HISTORY56 - Money: Then and Now

The musical, Cabaret, includes the song, “Money makes the world go round,” illustrating the importance of money in our lives.  Everybody has some money.  Most of us wish we had more.  But what do we know about money, how it came to be, and the different forms it comes in?  I realized that I didn’t know much about this subject.  So, this blog post is about the history of money.

 

After a short introduction, I’ll talk about bartering, the early evolution of currency, banks, the value of money, modern financial transactions, and finish with some conclusions.

My principal sources include “The History of Money,” mint.intuit.com; “The History of Money - From Bartering to Bitcoin,” “How Currency Works,” and “The Evolution of Banking Over Time,” investopedia.com; “History of Money,” Wikipedia; “History of Money,” historyworld.net; “Standards of Value,” britannica.com; “The History of Money,” thoughtco.com; “A Brief History of Money,” historyofyesterday.com; “The History of U.S. Circulating Coins,” usmint.gov; “U.S. Paper Money, 1793-Present,” littletoncoincoin.com; “A History of Central Banking in the United States,” minneapolisfed.org; and numerous other online sources.

Introduction

Money is a medium of exchange commonly accepted for goods and services, and repayment of debts.

Money also helps communicate the price of goods (written in dollars and cents), and it provides individuals with a way to store their wealth.

Up until about 5,000 years ago, humans had only the barter system to obtain (legally) desired goods from others.   Individuals traded (exchanged) goods or services for other goods or services, in the absence of money.

From the third millennium BC, money evolved in several different forms.  The earliest currency was gold.  This was followed by the historic currencies of metal coins, introduced in 7^th century BC, and paper money, introduced in the 8^th century.  In modern times, credit card transactions and electronic money were introduced in the 20^th century, and virtual cryptocurrency was introduced in the early 21^st century. 

 

Throughout history, money and purchasing options have evolved in several different forms. 

Bartering/Commodity Money

The history of bartering dates all the way back to the time that early humans began to congregate in groups.

Slowly, a type of transaction developed over the centuries that involved easily traded items like cattle, animal skins, salt, weapons, tea, tobacco, and seeds.  These traded goods served as the medium of exchange (even though the value of each of these items was still negotiable in many cases).  This system of trading spread across the world, and still survives today in some parts of the globe.

One major problem with the barter system was that there was no standard rate of exchange.  What would happen if the parties involved couldn't agree that the goods or services being swapped were of equal value, or if the person in need of goods or services had nothing the person who had them wanted?  No deal! 

To solve this problem, humans developed what is called commodity money - a basic item that's used by almost everyone in a given society.  The commodity would effectively take the form of money.

However, using commodities as money created difficulties.  For instance, lugging heavy bags of salt, or dragging recalcitrant oxen around could prove a practical or logistical nightmare.  Using commodities for trade led to other problems as well, as many commodities were difficult to store, and could also be highly perishable.  When the commodity traded involved a service, disputes also arose if that service failed to live up to expectations (realistic or not).

Commodity money became practical in the form of collectibles - small, mostly homogenous items such as shells or beads.  Collectibles tended to be durable, easy to store or hide on one’s person, difficult to find or forge, and easy to appraise in value.  This made them more robust forms of money relative to many commodity forms of money, like cattle.

One of the greatest achievements of the introduction of commodity money was the increased speed at which business could be done.

Historic Currencies

This section will cover the historic currencies of gold, metal coins, and paper money.

Gold. The earliest “money” currency appeared in Egypt and Mesopotamia in the third millennium BC.  It consisted of non-standard gold bars, which had to be weighed to establish their value each time they were exchanged.  Later, the bars were supplemented by gold rings for smaller sums.  In about 2,500 BC, extensive trade, at Ebla in modern Syria, was based on currency of this kind in silver and gold.

Gold rings and ornaments, which could be worn for safe keeping, as well as display, approached the ideal of a portable currency. 

Wealth, compressed into the convenient form of gold, brought one disadvantage.  Unless well-hidden or protected, it was easily stolen.

Metal Coins.  The idea of metal coins for money occurred at about the same time in two far-separated parts of the world.  While the craftsmen of Lydia, an Iron-Age kingdom of western Asia Minor, that is now part of Western Turkey, were striking designs on blank coins, the skilled casters of China were making coins by a different method - pouring molten bronze into molds.

