
If it is your desire to learn more about the subject and get started in the Bitcoin universe, it is worth knowing the services of Ripio, the company that is enabling the creation of this content. On the company’s website, you can follow the Bitcoin quote, buy the virtual currency and manage your wallet quickly and conveniently.
Translated from Spanish, the word ripio means gravel. As such, Ripio wants to act as the “gravel” of the current financial system and open new paths for evolution. The company aims to help build an infrastructure for entry into the digital economy, allowing everyone to have access to assets like Bitcoin and other virtual currencies.
Ripio has 7 years of experience in the market with operations in Argentina, Brazil, Mexico, Uruguay and Spain. There are more than 100 professionals working together to serve more than 500 thousand customers satisfied with the services provided by this promoter of a new digital economy. All of Ripio’s financial products are built with blockchain technology to boost the economy in Latin America and other parts of the world.
Do you want to actively participate in this new digital economic model that is sure to change (and is already changing) the world as we know it? Meet Ripio, create your Bitcoin wallet and start being part of that future today.