What is the future of money? Thousands of years ago, our ancestors bartered or traded food, hunting equipment, and livestock. And now Uniswap, the world’s most popular crypto exchange and barter protocol, has generated a billion dollars in fees! The money has come full circle. Welcome to the first edition of this weekly “zero BS” column on futures money and crypto. Today we are discussing the past, present and future of money.
We spend most of our time in a never-ending race for money. But many of us don’t know what money really is.
1. The past
Our ancestors started with the barter system – something like “I’ll give you two buffaloes in exchange for five shiny, super-sharp new axes.” Soon they realized that the barter system had too many limits:
- not everyone wanted buffaloes,
- buffaloes were not divisible (few people would want 0.35 buffaloes)
- buffaloes weren’t portable (imagine you had to carry a buffalo on your shoulders while shopping!).
So they switched to more acceptable, divisible, homogeneous and portable forms of currency – cowries, salt, gold, silver and many more.
The Chinese invention of paper ultimately led to the birth of paper money, which was initially backed by gold or other precious metals. The United States dollar has been on the gold standard for many years. This means that the dollar was backed by gold. This ended on June 5, 1933.
The US government continued to convert dollars into gold at a fixed value until August 15, 1971.
Today the whole world has switched to fiat money – currency declared to be legal tender by a government but not backed by a physical commodity.
Take a look at an Indian bill (anything but a 1 rupee bill). It carries a pledge signed by the Governor of the Reserve Bank of India (RBI):
“I promise to pay the sum of one hundred rupees to the bearer.”
If you were to take this note to the governor of the RBI, he would (probably) give you rupee coins or bills. (Disclaimer: I haven’t tried it!)
These banknotes issued by the RBI can be used as “legal tender” in India. This means that everyone must accept them for all legal payments. Do you remember the demonetization of some banknotes in India in 2016? Well, legally speaking, that’s what happened: the “legal tender status” of the then Rs. 500 and Rs. 1,000 banknotes were withdrawn.
2. The present
The birth of computers and the Internet has brought many innovative payment systems such as debit and credit cards, online banking, mobile wallets, UPI, etc.
The cryptocurrency revolution began with Satoshi Nakamoto’s groundbreaking white paper – “Bitcoin: A Peer-to-Peer Electronic Cash System” in October 2008. This brought Bitcoin, the world’s first true peer-to electronic money to the world. -peer. Today, there are nearly 6,000 actively traded cryptocurrencies!
These cryptocurrencies come in many types – medium of exchange coins, stablecoins, utility coins, privacy coins, meme coins, NFTs, etc.
There are also use case specific cryptos that are disrupting industries such as e-commerce, education, data storage, gaming, marketing, media, supply chain, video streaming and even more.
Do you know that there is a crypto project called Basic Attention Token (BAT) which monetizes human attention? Yes, that’s right, human attention! I will cover this in a future edition.
3. The future
In my opinion, silver must have at least 1 of the following characteristics:
I should be able to buy and sell stuff using it
I should be able to manage my accounts using it
I should be able to keep and grow my savings with
Money is not just cash and bank deposits. It includes so much more – art, cryptocurrencies, stocks, gold real estate, loyalty points, etc.
Let’s say I have a great idea for a startup. But I don’t have the money to hire a good team. I could pay them using the shares of my startup. I could also give them ESOPs (employee stock options). If my startup is successful, my team could sell their shares at a huge profit.
This is what I think the future of money will look like:
Rohas Nagpal is the author of the Future Money Playbook and the chief blockchain architect at the Wrapped Asset Project. He is also a retired amateur boxer and hacker. you can follow him on Linkedin.