The earliest known metal coins came from the city of Ephesus, in Lydia, in about 650 BC.  The metal used was electrum, a natural alloy of gold and silver, found locally.  The coins were bean-shaped, and were struck on one side with a distinguishing mark, such as the image of a lion.

The underlying purpose was to ensure a stable value in this variable metal of exchange, previously traded by weight alone.

Lydia's currency helped the country increase both its internal and external trading systems, making it one of the richest empires in Asia Minor.

Tidbit:  Today, when someone says, "as rich as Croesus,” they are referring to the last Lydian king who ruled from 585-546 BC.

Lydia started striking metal coins like this in 650 BC.

 

Greek cities, to the west of Lydia, the Roman Empire, and the great Persian Empire to the east, were quick to adopt the useful new technique of metal currency.  Coinage quickly became common throughout the populated western world.

Meanwhile, to the east, in China, around 640 BC, a minting facility in Guanzhuang, Henan Province, China, began minting metal coins.  Two shapes were characteristic of the first Chinese bronze-cast coins.  One type resembled the metal part of a spade, while others were like a knife blade with a handle.  In both cases the flat surfaces were decorated with Chinese characters.  These designs were copied in nearly all the states of China during the later centuries of the Zhou dynasty (1046-256 BC).

This early spade coin was bronze-cast in China, circa 640 BC.

.

Shi Huangdi, the first emperor of China, introduced the more rational round coin in the late 3^rd century BC.  Still cast in bronze, rather than struck, they had a square hole in the middle - a shape characteristic of far eastern coins for the next two millennia.

Worldwide, over time, round metal coins evolved to be made from the silver and gold that we associate with money today.  Coins were a huge milestone in the history of money because they were one of the first currencies that allowed people to pay by count (number of coins) rather than weight.

This round gold coin, with a likeness of Roman Emperor Claudius, was cast in 46-47.

  

Soon, countries began minting their own series of coins with specific values.  Since coins were given a designated value, it became easier to compare the cost of items people wanted.

Throughout history, there have been lots of different coins used in different regions.  In 800, Charlemagne issued the silver penny, which was the standard coin in Western Europe until 1200.

By the mid-13^TH century in England, the shilling and pound became widely used to describe larger amounts of pennies.  As the value of currency has changed over the years, the creation of larger forms of currency has been an important part of the history of money.

Parts of Europe were still using metal coins as their sole form of currency until the 16^th century.  Colonial acquisitions of new territories, via European conquest, provided new sources of precious metals and enabled European nations to keep minting a greater quantity of coins.

During the American Colonial Period, a variety of coins circulated, including British pounds, German thalers, Spanish milled dollars, and even some coins produced by the colonies. Spanish milled dollars became a favorite because of the consistency of the silver content throughout the years.  To make change for a dollar, people sometimes cut the coin into halves, quarters, eighths, and sixteenths to match the fractional denominations that were in short supply.

After the American Revolution, the United States Coinage Act of 1792 established a national mint located in Philadelphia.  Congress chose decimal coinage and set the U.S. dollar to the already familiar Spanish milled dollar and its fractional parts.

The Coinage Act of 1792 specified that all coins have an “impression emblematic of liberty,” the inscription “LIBERTY,” and the year of coinage on the “front” side. The Act required that the “back” side of gold and silver coins have a representation of an eagle and the inscription, “UNITED STATES OF AMERICA.” The only requirement of copper coin back sides was to list the denomination of the coin, although a wreath became the standard design until the 20^th century.  Later Acts were responsible for changing the inscriptions and elements that we recognize on our coins today.

Below is a snapshot of current U.S. coins.

 

Current popular U.S. coins.  Left to right:  penny, dime, nickel, quarter.  Half dollar and dollar coins are still produced and circulated, but in smaller quantities.

Paper Money. This discussion will focus on China, Europe, and America.

China.  By the 8^th century in China, the shortage of precious metals for coins, and the prac­tical dif­fi­culties in using bronze coins, led to the devel­opment of paper money.   Around 800, the Chinese moved from coins to paper money.

 

Early Chinese paper money, circa 1100.

Paper money took on a major role in domestic trans­ac­tions, gold and silver being used for inter­na­tional trans­ac­tions.  To prevent fraud with this new form of money, in the place where modern American bills say, "In God We Trust," the Chinese inscription at that time warned: "Those who are counterfeiting will be decapitated."

Tidbit:  Paper money was one of the wonders that Marco Polo brought back to Europe in the late 13^th century. 

