Lesson 4 - Money History

 Evolution and Functions of Money

What is Money?

Anything which can be used as medium of exchange in our daily life is called money.

Money is not just a paper currency which is in our pockets.

>Skill and Trust is also like a money

Skill=> For Example: The doctor who invest his money and study hard for 15 years to become doctor now he has a skill which is also his money because with the help of this skill he can earn money.

There is also unit of account in Skill like one doctor fees is 500 and other has 1000.

Trust=> For Example: The trust between two people is also money like the one person have money in the bank . He will just write the amount on the cheque which is a paper and hand it over to the second person. The second person will trust and take the cheque to the bank for the money.

The cheque and (Bank) is called as Trust Builder.

Functions of Money

-Medium of exchange

A medium of exchange is something accepted generally in payment for goods and services.

-store of value

We can store our money and use it to the next year or whenever we want.

-unit of account

It has a unit of account means it has a limit. The unit of account is same as net worth.

stages of the evolution of money

-barter economy

It is the first stage of trade. In which people were trading with animals. Animals were Medium of Exchange.

-commodity economy

In which people use different things to trade like: Wheat, meat, rice, wood, etc.

-metallic money

In which people use different metallic coins to trade like: Gold coins, Silver coins, etc. The world use this method for long term. 

-paper currency

It was so difficult to carry the metallic money specially for the big purchases and it was also so difficult to store them. It was started from China when there Leader was The Great Khan and he was Mongol. 

He suggest his people to store their Gold to the government and take the receipt as a medium of exchange. and with the time governments make their currencies which we use till now.

-electronic currency

They make it advance and make it digital like Easypaisa, JazzCash, Bank applications, etc.

-Crypto currency

As government have all control on people money and they can print as much money as they want which caused Inflation. In 2009, Satoshi Nakamoto who did not like this behave of government. He proposed the idea of Bitcoin with the help of Blockchain Technology, which will be fully decentrallized. Nobody will have control on the money other than owner.

evolution of money and banking

The interest system was also started from paper currency as the government give store gold to the people as a loan and make them to pay more to the government back and America copy this idea and name it as banking system.