History of Payments: Cash is king!

by. Bill Prichard

Earlier this week, we began a four-part series in Insight Vault on the “History of Payments.” This history, we argue, can be segmented into three great movements towards making it safer and easier to pay someone. We started with “Let’s Trade”: the era dominated by bartering. But, as we will see, the world needed to crown new royalty: coins and paper money.

Coins made their first appearance in what is now Turkey in 630 B.C. The King stamped precious metal slugs of uniform size and weight forming the familiar coin shape. Now value could be determined by simply counting coins. From Turkey, coins spread around the world becoming the first global money system. With coins as a standardized medium of exchange, merchants and consumers traded freely for the daily necessities of life.

As coins began to circulate widely, fraud once again became an issue. One counterfeiting practice was called “clipping”. The edges of coins were trimmed allowing the collection of silver or gold from the shavings. Naturally, the original coin lost value in the process. Early Italian bankers became experts with the scale carefully weighing coins in order to confirm their real value. As revolutionary as coins were to the history of payments, downsides remained. Coins in bulk were heavy and difficult to transport. To overcome some of these challenges, currency once again needed to evolve.

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