The origin of money and the importance of faith; LESSON,1
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| The origin of money and the importance of faith |
Before we dive into the world of cryptocurrencies, let's take a step back and cover the basics of money.
Money has taken many forms throughout human history.
Before money was created, people used barter (although according to new research, money appeared after the creation of debt).
Bitcoin is the biggest financial innovation since the introduction of credit cards in the 1950s and the introduction of internet banking in the late 1990s.
In this class, you will learn the basics of finance.
What is money?
People have traded goods with people since the beginning of time. First, there was the exchange system. People exchanged items that gave them equal intrinsic value, such as "I gave you the idea of this animal and you gave me that sharp stone you found". This system is good for exchanges between two people, but it becomes very difficult when dealing with more people, goods, and longer distances.
Furthermore, the exchange system reaches its limit when only two parties participate in the exchange. Let's say you have a lot of berries and want to exchange them for animal skins. A transaction occurs when both parties want and need something from the other party. But if there is no hope of wanting, then there is a problem.
Why do we need money?
Also, the problem with exchange systems like exchanges is that they are not very efficient. To solve this problem, the idea of exchanging various materials such as animal skins, salt, shells, jewelry, grains, precious metals, etc., has been around throughout human history. It is used for valuable property. other things.
But what if the opponent already has enough berries or doesn't need animal skins? To solve this problem, people invented money.
Now we are not talking about coins or paper money as we know them, but whatever is taken as a store of value, which all concerned agree to exchange, can be exchanged for any other purpose with value in the sight
Money is a convenient tool for exchanging values between people. Basically, it's best described as an "average shift".
Money is a controlled substance or thing and is generally accepted as a form of payment.
Some financial matters.
exchange environment
Money is an exchange for commercial transactions of goods, services, and labor. It is very convenient to have a designated common exchange for trading.
value of savings
For later use, the currency can be used as a store of value for transactions until needed. A prerequisite is to believe that money continues to have value.
portability for portability
Money can be easily moved and exchanged for other currencies. For example, the people of Yap Island in Micronesia used limestone as their official currency before the American dollar. One of these rocks is often heavier than a car, making movement difficult. So even if you change owners, they stay in the same place and you have to remember who the real owner is now.
which lasts for a long time
Money is immutable and lasts. Because of its durability, it can be used until new materials are printed and replaced with old materials.
The flow is separable. It is used interchangeably in small quantities for items of varying value. Imagine you want to buy a pack of gum, but you can only use 50 pieces. Then it will definitely make trading more difficult.
controllable
Counterfeit bills are probably as old as money. To be financially safe and reliable, you need to be able to easily check its authenticity and legitimacy. Counterfeiting makes it impossible to buy real money.
competition
Individual currency units should be interchangeable in nature. This means that two identical units must be identical and indistinguishable. This also applies to separability. Stores of value that do not meet these criteria are classified as "non-exchangeable". The most popular example of an item that can be traded for a certain amount is a collectible item, such as a piece of art.
Why is it considered valuable?
Shells, jewelry, and even gold have no positive electrical charge, except for things that are beautiful and shiny. But for thousands of years, people have used such objects as a means of communication. They are valuable because people believe in them.
In this context, intrinsic value is the perceived assignable value of something. This value is found in the specific attribute value.
Even today, this is true for the most popular and popular currencies such as the Euro and the US. Both are run by central banks and their takeover is subsidized by the governments they trust.
For the most part, the value of most currencies and coins comes from what people think they are worth. Those who use it rely on its value.
Cash and other tangible assets are trusted in many different ways.
Historically, gold and silver were considered valuable and trusted because they were used to create valuable objects due to their aesthetic qualities.
Government-imposed fiat currencies are reliable. They have traditionally been considered valuable because they are backed by governments and issued by central banks.
If one were to lose any of these comforting elements, their value would inevitably decrease. For example, hyperinflation (hyperinflation) usually occurs because a country loses confidence in its currency.
WARNING;
This article is not investment advice or recommendation or an invitation to buy crypto assets.
This article is for general informational purposes only and makes no representations or warranties, express or implied, and you should not rely on the impartiality, accuracy, completeness, or accuracy of the articles or opinions contained in this article.
Certain statements in this article may contain forward-looking statements based on our current beliefs and expectations and may involve uncertainties that could cause actual results, performance, or events to differ materially from such statements.
Investing in cryptocurrency carries risks in addition to the opportunities mentioned above.
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