The History of Money
THE HISTORY OF MONEY
Good morning. On behalf of myself I would like to welcome you all here today. Allow me to introduce myself. My name is Lucia Ladonová and I am a student of a The Faculty of Business Economics in Košice. My intention today is to present you with the history of money.
In the following presentation, I would like to make a number of points. I will explain what forms of payment were used before coinage system. Then I will tell you something of the history of coins. Next I will go on to talk about history of bank notes. In conclusion I will show how the e-money works and what it is. And finally, I will tell some facts about Euro.
I would like to begin with the definition of what the money really is. Money is generally accepted mean of payment. The use of it is almost as old as the human civilization. But it hasn't always had the same form as today and it is still developing.
Now let's have a look on what forms of payment were used before coinage system. The oldest one was bartering. It may date back to the beginning of humankind. Barter is the exchange of goods, resources, services for another goods, resources, services. For example when the farmer needs spade and the smith needs apples they could change their products and they are both satisfied. But it is not as easy as it seems because the farmer have to find a smith who needs his products and wants to change them for a spade. The most important improvement was the tendency to select some items in preference to others. These barter items were accepted as a mean of exchange. It was for example tea, fur, cattle, seashells or even eggs, leather, rice, salt.. Today organizations and governments still use and often prefer barter as a form of exchange.
Now, I will move on to the history of coins. The coinage as a replacement of the barter system and as a mean of payment was taken it the real life in the seventh century BC. First, people started to use gold and silver as a mean of exchange. The first people who made and used coins were seafaring modern western Turkeys. The design was only on one of the sides, in most cases it was an animal. The other side had a punch mark. It was made of the electrum - naturally occurring alloy of gold and silver and these coins were handmade. Coinage then quickly spread out. Within some hundred years the design was engraved on both sides.
The next point is the history of bank notes.
After year 600 Chinese as the first nation introduced the paper money. They placed the emperor's seal and signature on a crude paper made form mulberry bark. This was the first attempt to avoid the falsification. The paper notes grew in production to the point that their value rapidly depreciated and inflation soared. In about year 1260 in Italy the first watermark came into existence. Later, watermark was used as a very important item to avoid falsification of bank notes.
The next area we are dealing with is e-money. What is it? It is a form of money that does not exist physically, but only as an information stored in a chip of smart card or on hard disk of your computer. This is possible due to the cryptography and digital signatures. What are the possibilities for paying for goods ordered via Internet? The first one, used mostly in the US, is sending credit card information over the Internet in plain (not encoded) form. This method brings very high risk of misusing this information, and today this type of payment is considered mad. A second type of a credit card-based system uses an ID number to purchase goods, rather than sending the actual credit card number on-line. The ID number is obtained by pre-registering a credit card number with a third party who is responsible for maintaining the integrity of that information. Now let's turn to Euro. It started its function on 1.1.1999. It's a common European Union currency. Euro area Member States began implementing a common monetary policy, the Euro was introduced as a legal currency and the 12 currencies of the participating Member States became subdivisions of the Euro. But after 30.6.2002 national currencies won’t be valid. Together the European Central Bank and the Euro area national central banks are known as the Eurosystem.
To put it briefly, money developed from the bartering to its today's form and will be still developing until the end of the civilization.