Name: Goodangel Blessing

Group: FEM418

INTRODUCTION

In our world today, money is high-tech. People do not only use coins and dollar bills issued by the
government as money, but also increasingly cheques and credit cards. Banks are able to move
millions of dollars by touching only one button on their computers. Money has always been
important to people and to the economy. Many economists, like Keynes (Skidelsky, 2000,
pp.110,112), have dealt with the question of money already. The forms money has taken on over
centuries have always been closely connected with the technological developments in the economy.
As simple economies evolved into more complicated economies, money has always adapted to the
different economic circumstances. With respect to the latest innovations in the computer industry a
new form of money has evolved: e money. This paper describes the transition from traditional
government money to privately issued electronic money. It examines the current innovations in the
payment technologies by exploring how today’s form of money have evolved over time. It also
reflects the reasons for inventing electronic money schemes.

BRIEF HISTORICAL EVOLUTION AND DEVELOPMENT MONEY

Money has taken different forms through the ages; example includes cowry shells in Africa, large
stone wheels on the pacific island Yap, and strings of beads called wampum used by Native American
settlers. In fact, economist says that the invention of money belongs in the same category as the
great inventions of ancient times, such as the wheel and the inclined plane, but how did money
develop? Early forms of money were often Commodity Money, that is, money that had value
because it was made of a substance that had value. Examples of commodity money are gold and
silver coins. Gold coins were valuable because they could be used in exchange for other goods or
services, but also because the gold itself was valued and had other uses. Commodity money gave
way to the next stage-representative money.

The barter economy- A world without money

In order to appreciate the conveniences that money brings to am economy, we will have to think
about a world without money. Just imagine a musician – a bassoonist in an orchestra, who has a car
that needs to be repaired. In a world without money, he would need to barter for car repair. In fact,
he would need to find a coincidence of wants, (that is, the case that two people each have
something that the other wants at the right time and place to make an exchange). In other worlds,
he would need to find a mechanic who would be willing to exchange car repairs for a private
bassoon concert by the next day so that he can drive to his next orchestra rehearsal.
 Step of mix of exchange before cash come
Barter

In the earlies societies where there was not yet any central agency for minting money and people
live sparsely. Even then, trading was an important way of acquiring things, things that could not be
easily made by oneself. People gathered or made different products that were then bartered with
people that produced other items or services. In some cases, this became difficult, since the people
wanting to trade did not always have the products the others wanted. It was often necessary to first
trade something one had to get something the other wanted. A medium of exchange was required.

Primitives

Later, a variety of valued items fulfilled such a need. The type of these items varied much depending
on the society. Such items originally had value in themselves. Precious stones, cowries, beads, eggs,
feathers, ivory, leather, cattle and vodka are examples of what were used. These weren't called
money as such, but they were its primitive form. Pieces of gold were weighted for value, they didn't
have a predefined i.e. printed, value. Cattle and other animals were considered highly valuable and
many a man's reputation was weighted by the number of animals in his possession. In fact, the
words cattle and capital share the same origin.

Some of such primitive forms of money had value in more than economic sense, the items could
have sociological or religious meaning. In Fijian society gifts of whales still play an important role in
certain ceremonies. And in many societies, it was required to compensate crimes or other actions,
such as marriage, with commodities rather than an "eye for an eye" principle. The English word
"pay" derives from Latin "pacare", to pacify, appease, or make peace with.

Tokens

Next step was for the money not to have value in itself. Coins were minted that weren't worth the
face value in metal. It was simply agreed that they carried a certain value. This became possible as
societies grew, and cities were built, since such form of money required a static form of authority
that vowed for the value. Coins were minted with the current ruler's face in it. Our coins and notes
are still forms of token money.

Notational money

After people became more educated and the skills of reading and writing spread, it became possible
to write notes that authorized the subject to withdraw or transfer money from the issuers account.
One of the first known examples of such customs were the merchants of 13th century in Italy. A
more current form of notational money are cheques. These are a notation that are tied to value that
is stored somewhere else, like a bank account. In themselves these are not worth anything, the
concept of a blank cheque is well known, but nobody talks about blank coins.

Credit
If we add yet another layer of abstraction, we can tie the value to something that isn't even
anywhere. The only tie is the commitment of the user to be liable for the sum. The seller gets her
money from the creditor, who in turn trusts the buyer to pay the sum to her.

THE CONCEPT OF MONEY

In economics money is defined as an asset (a store of value) which functions as a generally

accepted medium of exchange, i.e., it can in principle be used directly to buy any good.

All the difficulties of barter were overcome with the introduction of money. Crowther had defined
money as “anything that is generally acceptable as a means of exchange (i.e., as a means of settling
debts) and that at the same time acts as a measure and as a store of value.” An important point
about this definition is that it regards anything that is generally acceptable as money. Thus, money
includes coins, currency notes, cheques, Bills of Exchange, and so on. It is not always easy to define
money. That is why Prof. Walker has said that money is that which money does. By this, he refers to
the functions of money. Money performs many functions in a modern economy. The most important
functions are given in the form of a couplet quoted below. “Money is a matter of functions four - a
medium, a measure, a standard, a store.”

Qualities of Good Money/Characteristics of Money

1. Acceptability

2. Convertibility

3. Standardizable

4. Scarcity

5. Divisibility

6. Legality

7. Stability

8. Homogeneity

9. Durability

10. Recognizability

11. Storability

12. Economical
13. Transferability

14. Portability

15. Difficult to duplicate

16. Government support

FUNCTIONS OF MONEY

CONCLUSION
To sum up, money has taken different forms over time. As discussed in the paper, today’s money has
evolved over centuries. Due to many innovations and technological advances in the computer
industry, money has become finally what it is today: high-tech. It acts like a symbol of the
commercial structure we operate in. By examining the history of money, it becomes obvious that a
higher number of societies with sophisticated economies have resulted in money adapting to the
technological advances in the economies.