Because China’s paper money was not backed by a given quantity/value of precious metals, this gradually res­ulted in high inflation.  By the early 15^th century, inflation had become such a problem that paper currency was abolished.

After China stopped using its paper money in the mid-15^th century, coins once again became the most popular form of money in the country and in the world.

Europe.  The first paper currency issued by European governments was actually issued by colonial governments in North America.  Because cross-Atlantic shipment of goods between Europe and the North American colonies took a very long time, the colonists often ran out of coins as operations expanded.  Instead of going back to a barter system, the colonial governments issued IOUs that traded as a currency.  The first instance was in Canada, which was at that time a French colony.  In 1685, soldiers were issued playing cards, denominated and signed by the governor, to use as cash instead of coins from France. 

Eventually, these IOUs, now called bills of exchange, became a common part of the world economy.  A bill of exchange was essentially a written order that one person or group will pay a specified amount of money on demand.  A bill of exchange could be used to settle an account in international trade, which was one of the early uses of this order.

Note:  The following discussion, including the mention of banks, inflation, and currency markets, is supplemented in the next two sections of this article: “The Introduction of Banks” and “The Value of Money.”

In Europe, throughout the commercially energetic 18^th century, there were frequent experiments with bank notes - deriving from a recognized need to expand the currency supply beyond the availability of precious metals.  Gradually, public confidence in these pieces of paper increased, particularly when they were issued by national banks, with the backing of government reserves. 

With governments issuing the bank notes, the inherent danger was no longer bankruptcy but inflation.

The shift to paper money in Europe increased the amount of international trade that could occur.  Banks and the ruling classes started buying currencies from other nations, and created the first currency market.  The stability of a particular monarchy or government affected the value of the country's currency, and thus, that country's ability to trade on an increasingly international market.

Competition between countries often led to currency wars, where competing countries would try to change the value of the competitor's currency by driving it up, making the enemy's goods too expensive, or by driving it down, reducing the enemy's buying power (and ability to pay for a war), or by eliminating the currency completely.

America.  In America, the first paper money created (in 1690) was called a bill of credit and represented the colony's obligation to soldiers, who could spend or trade the colony's IOU just like silver and gold coins.

During the American Revolution in 1775, Colonial leaders created paper money, but it could not be readily exchanged for silver or gold.  Instead, later, Congress enacted complicated rules for future redemption, assigning each state a quota of continental dollars that could be returned to the government at a future date.  On a small scale, it might have worked, but so much money was printed that rapid inflation stripped them of all their value.

In 1779, the new United States of America used bills of exchange, to deal with European governments.

A 1779 bill of Exchange for $50, backed by Spain.

 

Once the U.S. Constitution was ratified, and the coinage system of the United States was established in 1792 - from then until 1861 (68 years later) -  the U.S. government saw no need for a national paper currency.

Between the Revolutionary War and the Civil War, some paper money in the U.S. was printed by individual states and individual banks - with no standardization and no security.  Value of the paper money depended on the financial condition of the institutions by which they were printed.

Tidbit:  The United States officially adopted the dollar sign in 1785. The symbol evolved from the Spanish-American figure for pesos.

It wasn't until the National Bank Acts of 1863 and 1864, that the U.S. government introduced a monetary system where national banks could issue paper notes based on their holding of government bonds.  The disparate currencies were then replaced with standardized national bank notes, giving the U.S. its first uniform paper currency, with denominations at the time of $5, $10, and $20.   

By the end of the Civil War (in 1865), 2,000 private banks had converted to national banks.  All of them issued paper money in the standard note design, with their own name on it, and all is still legal tender today.

The Federal Reserve Act of 1913 created a national banking system that could keep up with the changing financial needs of the country.  The Federal Reserve Board then issued the first federal note in the form of a ten-dollar bill in 1914. The Federal Reserve later decided to reduce the actual size of the notes by 30%.

Tidbit:  The inclusion of the motto "In God We Trust" on all currency was required by law in 1955.

Designs on the notes would not change again until 1996, when a series of improvements were made to make the U.S. dollar more counterfeit-proof.

Today, American paper currency come in seven denominations: $1, $2, $5, $10, $20, $50, and $100. The United States no longer issues bills in larger denominations, such as $500, $1,000, $5,000, and $10,000 bills.  But they are still legal tender, and may still be in circulation.  All U.S. currency issued since 1861 is valid and redeemable at its full-face value.

Currently issued U.S. paper money.  Not showing the $2 bill.

