Money

It is not certain whether money makes us happier, but we can undoubtedly say that we are not able to live without it. Although we come across it almost everywhere and every time, we never think about what it is, where it came from and what stood behind its development.

It is not easy to define money as it has various different functions. Firstly, according to Bernard Lietaer, an economist and one of the designers of the Euro, "money is an agreement within a community to use something as a medium of exchange". Many things, from gold to entries on a computer tape, have been used. Businesses that use different products for exchange still exist, e.g. commodity markets based on barter exchanges. Secondly, money is a store of wealth. However, we should differentiate between accumulated money, for example on bank accounts, and money that serves as a device for increasing its amount in capitalization, id est when money make money. This type of wealth-storing is considered as a progressive one. The last and the most important function is money as an instrument of pricing the value of other things.

As it was said already, money as a medium of exchange had various forms, looks and shapes. The first form of paying for commodities was the naturalistic one: goods for goods. This form was widely used in a primitive economy only when the whole trade depended on an unstable quality of such goods. As more and more people got involved in business and trade, it became impossible to use barter exchange because not every emptor would have accepted the same type of goods that were offered by a vendor. Therefore, one particular commodity was chosen as a general equivalent that everyone would have used for trading. Cowrie shells, for instance, were used for a long time in Africa. Later on, pricy metals like platinum, gold, silver and copper began to be used as legal tender, but these moneys were not coined yet. If you wanted to pay for a product, you had to put the appropriate amount of metal on weights to make dealings happen. Coinage was probably invented in ancient China and, about 700 BC, reinvented by the Lydians in what is now Turkey. Paper currency was also invented in China, at least as early as the 11th century.

Coins are known in two forms. The former type had the same value as the metal it had been made from. As people were often melting them, they were not very enduring. The later form of coins was released with a lower value than the metal they were made from and are used till present days. Paper currency developed from a bill of exchange as a result of the understanding that gold is not necessarily needed to be present during the transaction, but it can be substituted by more comfortable, more handling and much more flexible means - paper, hence the payment, the exchange for gold, can be done subsequently. However, present business, because of a tendency towards the globalized trade, does not use any of these forms, as it is more efficient to use abstract money - that is to say, direct debit, which is cheaper, more comfortable, quicker and relatively safe. Thanks to this electronic form of banking, a required time for making a transaction has shortened from days to seconds.

Beyond any doubt, digital money is spreading widely and it is certain that in near future the majority of all the transactions will be contended in this manner. When taking, for instance, the huge and fast rise of credit cards into consideration, it is only a question of four or five decades when it would be possible to meet material money only in museums. This new digital era has already begun.