Money: Then, Now And The Future

Goals, Kids Savings, Piggy Bank, Savings

Rutul Gandhi, Solutions Specialist at Prive Technologies shares his opinion on how money has evolved – only to go full circle as he takes it from the very start. 

Money is a strange thing. The coins and notes that circulate today possess no real inherent value. The only reason they have any value is because we decided that they should. Money is really about the exchanges and transaction that we have with one another. 

We hold a physical representation of value, only because we acknowledge and accept (as a whole) that it is worth its designated value. The actual value is determined by a number of factors; primarily by the central banks that manage the money supply and the interest rates of their respective countries.

This money allows people to trade goods and services in the direct and/or distant future, and allows for us to understand the value of everything – but how did the concept of money really come about?


In the really early days, people would barter to get the goods and services that they needed. This means individuals would find another with commodities that they wanted/needed, and then would engage in an agreement to trade their possessions. 

From this, arises a pretty obvious problem. There was a serious lack of transferability and divisibility which is required for effective trading. 

Finding an individual willing to trade with you with a commodity of equal value would have proven cumbersome and inefficient. With livestock involved in much of the bartering, dividing the value of said livestock was messy business (quite literally!).

Even though bartering is still used today in many parts of the world, an instrument was required to facilitate the scale, purchase or trade of goods and services between parties.

This primitive method of bartering soon evolved into a physical exchange of goods that were mutually desirable, and therefore recognized as valuable. Early examples included dried corn, beaver pelts, spices, amongst numerous other things that acted as a currency based on the value of the underlying commodity. 

Tools and weapons made of bronze were also used as a medium of exchange. Over time, these were abandoned to less sharper, yet circular shapes – giving birth to the first coin in 600 B.C.

The now and future of money – blockchain.

Yap Money

In the early 1900s, the Yapese (local habitants of the Yap island in the Micronesian islands) saw value in Rai stones – large circular stone disks of limestone found on the island – and agreed that the stones will be used to “pay” for stuff. 

That being said, a single one of these stones could weigh more than a car. The largest Rai stones were 3.6 meters in diameter, 0.5 meters thick and weighed 4 metric tons. The holes at the centre of these disks was carved in order to carry these stones from the source on logs. However, once on the island, moving them was – and still is – near impossible.

But, it wasn’t necessary.

The Yapese simply orally transferred ownership of the stone, without even touching the stone. Just, everyone on the island knew that the stone was under new ownership. So all the Yap people kept track of who owns what part of the stone.

Rai stones are not only valued by their size and weight, but also by the provenance. For example, if people died during the extraction of the disk, it would attain a higher value than others of the same or similar size.

So, the Rai stone doesn’t move at all, but it can be used as an instrument for exchanges. In fact, the stone doesn’t even have to be on the island — just as long as there was a consensus amongst the members of the island that the stone does exist. 

There was an occasion where the Yapese were hit with a storm on the way back from an extraction and dropped a Rai stone into the ocean, accidentally. Upon return, all the villagers believed that the stone was at the bottom of the ocean, allocated a value to it, and it proceeded to become a part of the Yap economy.

Digital Payments

Let’s take the physical exchange of money discussed as ‘Money 1.0’. However, technology has changed the way we transfer money and now, the digital age now allows for us to transfer each other money without any physical commodity – just simply through 1’s and 0’s on computers. This becomes possible through a financial ecosystem of databases owned by large financial institutions. 

This infrastructure presents friction and pain-points in the ecosystem, which incurs cost to the institution as well as the general public. From global remittances to local loan approvals, there are an abundance of issues when the large financial institutions have the status quo.

On that note, let’s consider this digital exchange of money where we are at the mercy of these financial as ‘Money 2.0’.

Money 3.0

It’s time for the now and future of money – blockchain.

It works on a very similar concept to the one used by the Yapese. Every transfer of ownership is recorded on an immutable record, and everyone that is a part of that ecosystem is notified of the exchange – without fail.

The blockchain enables the digital exchange of money without the need for any financial intermediary, and therefore drastically reduces the possibilities of friction when processing financial exchanges. It gives rise to a whole new world of possibilities for safe and secure transactions.

Crypto-currencies are going to uncover opportunities that we have never even imagined. We’re only beginning to realise its potential since they will decouple the need for large, trusted institutions from the architecture of the network.

Funny thing, it’s all through using a digitized (albeit complex) method that was mastered centuries ago – by the Yapese. 

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Written by

Rutul Gandhi

Last updated on

July 22nd 2019, 11:45 am

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