 

The Introduction of Banks

This section will cover early banking, banking in the United States, and bank checks.

Early Banking.  In early Egyptian and Mesopotamian civilizations, gold was deposited in temples for safe-keeping.  In Babylon, in the 18^th century BC, loans made by the priests of the temple.  The concept of banking had arrived.

Banking activities in Greece were more varied and sophisticated than in any previous society.  Private entrepreneurs, as well as temples and public bodies, undertook financial transactions.  They took deposits, made loans, changed money from one currency to another, and tested coins for weight and purity.  Some moneylenders accepted payment in one Greek city and arranged for credit in another, avoiding the need for the customer to transport or transfer large numbers of coins.

Rome, with its genius for administration, adopted and regularized the banking practices of Greece.  By the 2^nd century, a debt could officially be discharged by paying the appropriate sum into a bank, and public notaries were appointed to register such transactions.

The collapse of trade after the fall of the Roman Empire made bankers less necessary than before, and their demise was hastened by the hostility of the Christian church to the charging of interest.  Usury came to seem morally offensive.  However, some of Rome’s banking institutions lived on in the form of papal bankers that emerged in the Holy Roman Empire and the Knights Templar during the Crusades.

Eventually, the monarchs who reigned over Europe noted the value of banking institutions.  As banks existed by the grace - and occasionally, the explicit charters and contracts - of the ruling sovereignty, the royal powers began to take loans, often on the king’s terms, to make up for hard times at the royal treasury.  This easy financing led kings into unnecessary extravagances, costly wars, and arms races with neighboring kingdoms that would often lead to crushing debt.

By the end of the 18^th century in Europe, banks had become respectable organizations within communities.  Since individuals didn’t all withdraw all their money at once, banks learned that they could loan more money than they actually had, which was a huge step in the history of money.

United States.  The first bank in the U.S., the Bank of the United States, was established in 1791 by Alexander Hamilton.  The bank was successful in paying off Revolutionary War debts and in its commercial operations.  But in 1811, with the debt largely taken care of, and concern about constitutionality, Congress refused to renew its charter, and the bank ceased operations.

 

The first bank in the United States was founded in 1791, in Philadelphia, Pennsylvania.

With the War of 1812, and the federal debt beginning to mount, the Second National Bank was formed.  When long-time national bank opponent Andrew Jackson was elected President, he refused to renew the Bank’s charter, on the grounds that such a powerful private institution was susceptible to corruption and would be difficult to control.  So, the Second Bank was closed in 1837.

During the period from 1837 to the Civil War, commonly known as the free banking era, states passed “free bank laws,” which allowed banks to operate under a much less onerous charter.

The outbreak of the Civil War, and the need to finance it, led again to a renewed interest in a national bank.  The National Banking Acts of 1863 and 1864 created the United States National Banking System.  Besides encouraging development of a national currency backed by bank holdings of U.S. Treasury securities, the acts established a system of nationally chartered banks - shaping today's national banking system and a uniform U.S. banking policy.

In 1913, the U.S. government formed the Federal Reserve Bank (the Fed) to provide central control of the monetary system, in order to alleviate financial crises.

Domestic banking in the United States finally settled to the point where, with the advent of deposit insurance and widespread mortgage lending, the average citizen could have confidence in the banking system, and reasonable access to credit. The modern era had arrived.

Checks.  It probably wasn't until the early 1500s, in Holland, that the written paper check first got widespread usage.  Amsterdam in the 16^th century was a major international shipping and trading center.  People who had accumulated cash began depositing it with Dutch “cashiers,” for a fee, as a safer alternative to keeping the money at home.  Eventually the cashiers agreed to pay their depositors' debts out of the money in each account, based on the depositor's written order or “note” to do so.

The concept of writing and depositing checks as a method of arranging payments soon spread to England and elsewhere.  The first printed checks are traced to 1762 and British banker Lawrence Childs.  The word “check” also may have originated in England in the 1700s, when serial numbers were placed on these pieces of paper as a way to keep track of, or “check” on, them.

More banks began to accept and issue checks, and more and more people came on board with this new payment method.  By the mid-19th century, the use of checks in the United States had grown rapidly and was the primary means of exchange.   People in business and others who exchanged money often found it inconvenient to withdraw large amounts of cash from their banks, and they began making large transactions by check instead.

