What is money?
As defined by Sir Dennis Robertson money is anything which is widely accepted in payments for goods, or in discharge of other kinds of business obligations. From this we can gather that money is widely accepted as a means of exchange for goods and services Heeding to Adam Smith commonly known as the father of economics ''the sole purpose of holding money is to facilitate the circulation of goods or services''. the concept of money plays a vital roll in modern society and for the majority of the population is viewed as a necessity. more often than not money is used as a method to depict the level of wealth and success.
Money serves 4 main purposes:
It acts as a medium for exchange enabling people to trade goods, prior to money there was a need for a direct exchange of goods which made transactions more difficult.
Money is used as a unit of account meaning it allows prices to be set in a common currency meaning it is far more simple to differentiate goods and services.
Money has a stored value enabling people to save wealth and help with future expenditures. this is more vital for people who wish to save for the future.
Facilitates trade by serving as a medium of exchange enabling people to freely buy and sell, prior to money if 2 people wanted to trade they would have to both come to an agreement on the worth of the individual assets.
The origins of money
However, when was this conceptualised? Coins were first standardized in the 7th century B.C. However the first coin to be accepted in England was created by a Saxon king and was named the penny. In ancient times cattle, spices and precious metals were used as currency. paper money was introduced first by China during the Tang dynasty, this is because it was far more convenient to have large sums of money compared to the alternative of metal coins.
How can a concept so old still be used today? The concept of bank was formed by the Romans to store valuables and goods this is still used to date. However with the invention of E-money at the beginning of the 21ts century the possibilities of online banking and payment methods has increased dramatically. Showing signs of a possible cashless society.
The current climate of money:
Due to constant innovations in technology it can be difficult to keep track for example the introduction of contactless payment. contactless payment was introduced in the UK around 2007, in 2019 83% of credit and debit cards were contactless. in over 10 years the 'newest' form of payment still hasn't
been completely accepted by the UK population. contactless payment still required a person to have their debit or credit card on them, more recent introductions such as Apple Pay and Google Pay completely disregard the need to carry a bank card. however this technology has not overridden the need for banks and traditional financial institutions.
The future of money:
Many believe the future of money will be digital currencies for example Ethereum and Bitcoin. As the blockchain is a very secure digital ledger it can be used to track transactions. the potential benefits from utilising the blockchain include faster transactions, cheaper transactions and more secure transactions. due to the prospect of cryptocurrencies and utilisation of the blockchain we may see the beginning of a cashless society in the near future and perhaps a world wide currency leading to the abolishment of exchange rates. Banks could revert back to their original use of storing valuables and assets for example gold as there is no longer a need to store large reserves of cash and may even become obsolete given large crypto banks take the correct steps in converting the current global economy.