Evolution of Currency: Isha Suhail - 2015-ARCH-05 Amna Kazmi - 2015-ARCH-12 Aqsa Shafique - 2015-ARCH-21

Evolution of Currency
Isha Suhail | 2015-ARCH-05

Amna Kazmi | 2015-ARCH-12
Aqsa Shafique | 2015-ARCH-21
Currency
 The money that is used in a particular country at a particular time.
 A currency, in the most specific sense is money, which serves the
function of being a country’s primary medium of exchange in the form
of coins or paper.
 Usually issued by a government and generally accepted as face value as
a method of payment.
 The increase in search cost: the high cost of
searching suitable persons to exchange goods and
disutility of waiting refers to time period spent on
searching the required person. This ultimately led to
evolution of money as medium of exchange.
 It allows people to obtain what they need to live.
 The problem arises in what proportion the two
goods are to be exchanged.
 It is difficult for the people to store wealth or
generalized purchasing power for future use in the
form of goods like cattle, wheat, potatoes, etc.
Why did people feel the need for money?

 Need to facilitate exchange of goods led to evolution of money.
 Money is the most important invention of modern times. It has
undergone a long process of historical evolution.
 Briefly, evolution of money was mainly through commodity
money, metallic money, paper money and bank money.
 Human beings passed through a stage when
money was not in use and goods were
exchanged directly for one another. Such
exchange of goods for goods was called
Barter Exchange.
 A barter system is an old method of

exchange. The is system has been used for
centuries and long before money was
invented.
 Barter system lasted for 3000 years before

coins or jewels were used.
Barter Exchange
 Today, bartering has made a
comeback using techniques that are
more sophisticated to aid in trading;
for instance, the Internet.
 In ancient times, this system involved

people in the same area, however
today bartering is global.
 Personal and natural resources are

perfectly utilized to
meet the requirements of the society
without involving any wastage.
1. Double Coincidence of Wants
The wants of the two persons who desire to exchange goods must coincide. Such a double coincidence of wants
involves great difficulty and wastage of time in modern society.
2. Absence of Common Measure of Value

Since there is no common measure in terms of which the value of a commodity can be expressed, the problem arises
how much wheat should be exchanged for how many pairs of shoes.
3. Lack of Divisibility
In the absence of a common medium of exchange, a problem arises, when a big indivisible commodity is to be
exchanged for a smaller commodity.
4. The Problem of Storing Wealth

Under a barter system, there is absence of a proper and convenient
means of storing wealth or value.
5. Difficulty of Deferred Payments

In an exchange economy, many contracts relate to future activities
and future payments. Under barter system, future payments are
written in terms of specific goods. It creates many problems.
6. Problem of Transportation
That goods and services cannot be transported conveniently from
one place to another.
Difficulties of Barter System

The inconveniences and drawbacks of barter led to the gradual use
of a medium of exchange.
For example; a person who specialized in fixing cars and needed to

trade for food would have to find a farmer with a broken car. But
what if farmer did not have anything that needed to be fixed? Of
what if a farmer could only give the mechanic more eggs than the
mechanic could reasonably use? Having to find specific person to
trade with makes it very difficult to specialize.
But money became a common medium of exchange.
Difficulties of Barter System

Emergence of coins: The earliest known mints date to 650 and 600 B.C. in
Asia Minor, where the elites of Lydia and Ionia used stamped silver and gold
coins to pay armies.
Inadequacy of commodity money

led to the evolution of metallic
money (gold and silver). The
problem of uniformity of weight
and purity of precious metals led
to private and public coinage.
Coin Money
Coins invention: Civilizations started forming their own currencies. Sometime
around 1100 B. C, the Chinese, instead of bartering actual tools and weapons,
started making miniature versions of the same tools in bronze. But that didn't
work, simply because it was a physical hazard more than anything.
So they ditched that and started making small circular discs made from bronze.
1. Coinage as commodity money owes its

success largely to its portability, durability,
transportability and inherent value.
2. Political leaders could control the production
of coins – from mining, smelting, minting -
as well as their circulation and use
Being shrewd business people, the
Chinese found the weight of the coin
money to be cumbersome and figured that
printed money would be more efficient. It
makes sense too, considering that China
also invented paper and printing. Paper
money was conceived when merchants
began leaving the heavy coins behind with
a trusted agent who would record on paper
how much money had been left as a
deposit.
Difficulties of Coin Money

This process was finally taken over by the state as one of its essential
features and ultimately commodity money gave way to Paper Money
which means currency notes.
Paper Money
Merchants in China, if they became rich enough, found that
their strings of coins were too heavy to carry around easily.
To solve this problem, coins were often left with a
trustworthy person, and the merchant was given a slip of
paper recording how much money they had with that
person. If they showed the paper to that person, they could
regain their money. Eventually, the Song Dynasty paper
money called "jiaozi" originated from these promissory
notes.
Song Dynasty Jiaozi, the world's earliest paper money.