But for all the convenience of checks, the boom carried its own hassles: Banks couldn’t keep up with the volume of transactions being made.  As a result, the first clearinghouse was established, which allowed banks to settle their accounts in a central location rather than going from bank to bank. By 1880, clearinghouses dotted the American landscape.

By the early 1950s, Americans were writing more than 28 million checks a day, and manual processing time became a problem.  Banks began introducing computers into their workflows. They also introduced Magnet Ink Character Recognition, a system of magnetic characters printed across the bottom of checks, used for printing routing and account numbers and other identifying information, and that could be read by computers.

This faster processing method meant people became even more inclined to write checks, because they’d get cleared faster.  The number of annual checks written peaked in 1995, at 49.5 billion.

In 2003, more transactions were paid for by check than by any other method.  But use of credit cards was on the rise, and check usage had plummeted by 2012.  In 2020, there were 14.5 billion checks written in the U.S.

Value of Money

This section will cover currency, exchange rates, and inflation.

Value of Currency.  In 1816, gold was made the standard of value for money in England.  Other governments soon followed England’s lead.  Each banknote represented a certain amount of gold, so governments could print as much money as they wanted, as long as they had the amount of gold that corresponded to that much money. 

This so-called representative money was backed by a government’s or bank's promise to exchange it on demand for a certain amount of gold.  This meant that the value of a particular currency was much more stable.

The United States followed suit in 1900 with the Gold Standard Act.  Gold became the United States’ official standard of value.  The conversion rates of two different currencies, say dollars to pounds, were now much better defined. 

The U.S. was on the gold standard from 1900 to 1971.

 

Tidbit:  Gold certificates were used as paper currency in the United States from 1882 to 1933. These certificates were freely convertible into gold coins.

The U.S. abandoned the gold standard in 1971 to curb inflation and prevent foreign nations from overburdening the system by redeeming their dollars for gold.  Slowly, other countries followed suit and the Gold Standard was abandoned.  The value of a particular currency was no longer defined by how much gold the country’s government had in its reserves.

Gold-backed representative money was replaced by fiat money.  Fiat is the Latin word for "let it be done."  Money was given its value by government fiat or decree.  In other words, money holds value simply because people have faith that other parties will accept it. Today, most of the major currencies around the world, including the euro, British pound and Japanese yen, fall into this category.  Fiat money derives its value from the trust in the government and its ability to levy and collect taxes.

Exchange-Rate Policies.  While currency technically refers to physical money, financial markets refer to currencies as the units of account of national economies and the exchange rates that exist across currencies. Because of the global nature of trade, parties often need to acquire foreign currencies as well.  Governments have two basic policy choices when it comes to managing this process.

The first is to offer a fixed exchange rate.  Here, the government pegs its own currency to one of the major world currencies, such as the American dollar, or the euro, and sets a firm exchange rate between the two denominations.  To preserve the local exchange rate, the nation’s central bank either buys or sells the currency to which it is pegged.

The main goal of a fixed exchange rate is to create a sense of stability, especially when a nation's financial markets are less sophisticated than those in other parts of the world.  Investors gain confidence by knowing the exact amount of the pegged currency they can acquire if they so desire.

However, fixed exchange rates have played a part in numerous currency crises in recent history.  This can happen, for instance, when the purchase of local currency by the central bank, leads to its overvaluation.

The alternative to this system is letting the currency float.  Instead of pre-determining the price of foreign currency, the market dictates what the cost will be.  The United States is one of the major economies that uses a floating exchange rate.  In a floating system, the rules of supply and demand govern a foreign currency's price.  Therefore, an increase in the amount of money will make the denomination cheaper for foreign investors.  And an increase in demand will strengthen the currency (make it more expensive).

While a “strong” currency has positive connotations, there are drawbacks. Suppose the dollar gained value against the yen. Suddenly, Japanese businesses would have to pay more to acquire American-made goods, likely passing their costs on to consumers. This makes U.S. products less competitive in overseas markets.

The Impact of Inflation.  Most of the major economies around the world now use fiat currencies. Since they’re not linked to any physical asset, governments have the freedom to print additional money in times of financial trouble.  While this provides greater flexibility to address challenges, it also creates the opportunity to overspend.

The biggest hazard of printing too much money is hyperinflation.  With more of the currency in circulation, each unit is worth less.  While modest amounts of inflation are relatively harmless, uncontrolled devaluation can dramatically erode the purchasing power of consumers.  If inflation reaches 5% annually, each individual’s savings, assuming it doesn’t accrue substantial interest, is worth 5% less than it was the previous year.  Naturally, it becomes harder to maintain the same standard of living.

