The fascinating history of commerce can be traced back several millennia ago. Before the advent of money, non-monetary societies operated largely along the principles of gifting and debt, even before barter was introduced. However, the major limitation in terms of coincidence of wants rendered the barter system deficient; thus the emergence of money.

Money describes something that is generally acceptable as a means of payment for goods purchased or services rendered. In his book Money and the Mechanism of Exchange (1875), William Stanley Jevons famously described money in terms of four functions: a medium of exchange, a common measure of value (or unit of account), a standard of value (or standard of deferred payment), and a store of value. Economists would later go on to adopt/list only 3 functions in the modern macroeconomics textbooks, being – money used as medium of exchange, as a unit of account and as a store of value.

Following the barter system of commerce, money underwent multiple stages of evolution, resulting in its availability in various forms, such as:

Commodity Money: The value of a commodity money is determined by the value of the commodity from which it is formed. Many items which were perceived to hold great value have been used as commodity money in ancient times and are in fact still being used in developing countries like Burundi, Papua New Guinea etc. Examples of commodities that have been used as medium of exchange include salt, large stones, naturally occuring rare metals(like gold, silver, copper), rice, shells etc.
Coinage: Precious and non-precious metals are mined, casted, weighed and stamped into coins to serve as a store of value thereby creating a new unit of account which leads to banking. In the medieval period, notable economies used coinage attributing more importance to Gold,Silver and Copper(in this order),thus forming the three tiers of coins. While Gold coins were used for major purchases & backing of state activities, Silver coins were utilized for midsize transactions and as a unit of account for taxes, fealty and dues. Copper on the other hand, represented the coinage of common transactions.
Paper Money: As opposed to going around with the weight of a thousand coins in one’s pocket, came the introduction of paper money as a less burdensome means of exchange. Paper money was backed by a government or institution’s promise to exchange coins for a fixed amount of commodity. Standardization of paper money was made into an acceptable nationwide currency around the mid 13th century.
Fiat money, often known as fiat currency, is described as money whose value is not based on any inherent worth or assurance that it may be exchanged for a valuable good (like gold). Rather, its value is derived solely on government decree (fiat). It is illegal to refuse to accept fiat currency as payment for any debt, whether public or private, after the government declares it to be legal tender. Fiat currency is usually notes and coins issued by central banks, such as the Federal Reserve System in the United States.
Digital Money: The development of digital technology into the twentieth century, led to the creation of digital forms of money, such as bank deposits and electronic payment systems. Anonymous digital currencies were developed in the early 2000s with examples being Ecash, bit gold, RPOW, and b-money. Before the idea of Bitcoin emerged in 2008, not much had changed. This idea presented the innovation of a decentralized money that does not depend on a third party for verification.
Cryptocurrencies: A Cryptocurrency is a type of digital currency based on the network of decentralized systems and ledgers called a Blockchain. The creation of Bitcoin in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto, marked the emergence of cryptocurrencies which offer better security and transparency. Thousands of other cryptocurrencies have been created after Bitcoin, with each having their own unique features and use cases. For example, smart contracts were introduced by Ethereum thereby enabling programmable transactions.

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Top 7 reasons Why you should choose Cryptocurrencies transactions

As Cryptocurrency gained traction, Conventional financial markets started incorporating cryptocurrencies,while governments and financial institutions moved to regulate them. Several factors leading to the widespread(unanimous) adoption in the financial markets of well developed countries are mentioned below:

1.Transparency: The majority of Cryptocurrencies are powered by Blockchain technology which provides transparency. Blockchain is a virtual chain of blocks that keeps track of all transactions as well as record data sent via the network. The transactions recorded on this public ledger(the Blockchain) enhances trust, improves security, and support immutability of already existing transactions as a means of reducing fraudulent activities.

2.Advanced Security and Privacy: To guarantee the security of transactions, cryptocurrencies utilize advanced cryptographic algorithms. They offer a high level of security since they are extremely difficult to counterfeit and are almost impossible to change once a transaction is verified on the blockchain.Most crypto wallets have improved privacy features therefore offering a greater level of control over transaction data to users.Furthermore, you may secure your digital assets using 2FA (2-Factor Authentication) and your seed phrases—a unique list of words that only you know—without worrying about hacking.

3. Decentralization: Because cryptocurrencies run on decentralized networks, they lessen the power of governments and financial corporations that have centralized control. Consumers are able to carry out transactions without the use of intermediaries and thus,have greater control over their finances.

4.Transaction Speed: Cryptocurrencies are borderless, since they are not restricted to any nation or currency. For cross-border transactions, crypto transactions can be quicker than those made with typical banking channels. The confirmation times of many cryptocurrencies are literally instantaneous.

5. Decreased Costs: Transfer fees, currency translation costs, and intermediary fees are merely a couple of the fees that are frequently associated with traditional banking systems. Transactions using cryptocurrencies can be more affordable and advantageous because they eliminate or drastically cut down on a number of these costs.

6. Accessibility: Anyone with an internet connection can use cryptocurrencies to access financial services, most especially those who lack or have inadequate access to banking services. This has the potential to promote financial inclusion worldwide and advantageous to international trading.

7.As a hedge against inflation: Because many cryptocurrencies, like Bitcoin & Ethereum have a limited supply, some people and companies utilize cryptocurrencies as a store of wealth, particularly in regions with significant inflation eg. Nigeria. Despite crypto ban by the Nigerian government, 33.4million Nigerians(which accounts for 35% of the population aged 18 to 60) still store and trade cryptocurrencies, beyond the control of corrupt government policies and roguish financial institutions.

Although cryptocurrencies have numerous benefits,it’s important to remember that there are hazards associated with them as well, including price volatility, unpredictability in regulations, and the possibility of illicit activity due to their relative anonymity. Consequently, the choice to transact using cryptocurrencies should be made after meticulously gaining sound knowledge on the concept, benefits and dangers of the technology.

Conclusion

With a capacity to totally transform financial systems and transactions, the evolution of money and the emergence of cryptocurrencies signal a substantial shift in how we approach and utilize money in the digital era.The advent of smart contracts and decentralized finance (DeFi) applications, which provide novel approaches to the ownership and exchange of digital assets, can be attributed to the innovative nature of cryptocurrencies in the financial industry.