On The Future Of Coins And Notes
Money is still a store of value. But how secure are digital systems against attacks from outside and above all from inside?
It’s all a question of trust
The acceptance of a possible abolition of cash is a question of trust. It is significant and not without a certain irony that precisely for this reason in Sweden and the People’s Republic of China the move away from cash has progressed the furthest in the world. In Sweden, citizens’ trust in state institutions and measures has traditionally been high.
It is acceptable in a state that enjoys the full trust of its citizens that every human being, insofar as he inescapably appears as a market participant, becomes absolutely transparent because all acts of consumption and whereabouts are completely traceable. In many places in Sweden, cash payments are no longer possible at all, and the country is well on the way to becoming Europe’s first cashless economy. Because of this, people are checking digital coin reviews so they can avoid scams.
Quite different in China, the country where the political elite trusts the people so little that they now monitor every step with 625 million video cameras, has introduced a points system for state piety and where no telephone card can be purchased without a face scan. And how could this surveillance be carried out more easily than through tracking in the form of abolishing cash? That is why cash is also embossed and printed data protection.
Digital inflation warning
A final aspect is an economic one. The abolition of cash would permanently change the relationship between central banks and credit institutions. The former would no longer generate profits. It is a problem that could possibly be dealt with from a fiscal perspective, but what would weigh more heavily was the risk of inflation.
Commercial banks could theoretically create a lot of money by lending in almost any way, thereby increasing the money supply. If the so-called money supply is eliminated, i.e. the current cash, the money supply managed by them increases. Correspondingly more money then flows into the economic cycle. So there are perfectly rational reasons for clinging to the continued existence of cash as a physical medium of exchange for goods and services.
History Of Money: From Grain To Crypto
A currency like Bitcoin would start a triumphal march around the world was unthinkable just a few years ago. There is still no way around coins and banknotes, even if it has been foreseeable for some time that governments all over the world want to push back cash. However, this change will not happen overnight, because this form of payment has become the standard over the centuries. People do not want to do without embossed or printed money in their wallets.
History of money: Before coins or banknotes were in circulation
People used to pay with other objects for example with shells or grain, but also with cattle. The history of mankind can also be traced on the basis of the development of money. When everyday life developed away from the classic nomadism of hunters and gatherers and the division of labor was introduced, people needed a means of exchange. Numerous forms of “primitive money” or “pre-monetary money” were used.
Precious metals for the first coins
Precious metals were also used early on as a medium of exchange. The first coins appeared in Asia Minor in the 7th century BC. There, gold nuggets were processed in such a way that the king’s likeness could be seen with a stamp. This is how the coins began their triumphal march from Greece to Europe.
Gold and silver were the preferred materials at the time. The minting of gold coins goes back to the Lydian king Croesus who had gold coins of a uniform size minted in Asia Minor for the first time. Also, Persia, Greece, and Egypt used gold as a coinage metal. The precious metal ensured trust and a high level of acceptance of the coins, even beyond national borders.
From grain to precious metals to cryptocurrencies
With the outbreak of the First World War, the gold standard went under. The states simply could no longer afford this luxury and it was more convenient to finance the state with the money press. That’s why people are still longing for an anchor of stability that protects them from the devaluation of their money.
Over time, from shells to gold to fiat, people developed and used different payment methods. These days, you can buy cryptocurrencies and sell them. You can also use it as a payment method in some business areas.