History of Currency
Paper currency first developed in Tang Dynasty China during the 7th century, although true paper money did not appear until the 11th century, during the Song Dynasty. The usage of paper currency later spread throughout the Mongol Empire. European explorers like Marco Polo introduced the concept in Europe during the 13th century. Napolean issued paper banknotes in the early 1800’s. Cash paper money originated as receipts for value held on account “value received”, and should not be conflated with promissory “sight bills” which were issued with a promise to convert at a later date.
A banknote (often known as a bill, paper money, or simply a note) is a type of negotiable instrument known as a promissory note, made by a bank, payable to the bearer on demand. Banknotes were originally issued by commercial banks, who were legally required to redeem the notes for legal tender (usually gold or silver coin) when presented to the chief cashier of the originating bank. These commercial banknotes only traded at face value in the market served by the issuing bank. Commercial banknotes have primarily been replaced by national banknotes issued by central banks.
National banknotes are generally legal tender, meaning that medium of payment is allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Historically, banks sought to ensure that they could always pay customers in coins when they presented banknotes for payment. This practice of “backing” notes with something of substance is the basis for the history of central banks backing their currencies in gold or silver. Today, most national currencies have no backing in precious metals or commodities and have value only by fiat. With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.
The idea of using a durable light-weight substance as evidence of a promise to pay a bearer on demand originated in China during the Han Dynasty in 118 BC, and was made of leather. Although Carthage was purported to have issued bank notes on parchment or leather at least before the city’s destruction in 146 BC, making Carthage the oldest known user of lightweight promissory notes. The first known banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century.
Paper money is a medium of exchange for goods or services within an economy. It is printed on paper, rather than in coin form.
Paperare the most generally accepted forms of paper money. In most cases, each country in the world has its own paper money, but in many cases several countries use the same (such as the Euro or the U.S. dollar). A country’s government designs and manufactures that country’s paper .
Some paper money is fiat money, meaning that it has no intrinsic value. That is, the paper used to create theis not worth very much in terms of its value as a raw material. Most paper is fiat , and its value comes from what it represents rather than what it is. Before 1971, the U.S. dollar was not fiat — it was backed by a corresponding amount of gold held with the Federal Reserve.
A digital currency is a medium of exchange that is generated, stored and transferred electronically. Digital currencies are not typically associated with any country’s government or represented in physical forms like the coins and notes of traditional currencies.
Cryptocurrencies, the most common category of digital currency, are the type that comes to mind for most people when they hear the term. Cryptocurrencies rely on encryption to secure the processes involved in generating units and conducting transactions. They are used similarly to conventional money for purchases online and in person and are accepted by an increasing number of sellers.
The first widely-adopted cryptocurrency, Bitcoin, relies on blockchain’s distributed ledger model to prevent a single point of failure and to ensure that the record of transactions is tamper-proof. Most other well-known cryptocurrencies also use blockchain and the technology is being explored in many industries as a secure and cost-effective way to create and manage a distributed database and maintain records for digital transactions of all types.
Virtual currencies, another subset of digital currencies, are mediums of monetary exchange that are confined to particular software-based environments.
Benefits of Digital currency
1. THEY ASSIST DEVELOPING NATIONS
2. THEY’RE POTENTIAL INVESTMENTS
3. THE TECHNOLOGY IS PRETTY COOL
What percentage of the world’s money is digital?
Total amount of money in the world is estimated to be around 60 trillion US dollars .
Total cash is estimated at about 5 trillion dollars
5 / (60 / 100%) = 8.3%
So about 91.7% of world money exists in one digital form or another.