Example of inflation.

  

For this reason, central banks in developed countries usually try to keep inflation under control by indirectly taking money out of circulation when the currency loses too much value.

Modern Financial Transactions

Thanks to the creation and widespread use of computers and the internet, buying, selling, and paying off debts are easier than they have ever been.  This section will cover credit and debit cards, online banking with electronic money, and virtual currency known as cryptocurrency.

Credit & Debit Cards.  When it comes to convenience, credit cards and debit cards are popular choices.  Credit cards were first issued to consumers in the 1920s and have grown in popularity ever since.  Credit cards create loans that the purchaser-borrower must later repay.

A debit card is loaded with a set amount of money from your bank account, with money being removed from your account after each purchase you make.

Credit cards are a little different in the sense that they don’t carry a balance that you have to put in. Instead, lenders can choose a credit limit to set on your card, allowing you to spend up to a certain amount before you have to start paying it back to continue using your card.

In 2020, credit cards were the most commonly used payment method in the U.S.

Electronic Money/Online Banking.  As banking advanced with credit cards and other forms of currencies, the advent of chip technology, the increased capability of computers, and the World Wide Web allowed transactions to occur over the internet, with electronic money.

Electronic money is money that exists in banking computer systems that may be used to facilitate electronic transactions.  Although its value is backed by fiat currency and may, therefore, be exchanged into a physical, tangible form, electronic money is primarily used for electronic transactions due to the sheer convenience of this methodology.

In 1995, Wells Fargo became the first bank to offer internet banking to customers, replacing programs involving desktop computers, hard drives, and bank-provided floppy disks. 

With online payments, you can simply enter a credit or debit card number on a website and pay for the goods you want.  Online payments can also be made using a bank account number and routing number.

In 1997, mobile commerce services were introduced when Coca-Cola set up several vending machines that could accept payments via text message.  In 1998, PayPal was founded in California and it allowed its members to leverage the medium of the internet to make payments and transfer money.

The 21^st century has given rise to mobile payments, where money is rendered for a product or service through a portable electronic device, such as a tablet, smartphone, or even a watch.  Mobile payment technology can also be used to send money to friends or family members.  Increasingly, services like Apple Pay and Google Pay are vying for retailers to accept their platforms for point-of-sale payments.

Mobile payments have made financial transaction much more flexible

  

Other mobile payment services like Zelle are available for bank-to-bank money transfers, and Venmo, for transferring funds between individuals.

These mobile electronic money transactions have been particularly useful during the ongoing pandemic, where cash is often not accepted.

Virtual Currency/Cryptocurrency.  Virtual currencies, also described as digital currencies and cryptocurrencies, are designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.  The appeal of virtual currency is it offers the promise of lower transaction fees than traditional online payment mechanisms.  But this makes them potentially risky as there is no central control regulating the value of one unit of currency.

In the 1990s, digital currency tried and failed to get off the ground, but in the 2000s things have changed, allowing it to grow in popularity and in widespread use.  Currently, there are more than 1,600 unique cryptocurrencies available online, and the number continues to grow.

Bitcoin was the first, and still the largest, cryptocurrency.  Released as open-source software in 2009, Bitcoin was invented by an anonymous person (or group of people) who used the name Satoshi Nakamoto.  Bitcoins are digital assets that can be exchanged for other currencies, products, and services.  The Bitcoin system employs robust cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.  Digital ledgers of these transactions are kept, containing a compressed cryptographic record of actions, a timestamp, and transaction data.  These digital records, by design, are resistant to data modification.

Bitcoin's value is volatile, primarily affected by its supply, the market’s demand for it, availability, competing cryptocurrencies, and investor sentiment.

Bitcoins dominance has waned over time.  In 2018, Bitcoin accounted for more than 80% of the overall cryptocurrency market share.  By 2022, that share was down to less than 50%

 

Bitcoin was the first, and still the largest, cryptocurrency.

The Bottom Line

The history of money is still being written. The system of exchange has moved from swapping animal skins, to minting coins, to printing paper money, and today, we appear to be on the cusp of a massive shift to electronic transactions and cryptocurrencies like Bitcoin. The monetary system will surely continue evolving as long as humans require a medium of exchange.

 

The real measure of your wealth is how much you'd be worth if you lost all your money. --Anonymous