Past mediums of exchange and why Cryptocurrency is the future
In this bear market, it is easy to fear that the days of Cryptocurrency are over and that the market will never recover. However, that is discounting the enormous potential for Cryptocurrencies to be the next medium of exchange around the world.
With capitalism came trade, as many merchants emerged to sell their products/services. This brought with it the question of what customers can give merchants in exchange for the goods and services they received.
Regarding the item provided by the customer, can the merchant exchange the item for another item of her desire?
With the passage of time, these questions were answered as better forms of mediums of exchanges started to emerge. How did trade evolve with time and are Cryptocurrencies the ultimate medium of exchange for the future? We explore these questions and more in this article. Continue reading for more.
Past Mediums Of Exchange
Since the implementation of agricultural practices that led to the production of more crops than needed for sustenance, barter trade became widespread. Instead of holding onto excess amounts of wheat that will expire with time, a farmer can trade wheat for a few cows with a merchant to plough the fields.
In this case, both the farmer and the merchant receive a higher utility in their life through this exchange of goods. However, this raised the issue of quantifying the goods- How much wheat should be exchanged for one cow?
That is how gold started to become a store of value and medium of exchange.
Trading With Gold
When it came to gold, merchants found a medium of exchange that was divisible and could be measured when received. Able to transport it anywhere, gold started to facilitate trade that went beyond borders, together with merchant ships sailing across seas to sell goods.
Unfortunately, despite these benefits of gold, there were still fundamental flaws with it as a medium of exchange.
Firstly, large transactions required large amounts of gold, which for practical reasons was not possible to transport around. Secondly, gold was easy to counterfeit, making it difficult to determine real gold from the fake.
Lastly, the volatile supply and uneven distribution across different geographies made it difficult to determine the true value of gold universally.
Transacting With Paper Money
The next step in the evolution of money begun with the minting of paper money by the central banks of countries. It is difficult to create counterfeit paper money, given the serial number on each note that could be tracked.
Furthermore, citizens could store their paper money in a bank and withdraw it when needed, solving the issue of transportation.
However, transacting paper money meant the centralization of control on the economy. It also means giving implicit trust to a central power, opening up opportunities for corruption as well as citizens being affected by monetary policies that went wrong.
This is best illustrated by the 2008 financial crisis that happened in America and in countries such as Venezuela where there is hyperinflation of their currency, making the currency virtually worthless.
Trading Financial Assets
The creation of financial institutions led to the trading of stocks, bonds and other financial derivatives. No longer were transactions just limited to goods and services. Equity in companies and debts could now be traded in both primary and secondary markets.
However, there are downsides to traditional financial exchanges as well, such as trading being limited to operating hours, time difference for traders in different countries as well as regulation that foreign traders have to comply. What if we possessed a form of money that never sleeps?
Cryptocurrency- The Future Of Money?
Since Bitcoin became well-known to the masses, many have advocated for a decentralised world whereby each individual has complete ownership over her money. Besides Bitcoin meeting the ideology of its advocates, there are practical benefits to Bitcoin as well.
The most immediate benefits are the reduced transaction fees from cross-border payments and the relatively fast processing speed of cross-border transactions. Taken to its utopian extreme, each protocol has its own “P2P economy”, with each user utilizing the platform’s native token.
This form of money is not controlled by a single entity, giving control back to the masses. Although it must be acknowledged that Cryptocurrency is still a nascent industry, with many issues still to be resolved, such as volatile price movements and regulation of various jurisdictions.
What We Do At ABCC Exchange
The “Why” of ABCC Exchange is to provide a secure and seamless trading experience for all Cryptocurrency traders. From Day 1 our aim has been to make Cryptocurrency accessible to all, whether it is the user who have only heard of Bitcoin or the advanced trader.
Disclaimer: The following content is the view of one writer and is not representative of the views of ABCC Exchange. The content in this article is in no way an endorsement of any project or financial advice of any form. Users are reminded to carry out their own due diligence and execute trades based on their research and risk tolerance.
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