Gold, Inflation and crypto: Part 2

Last week we discussed early trades, necessity, and characteristics of a currency. This week we will discuss metals as early currency to modern banknotes. 

Datalators

Originally money was a form of receipt, representing crop grain stored in temple granaries in Sumer in ancient Mesopotamia and in Ancient Egypt. In this first stage of currency, metals were used to represent value stored in the form of commodities. Then because of the instability of emporiums, there was no safe place to store value.

Coinage:

Later metal itself became the store of value, First silver, then both silver and gold, and at one point also bronze. Now we have copper coins and other non-precious metals as coins.

Most economies using coinage had several tiers of coins of different values, made of copper or bronze, silver, and gold. Gold coins were the most valuable and were used for large purchases, payment of the military, and backing of state activities. Units of account were often defined as the value of a particular type of gold coin. Silver coins were used for mid-sized transactions, while coins of copper or bronze, might be used for smaller transactions. The exact ratios among the coins were directly related to the size and weight of the metal but the ratio between the values of the three metals varied greatly between different eras and places. The rarity of gold consistently made it most valuable currency and almost every economies valued gold. Gold became the universal currency. That was the era of gold.

Paper money:

Once again, the credit for making the first paper money goes to China. And almost at the same time, several other regions started their paper currencies. Yet the banknotes issued were still only locally and temporarily valid. It was not until the mid-13th century that a standard and uniform government issue of paper money became an acceptable nationwide currency.

In Europe, paper money was first introduced on a regular basis in Sweden in 1661 (although Washington Irving records an earlier emergency use of it, by the Spanish in a siege during the Conquest of Granada). As Sweden was rich in copper, many copper coins were in circulation, but its relatively low value necessitated extraordinarily big coins, often weighing several kilograms.

The use of paper money reduced the need to transport gold and silver as well as the associated risk. It facilitated loans of gold or silver at interest since the underlying specie (money in the form of gold or silver coins rather than notes) never left the possession of the lender until someone else redeemed the note; and it allowed a division of currency into credit- and specie-backed forms. It enabled the sale of stock in joint-stock companies and the redemption of those shares in a paper.

Taking money against goods and gold is a form of trust because a note has no intrinsic value. Here you trust this 100$ bill will buy you a tiny piece of gold or equivalent goods.

  • Everyone will accept this money and exchange it for goods.
  • The only government-regulated central bank will print money and keep its authenticity.
  • The government and the economy will last and their money’s value will be upheld.
  • The government will not devalue the money (unregulated supply of money can bring the value to zero.)

Next week we will see how money failed to keep promises. Before that, we will discuss a few other forms of banknotes.

Cashless payment:

Since the 1980s, the use of banknotes has increasingly been displaced by credit and debit cards, electronic money transfers, and mobile payments. These payment methods make transactions easier but cash is still the primary means of payment (and store of value) for unbanked people with low income. And while accepting electronic money, we trust the bank (provider) will give our paper money back any time we want. The government-issued banknote is still the store of value. So it is also a part of the era of paper money and era of Inflation.

This ends the 2nd week of Gold, Inflation and crypto. Next week we will discuss the era of inflation and potential future of currency.

50 thoughts on “Gold, Inflation and crypto: Part 2”

  1. Pingback: Gold, Inflation, and Cryptocurrency – 1 (Trading and currency) – Datalators Blog

  2. It’s genuinely very difficult in this full of activity life to
    listen news on TV, therefore I only use world
    wide web for that reason, and get the most recent news.

  3. First of all I want to say fantastic blog! I had a quick
    question that I’d like to ask if you don’t mind. I was interested to know
    how you center yourself and clear your mind prior to
    writing. I’ve had difficulty clearing my mind in getting
    my thoughts out there. I truly do enjoy writing however it just seems like
    the first 10 to 15 minutes are wasted simply just trying to figure
    out how to begin. Any ideas or hints? Kudos!

  4. Have you ever thought about adding a little bit more than just your articles?

    I mean, what you say is important and everything.

    But imagine if you added some great visuals or video clips to
    give your posts more, “pop”! Your content is excellent but with pics and videos, this website could definitely be one of the very best in its field.
    Wonderful blog!

  5. Superb site you have here but I was wondering if you knew of any user discussion forums
    that cover the same topics talked about here?
    I’d really love to be a part of group where I can get feedback from other knowledgeable people that
    share the same interest. If you have any recommendations,
    please let me know. Bless you!

