Money has continued to evolve into different forms in at different times depending on the needs and complexities of people. Money has gone through many stages each being driven by the need of the people for the more efficient and reliable means of exchange
Let us talk about some of this money and we will be better off to understand why cryptocurrencies has shaped the concept of money.
Some Forms of Money
Money has existed in different forms but I will mention just a few of them. The first one that prompted for more efficient means of exchange is the trade by barter system of money.
Trade by Barter System: this is the first system of money. The trade by berter system of money demands that one use hos/her produce or products to exchange for what he/she wants. This system of money wasn't all that convenient for people because it lacks true measure of value.
Commodity Money: After the trade by barter system another form of money came into existence which is known as the commodity money. In this system of money precious metals like gold and silver or livestock's were used as money. This form of money was more better than the previous one because of it being more efficient and reliable at that time.
Fiat: Money continue evolving into different forms until now we have Fiat money. Fiat money was introduced during the 20th century. This form of money has no instinct value rather it is declared legal tender by the government based on the People's trust in issuing authority.
The system of money also have it digital form which operates on the bank database. they all are being controlled by the banks and governments.
In all the forms of money that have existed and once that is still existing none has completely archive the concept of money.
The Limitations Of Some Forms Of Money In Archiving The Concept Of Money
Most functions of money have been of great help in fulfilling the core function of money serving as a medium of exchange, a unit of account and store of value, But at the same time they have faced challenges that have cause a lot limitations in archiving it concept.
Let us talk about this limitations
.Trade by barter system:** the trade by barter system was a simple system but at the same time lack standardized medium of exchange which make transactions difficult and inefficient. This process where the both parties will have to desire what the other has to offer brought a lot of challenges.
.Commodity money: commodity money was susceptible to wears or damage so carrying a lot of it was not always easy. Imagine carrying a lot of gold or silver for a transaction that we will be paying a lot of some of these items. The inability to always carry it thia items to perform a large transaction and the problem of it wearing out was really a big challenge.
.Fiat: Fiat money provides a more easier and flexible means of transactions but it's value was mainly influenced by the government or Central body. While this is good compared to the already existed forms of money, a lost of confidence in the government can cause a high lost of value or even an inflation. The digital form of this money has its limitation when it comes to achieving the real concept of money. This form of money usually experience vulnerability which are related to cyber security and privacy concerns because it is being controlled by central bodies, and also the possibility of exposing one data to financial fraud is high.
How Cryptocurrency Is Revolutionizing the Concept Of Money
Cryptocurrencies revolutionising the concept of money by achieving the main concerns of money and also leading money to a more brighter space. Cryptocurrencies is doing this by first running on decentralized and digital form. Here are some features on how cryptocurrency is revolutionising the concept of money.
. Decentralization: Unlike the fiat form of money cryptocurrencies runs on a decentralised network. Meaning that no central body or government controls or have access over the currency, but each person access and control his/her fund. Being decentralized help build a lot of trust in the system because it reduces the risk of manipulation.
. Easy And Fast Transaction: Cryptocurrencies has made transactions more easier and enjoyable. With cryptocurrencies sending money remotely has been very easy and performing cross-border transaction is now more easier than before. With cryptocurrencies the traditional banks are no longer need the banks inorder to send money abroad. These have also benefited people living in areas where there is no bank infrastructure.
. Security: Since all forms of money has failed to provide sure security, cryptocurrency has done that. Cryptocurrencies operates on blockchain technology which uses cryptographic techniques to save transactions. This help eliminate the need for central body and also help in fighting against fraud and hacking.
. Transparency: cryptocurrencies record all transaction with public ledger and this makes it possible for anyone to view transactions history while at the same time maintain every users privacy through pseudonymous addresses.
. Store Of Value: For money to achieve the purpose of being a true store of value it must be persevere especially during periods when inflation or economic uncertainty occurs. Cryptocurrency is operating in decentralized network and also with each crypto-currency having a limited supply have helped to create scarcity which has helped in maintaining a good value and also fight against inflationary pressures.
In conclusion, cryptocurrencies is shaping the concept of money and taking the world to a more brighter level of decentralised financial state. Cryptocurrencies has what it takes to make money but it should be.