Episode 1 | A brief history of currency
Before we consider
cryptocurrency, we can look at a system
for exchanging goods and service that is easier to understand bartering.
Bartering is a direct exchange , trading something you have that the other
person wants for something they have that you want.
Bartering
Imagine a scenario that you
have an apple , and you would like to trade it for your friend’s cookie, but
your friend wants a egg bun.is it possible for both you and your friend to get
what you want by battering ? it
obviously can not do but if there is a third person with a egg bun and
preference to apple .Then you can get what you want
Bartering can be simple and
direct , but getting what you want in exchange for what you have might require
coordination between more than just you and the person who has what you want.
A solution to this matter of
coordination is money. something that we can use as a medium of exchange.
With currency(money in
general) , we can make a trade with someone even if they don’t want the goods
that we have. Instead of exchanging goods , we pay using currency.
Commodity monies
In early ages, people used
commodity (for example barley or salt was used as currency )as their money , it
is not that different from bartering since the currency is something you can
actually use, These are called commodity monies, since their value comes from
the fact that they are made out of a commodity.
Commodities that meet basic
needs are nice because we can trust that every one will be able to make use of
them and they are ublikely to lose value , but they are not always the most
convenient things to carry around or store.
The best solution is to use
a commodity that is more convenient and trustful source to everyone
For thousand of years ,valuable
metals like gold and silver were used to
make coins for currency because they have
unique characteristics
·
Metal don’t
degrade over time easily
·
Metal are rare
and it takes a lot of work to find
·
Easy to carry
around
The collective agreement to
value valuable metals made for a much smoother system of exchange .
Money
The
money we use today dose not represent anything that meets basic needs , and it
is not even backed by a convenient monetary
commodity like gold.but people will still exchange it for these things.
The
reason behind this is money is backed by governments.it is easy to trust that the
monetary system will keep working.
Credits
Credit
system is another way of trading but it trade a promise that you will pay the
person back later.this system based on
trust of each other.
When
you use a credit card to pay for something , the merchant receives the money
immediately.In the moment , you are
essentially making a promise to the credit card company that you will pay them later for the money
they are distributing on your behalf.
For most everyday users of credit , risk has been transferred from the merchant
to the credit card company
Cryptocurrency
Cryptocurrencies
offer another way of exchange money in a way that is fundamentally different
from credit cards.Cryptocurrencies accomplish a monetary system that dose not
depend on trust in a centralized authority or the people you are transacting
with. It requires trust in mathematics and certain algorithms.
In
this tutorial series ,we will deep down into the cryptocurrency
Please
comment below your idea about crypto
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