Barter System

• Barter system has been in existence since 6000 BC
• Earliest forms of barter system had livestock trade (sheep, cattle, vegetables, grains)
• It was first recorded in Egypt
• Mesopotamia to Phoenicians and the Babylonians improved the system
• Goods were exchanged for food, tea, weapons, and spices. Even human skulls were used. Salt was a very important trade commodity that Roman soldiers were paid with it.
• Middle ages, Europeans traded crafts and fur for silks and perfumes.
• Musket balls, wheat, and deer skins were used by colonial americans
• The invention of money did not kill barter system. But it made it organised.
• Barter system came back during the great depression of 1930s in a form similar to that of banks.

Disadvantages:

• No certification of proof to show legitimacy of the person you are dealing with
• It depends on trust
• Possible exchange of bad commodities
• Need a double coincidence of wants
• No common measure of value
• Storage issues high

Advantages:

• No need of money
• Flexibility that anything can be traded.
• Does not have to be material items. You can exchange skills

Coin Paper Currency

• Currencies has been in existence for almost 3000 years
• Chinese started using goods cast made from bronze (cutlery, arrows, spades, daggers)
• They started using coins to avoid being impaled
• First known minted currency was a roaring lion coin created by King Alyattes in Lydia (present Western Turkey)
• It was made using a mixture of silver and gold which is called Electrum
• Chinese came up with paper currency in 700 BC (Tang and Song Dynasty). These notes in the beginning where only temporarily valid.

• By 1271 AD, the currency system in China was thriving. The government had took over shops which print currency and made state-issued currency. It was the time when Marco Polo visited the place.

• Medieval Islamic world build a monetary system during 7th - 12th centuries (Dinar). They are the first to use credit, cheques, savings account, transactional accounts, exchange rates, promissory notes, banking institutions for loans and deposits, etc.

• Manilla rings were used in West Africa since 15th century for slave trade.
• Metal coins and Archimedes Principle - To test its purity
• Europeans used coins up until the 16th century. And it was not until 1661, Europeans (Swedes) started using paper currency.
• European paper notes could be exchanged at any banks for gold or silver coins
• More than the government, it were the banks and private institutions who used to regulate the printing of currency
• First issuance of currency happened in colonial North America so that the traders do not run out of money.

• Paper currency improved international trade and also lead to conflicts between empires.

• Impact of World Wars lead the countries involved to print currency out of proportion leading to inflation. The Great Depression of 1930s is a result of this.
• Gold is set as the standard for printing currency.
• Mobile and virtual currency - The move towards digital banking
• Invented in 2009 by the the pseudonymous Satoshi Nakamoto, Bitcoin has become the gold standard of virtual currency.

Facts:

• American - "In God we trust", Chinese - "All counterfeiters will be decapitated"
• Currency helped improve Lydia's economy, but they were conquered by the Persians not long after.
• In 1685, plating cards were signed and issued as currency by the governor for soldiers in France.
• Coins made out of a mixture of metals were used in India.

• Bijay’s Podcasting course

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