To origins of currency and improving how trade is conducted has always been a fascinating intrest of myself, money is seen as the route of all evil, but money is simply a tool of trade and has self regulating properties based the foundation of the currency.
The origins of money started with storage banks, where individuals could trade items for a number of printed tokens to trade individual items, which were much easier to carry than the goods themselves, before this people would take their goods to market, and trade goods for goods.
As different storage banks of the local areas started to trade tokens printed on metal, communication between banks improved and a universal token agreed apon between these banks started to form a currency.
A number of metals are agreed apon for these tokens, and a standard of value is agreed apon based around a limit of hard it is to acquire resources, to refine a resource and manufacture of that resources into the token.
A these token became public, less and less storage was needed at a bank for items, as these tokens became a universe value, goods were assigned a value in number of these tokens, rather than printing storage receipt and having to go to a bank to withdraw and item, banks started to store these tokens.
The universe element of these tokens allow people to trade these tokens with each other for goods from a trader without the need for an external storage bank of these items.
A mixture of metal can make a currency, for example copper, tin, iron, silver and gold, the resource with the highest value tends to be the reserve for a bank using a not renewable resource.
Non renewable resources is a limited resource, more is needed to be acquired to increase wealth, work towards acquiring such resources can diminish over time, the value of each reason is based the amount possible to acquire, the value is based on how rare it is to acquire the resources, abundent easy to acquire resources the to have less value, rare resources have a much higher value, non reactive resources as a currency tend be valued the most.
Renewable resources can be used, what is known as paper money is made of grown material that is manufactured into a material hard to acquire, generally paper money is made of cotten money, some earlier colonies used to use shells to trade.
A renewable resource is based around a bio system and work done towards refinement of that resource, the main focus is on the process of refinement and manufacturing and tends to be hard to replicate, the end product used as currency tends to have many authentication methods.
Originally money was backed by a physical resource, normally known as a gold reserve, the digitization of currency birth the fiat money model.
Just like a resource the fiat money models value is based on comparing the total amount along with other factors with another currency model, this is called the exchange rate between currencies.
Fiat money is not based on any physical material and unlike physical material the total amount has no upper limit, and tend to be limited by regulation.
Just like a value based on a physical amount, the value of a currency can decrease is the total amount raises, the opposite is true if the amount decreasest he value raises, this is called inflation and deflation.
Genrally when the amount of money raises, so does the value of wages, rent, goods and services, the value of the currency decreases and more is needed to equal the value of goods and services.
When the total amount of a currency decreases, the value of that currency increases, less money is needed to pay for a service or product, as it takes time for circulation to change, in the short term the effects of this creates a period of poverty.
Modern bank tend to work on inflation rather than deflation to avoid periods of poverty as circulation catches up with changed to the total amount, this is why it is considered to be a constantly inflationary system.
An opposite system that is mainly deflated over time inscreasing in value is crypto currencies, not actually a currency but considered a commodity to the financial market, these are trading token not back by the banking industry, and is based on the concept of a limited non renewable resources.
In a crypto currency there is an upper limit to total amount, and due to the encryption process causing permanent losses over time, as crypto currency wallets are lost, the value can raise as it starts to lose the total amount.
This create a virtual bubble as the more scarce the crypto currency has become the more valuable it become, if less is traded due to less existing over time, the market will start to crash when the flow of trade start to be reduce. Crypto coins tend to be divisible to a very large decimal place to compensate for this constant deflationary effect.
Unlike other currency, this currency requires processing power of machine to generate and tax which is a currency based around energy consumption.
Intresting facts about different forms of currency through out time, salt was used to trade in Egypt, although a mineral, it was consumed to help with retaining water in the body in the dry desert, although it would seem salt was abundant, unlike metals it heavily prized in this region.
Some ancient cultures used particular shells that were gathered for trading like a currency, this is an example of a traded resource constructed completely from nature and not refined or constructed further by people.
Before metal coins, stone could of be carved into coins by some cultures, and before that metal would of been measured by weight and purity of the metal.
Cotten money can take hundreds of years to degrade even if it made from organic material, and metal coin can take thousands of years to degrade.