The issue of credit notes is often for a
limited duration, and at some discount to
the promised amount later. The jiaozi
nevertheless did not replace coins during
the Song Dynasty; paper money was used
alongside the coins.
Still in use
The process of evolution of some better
medium of exchange still continues. As the
volume of transactions increased, even
paper money started becoming
inconvenient because of time involved in its
counting and space required for its safe
keeping.
Use of paper money has decreased

Use of credit cards originated in the United States during the 1920s,
when individual firms, such as oil companies and hotel chains,
began issuing them to customers." However, references to credit
cards have been made as far back as 1890 in Europe.
Plastic Money
 References to credit cards have been made as
far back as 1890 in Europe.
 Early credit cards involved sales directly

between the merchant offering the credit and
credit card and that merchant's customer.
From the beginning, plastic
money offered significant
advantages over all forms of
money: They’re pocket sized,
easily portable, relatively secure
and have no intrinsic value in
themselves. Other qualities
include:
• Convenience
• Traceability
• Purchasing power
• Can be used during emergency
• Builds history
Advantages
Credit cards were not always been made of plastic. Throughout history,
there have been credit tokens made from metal coins, metal plates, and
celluloid, metal, fiber, paper and now mostly plastic cards.
The Shape of Credit Cards

- High Interest Rates and Increased Debt
- Credit Card Fraud - Like cash, sometimes
credit cards can be stolen.
- Vague Approval Requirement
- Card too can get damaged
- Materials that decomposes the hardest
Disadvantages
Crypto currency is, basically, mediums of exchange. It is the
means of carrying out transaction digitally. It is a virtual
currency independent of government authority.
Crypto Currency
Block chain
Public ledger (record book) of all transactions that have ever occurred on
bin coin peer-to-peer network dating back to January 2009.
Crypto graphic hash function (SHA 256)

Use by the computer for the validity of transaction. This is used in many
of our modern security systems. Computer tries to guess and check
2^256 computational algorithm for right answer.
Miners
They keep track of the ledger and verify the validity of transactions. Some
spend hundreds of dollars to set up mining rigs just so they can be the
first ones to verify the transaction by solving the algorithm in order to
receive the reward of 12.5 bit coins.
Keywords
 Future of emerging economy that will effect banking, healthcare and
real estate.
 The prize of every bit coin increases after 10 minutes which make it
truly scarce asset.
 It helps you to protect your wealth outside the traditional financial

system.
 As a new age of digital money, bit coin and other universal currencies
are highly portable.
 It is the decentralize network and is censorship resistant.
Why bit coin is valuable?

Process
Making an
account
Miners Buying a bit

verify the coin for
validity $8126
Attaching
Transaction
public and
is sent off
private keys
to block
on digital
chain ledger
wallet
 Bit coin exchange platforms match buyers with sellers like a traditional
stock exchange. When a market order is selected, the trader authorizing
the exchange his coins for the best available prize in the market place.
Similar to the traditional system of bidding.
 A trader who would like to withdraw money from his/her account could
do so by using the options that include a bank transfer, cash delivery or
PayPal transfer.
 Bit coin is considered to be an investment for the future just like

property or gold and initially offers 15% discount for the first bin coin
purchase.
Understanding bit coin exchange
A crypto currency is a digital asset
designed to work as a medium of
exchange that uses strong cryptography
to secure financial transactions, control
the creation of additional units, and verify
the transfer of assets.
• One to one transactions

• Efficient asset transfers
• Confidential transactions
• No transaction fees
• Greater access to credit
• Easier international trade
• Individual ownership
• Adaptability
• Strong security
Advantages

Evolution of Currency: Isha Suhail - 2015-ARCH-05 Amna Kazmi - 2015-ARCH-12 Aqsa Shafique - 2015-ARCH-21

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Evolution of Currency

Isha Suhail | 2015-ARCH-05

Why did people feel the need for money?

 A barter system is an old method of

 Barter system lasted for 3000 years before

 In ancient times, this system involved

 Personal and natural resources are

2. Absence of Common Measure of Value

4. The Problem of Storing Wealth

5. Difficulty of Deferred Payments

Difficulties of Barter System

For example; a person who specialized in fixing cars and needed to

Difficulties of Barter System

Inadequacy of commodity money

1. Coinage as commodity money owes its

Difficulties of Coin Money

Song Dynasty Jiaozi, the world's earliest paper money.

Use of paper money has decreased

 Early credit cards involved sales directly

The Shape of Credit Cards

Crypto graphic hash function (SHA 256)

 It helps you to protect your wealth outside the traditional financial

 It is the decentralize network and is censorship resistant.

Why bit coin is valuable?

Miners Buying a bit

 Bit coin is considered to be an investment for the future just like

• One to one transactions

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