Gold, Inflation, and Cryptocurrency – 1 (Trading and currency)


In this series of articles, we will discuss the evolution of currency from the very beginning to date. And then we will try to figure out if paper money is serving well as a currency and whether cryptocurrency will take over paper money.

It all started when the society became a little complex and people began to feel the necessity of what they can not make or gather by themselves. They were ready to pay other for those things.
Say our friend X is good at catching fish and our friend Y is good at collecting fruits. (This complexity hadn’t existed before people started gathering in larger groups and individuals started developing skills in certain tasks).
If our friend X wants the taste of freshly picked fruits and at the same time, our friend Y wants to get some fish then they can swipe their food. Then society became more complex and people started exchanging goods for services and vice-versa. Trading got more and more complex when people became aware that there’s a way of getting something previously which was unavailable to them. Then their simple grab eat society became trad base society. Such complex trading can be traced back to prehistoric time.

Why currency:
In time trading got messier. Say our old friend X gets bored of eating roasted fish which he catches from river. wants to eat cooked fish mixed with spice. So he goes the master chef, our new friend Z. But Z has no interest in giving X cooked food (or as a service cooking for X) because he already has plenty of fish. But he might be interest in fruits. So, X reach out to our another old friend Y to trade some fish for fruits and goes back to Z for the cooked fish exchanging the fruits.
Then the necessity for some change rose. The idea of currency emerged. They started trading against something everyone commonly values. As complexity maxed people needed something more universal to trade with. Something which is valued by not only their tribe but other tribes as they started roaming places to places and meeting new people. The first very complex and long-distance trade is believed to be found in Mesopotamia. There’s written evidence of trade between Mesopotamia and Indus Valley (near Pakisthan) around 3000 BC.  Long-distance trade, in that early time, was limited almost exclusively to luxury goods like spices, textiles, and precious metals.

Characteristics of currency:
The idea of currency matured and after trying out a lot of alternatives they came up with the criteria of a good to be valued currency. One thing to keep in mind, these 6 criteria didn’t emerged overnight and they are not unchangeable. But people made them from trail and error of thousands of years.

  • Durability
  • portability
  • divisibility
  • uniformity
  • limited supply
  • acceptability

One thing for sure people tried out foods at first and they were there for long. Foods are acceptable, uniform, and good of limited supply. But they not not durable and often not portable.
Then people started tilting to more unusable things, like metal. They are unusable in the sense, that you can not eat them. The only thing you could use metal for is making tools. I am sure people didn’t value gold because they used gold to make tools like shovel or saw. As these metals fulfill other criteria like durability, portability, divisibility, uniformity and limited supply people started accepting them as currency and they found the missing piece, acceptability.
Something makes valued currency when it have these characteristics. Then later we will see some well valued currency started losing some the characteristics.

This ends the first part of Gold, Inflation, and Cryptocurrency series.
In the next session, we will discuss the Gold and other precious metals as currency.

57 thoughts on “Gold, Inflation, and Cryptocurrency – 1 (Trading and currency)”

  1. Pingback: Gold, Inflation and crypto: Part 2 – Datalators Blog

  2. I do agree with all of the concepts you’ve presented for your post.
    They’re very convincing and can definitely work.
    Still, the posts are very quick for newbies. May just
    you please prolong them a little from subsequent time?
    Thanks for the post.

  3. That is very fascinating, You are an overly skilled blogger.
    I’ve joined your feed and look ahead to in quest of more of
    your magnificent post. Also, I’ve shared your website in my social networks

  4. I’ve read several good stuff here. Definitely price bookmarking for revisiting.
    I surprise how so much effort you place to make any such great informative web site.

  5. Wonderful post however , I was wanting to know if you could write a litte more on this topic?
    I’d be very thankful if you could elaborate a little bit more.

  6. I am really impressed with your writing skills as well as with the layout
    on your blog. Is this a paid theme or did you customize it yourself?
    Either way keep up the nice quality writing, it’s rare to see a nice
    blog like this one nowadays.

  7. My relatives every time say that I am wasting my time here at
    net, except I know I am getting familiarity every
    day by reading such fastidious articles or

  8. Normally I don’t read article on blogs, but I wish to say that
    this write-up very compelled me to try and do so!

    Your writing style has been amazed me. Thanks, very nice article.

  9. I every time used to study piece of writing in news papers but now as I am a user of
    web thus from now I am using net for articles or reviews, thanks
    to web.

  10. Hi would you mind letting me know which web host you’re working with?
    I’ve loaded your blog in 3 completely different internet browsers and I must say this blog loads a lot
    faster then most. Can you recommend a good internet hosting provider at a reasonable price?
    Thank you, I appreciate it!

  11. Wonderful work! That is the kind of info that should be shared around the internet.
    Disgrace on Google for now not positioning this post upper!
    Come on over and seek advice from my site . Thank you =)

  12. YouTube is the world’s best and biggest video sharing website which millions of users
    visit it per day and share their videos on it.

    This popular website can play a very significant role
    in extending your business.
    The number of people who create video content and the users that take interest in watching videos
    is increasing day by day and if you create successful content,
    you can easily outdo your rivals. But the key to success is increasing the attention you receive and the number of users who
    watch your content. Other than creating proper and attractive content,
    you should also try to make more people interested in watching your videos.

  13. Hey there would you mind stating which blog platform you’re
    working with? I’m going to start my own blog soon but I’m having a difficult time selecting between BlogEngine/Wordpress/B2evolution and Drupal.
    The reason I ask is because your design and style seems different then most blogs and I’m looking for
    something completely unique. P.S Sorry for getting off-topic but I had to ask!

  14. I have been surfing online greater than three hours today, but
    I by no means discovered any fascinating article like yours.
    It is pretty price enough for me. In my view, if all
    webmasters and bloggers made good content as you probably
    did, the internet can be a lot more helpful than ever before.

  15. With havin so much content do you ever run into any problems
    of plagorism or copyright infringement? My website has a lot of completely
    unique content I’ve either authored myself or outsourced but it looks like a lot of it is
    popping it up all over the internet without my agreement.

    Do you know any methods to help prevent content from
    being ripped off? I’d definitely appreciate it.

  16. Hi there it’s me, I am also visiting this site on a regular basis, this web site is really
    nice and the users are truly sharing nice thoughts.

Leave a Comment

Your email address will not be published.