Money is defined as an accepted form of exchange which is considered to be able to complete a financial payment transaction. In this light, the money will not be just as we know to be banknotes and coins as it may exist in unorthodox forms. An example of this is the development of tokens by which those who work will be issued one that can be used to be spent at a membership facility. The functionality of money as an exchange medium makes it have a measure of value and it is accepted for making a payment transaction.
Digitalization of existing currencies
Money functions are not necessarily restrained to it being able to store value and be used for making an exchange. Through time, these functions can change. Over the past five decades, the term “cashless” has undergone an evolution. During the ’60s, bankers in the United States made the effort to digitize money by implementing an electronic system as a substitute for coins, banknotes, paper checks, etc. This cashless payment system brought the automation and electronic transformation of existing currencies.
Bitcoin and other alternative currencies
When Bitcoin was introduced, this solely digitalized and decentralized currency made the term “cashless” have a whole new meaning as it is not a government-backed currency. Cryptocurrency such as Bitcoin is also known as dollar-less or alternative currencies. These are independent of what we commonly accept as currency like that of the US dollar. This monetary system exists and operates entirely using cashless payment transactions.
Bartering as an inefficient payment system
Money originated from bartering because it was considered to be an inefficient payment system. Money was not created because of the desire for economic activity but because there was a need to have a standardization of the means of exchange. Money was also created for legal reasons within societies so that there would be a means of standardized payment. Societal obligations also initiated the creation of money, such as that of a groom making a payment transaction to the family of the bride as dowry. In ancient civilizations, money was necessary as there was a need to be able to collect tax from the citizenry.
Commodities assigned as a form of money
Thus, money was formed by non-economic cause as the completion of payment transactions were made more difficult through the inefficient payment system of bartering. Countries designated certain commodities for these to be a form of money. By the establishment of a commodity that is sought after to be accepted as money with as standard value, it needed characteristics such as it ought to be uniform, divisible, portable, and durable.
Efficient payment systems
Since time immemorial, money has had a physical form. In the past few decades, money has transformed to become digitalized. Due to this, there has been the creation of more payment methods to make financial transactions simplified and suitable to the requirement of the consumers. From bartering to cashless payment instruments, efficient payment systems are what is deemed as necessary.