  6. I’m amazed, I have to admit. Rarely do I come across a blog that’s both educative and
    amusing, and without a doubt, you’ve hit the nail on the head.
    The issue is something that not enough folks are speaking intelligently about.
    I’m very happy that I found this in my search for something relating to this.

  7. Its like you read my mind! You appear to know a lot about this,
    like you wrote the book in it or something. I think that you could do
    with some pics to drive the message home a bit, but instead of that,
    this is wonderful blog. A great read. I will certainly
    be back.

  8. I am not positive where you’re getting your info, however great topic.
    I must spend some time finding out much more or understanding
    more. Thanks for wonderful info I used to be searching for
    this info for my mission.

  9. My spouse and I absolutely love your blog and find nearly all of your post’s to be
    exactly I’m looking for. Would you offer guest writers to
    write content to suit your needs? I wouldn’t mind writing a post or elaborating on a lot of the subjects you write regarding here.
    Again, awesome web site!

  10. My spouse and I stumbled over here by a different web address and thought I should check things out.
    I like what I see so now i am following you. Look forward to going over your web page again.

  11. I’m impressed, I must say. Rarely do I come across a blog that’s both equally educative and amusing, and without a doubt, you have hit the nail
    on the head. The problem is something not enough folks are speaking intelligently about.
    I’m very happy that I stumbled across this during my hunt for something concerning this.

  12. Just wish to say your article is as amazing. The clarity in your post is just cool and i
    can assume you are an expert on this subject.
    Well with your permission allow me to grab your feed to keep up to date with forthcoming
    post. Thanks a million and please keep up the gratifying work.

  13. I am not sure where you are getting your information, but good topic.
    I needs to spend some time learning much more or understanding more.
    Thanks for magnificent information I was looking for this info for my mission. asmr 0mniartist

  14. Excellent blog here! Also your website loads up fast! What host are you using?
    Can I get your affiliate link to your host? I wish my site loaded up as fast as yours lol

  15. I’ve been browsing online more than three hours today, yet I
    never found any interesting article like yours. It’s pretty worth enough for me.

    Personally, if all webmasters and bloggers made
    good content as you did, the web will be much more
    useful than ever before.

  16. I’ve been browsing online greater than three hours nowadays, but I never discovered any interesting article
    like yours. It is lovely value enough for me. In my view, if
    all webmasters and bloggers made excellent content as you did, the internet can be
    a lot more helpful than ever before.

  17. scoliosis
    Greetings! Very helpful advice in this particular post! It is
    the little changes that will make the biggest changes.

    Many thanks for sharing! scoliosis

  18. free dating sites
    Hello, Neat post. There’s an issue with your website in web explorer,
    might check this? IE still is the marketplace chief and a huge section of other folks will omit your fantastic writing because of this problem.
    free dating sites

  19. It’s a pity you don’t have a donate button! I’d without a doubt donate to this
    brilliant blog! I suppose for now i’ll settle for
    book-marking and adding your RSS feed to my Google account.
    I look forward to new updates and will share
    this website with my Facebook group. Chat soon!

  20. I’m amazed, I must say. Rarely do I come across a blog that’s equally educative and
    engaging, and let me tell you, you have hit the nail on the head.
    The issue is an issue that not enough people are speaking intelligently about.

    Now i’m very happy that I found this during my hunt for something relating to
    this.

  21. I seriously love your blog.. Great colors & theme. Did you create this web site yourself?

    Please reply back as I’m hoping to create my very own site and would
    love to know where you got this from or just what the theme is named.
    Thanks!

  22. Hi would you mind sharing which blog platform you’re using?
    I’m looking to start my own blog soon but I’m having a tough time choosing between BlogEngine/Wordpress/B2evolution and Drupal.
    The reason I ask is because your design seems different then most blogs and I’m looking for
    something unique. P.S My apologies for being off-topic but I had to ask!

  23. I really like your blog.. very nice colors & theme.
    Did you create this website yourself or did you hire someone to
    do it for you? Plz reply as I’m looking to create my
    own blog and would like to find out where u got this from.

    cheers

  24. Hey I know this is off topic but I was wondering if
    you knew of any widgets I could add to my blog that automatically tweet
    my newest twitter updates. I’ve been looking for a plug-in like this
    for quite some time and was hoping maybe you would have some experience with something like this.
    Please let me know if you run into anything. I truly enjoy reading your
    blog and I look forward to your new updates.

Leave a Comment

Your email address will not be published.