Guess what… Raina’s dad came to our classroom today. He gave something called an “expert lecture”. This means that he told us about something he was a master at, in this case money. “What is money?”, was a question he started with.
First Raina’s dad told us about the barter system. This was the earliest form of money. The barter system is the process of exchanging and item for another item. For example, let’s say you were a wheat farmer. You had plenty of wheat, but you needed animal skins to make clothes. So, to solve the problem, you would find a hunter and exchange your wheat for his animal skins. That is the barter system. I thought it was a pretty good system, however, it turns out there are some major problems. For example, let’s say the hunter that you got your animal skins from moved out of town. You would need to spend a ton of time finding another hunter. Also, what if you hardly had enough wheat that year; how would you barter? I think these problems are very likely, which changes my opinion on the barter system.
Luckily, people came up with a solution. I like to call it universal currency. Basically, a group of people decided on one thing they were going to use to purchase items. Among these were salt, pepper and beads(beads were well liked because of how hard it was to make them, giving lots of value. Also, everybody could make them.) In fact, for a time period in Rome, soldiers were paid with cubes of salt! I think that is crazy! This system worked well because know the wheat farmer does not need to seek out a new hunter or lose some of his precious wheat, all he has to do is find someone with animal skins and buy them(rather than trade for them).
In the period 1100 B.C – 600 B.C. people began to move on from salt and pepper in Asia and some parts of Europe. The abandoned them to… silver and gold!(some countries liked copper too!) Why? Well, the thing about silver and gold is that they are not to plentiful that they have no value, but they also are not so rare that they are next to impossible to find. They are scarce, giving them perfect value.
Around 600 B.C., China came up with a revolutionary idea… the coin. Coins were still made out of gold and silver, but they had patterns on them making them hard to counterfeit. They coins, rather than being mined, were printed by the government in a building called a mint. Therefore, all the mines in the world could not have given you a single cent! This gives coins even more “just right value” than gold and silver. But China wasn’t done! Soon after inventing the coin the started to use paper money! I think this is revolutionary!
The interesting thing is that money did not progress much from coins and paper until very recently. What was the next addition? The credit card! This was a totally different way to purchase items. It allowed people to put their money onto a plastic card and then use it on the go! I mean, that is totally genius! This made money a million times more portable! Now, can money expand from here?
The answer is: yes! Money is already working its way into a new form: the bitcoin. What is the bitcoin? The bitcoin is the currency of the computer! Yes, the bitcoins are completely computerized. So computerized, in fact, there value changes every day depending on the world’s economy! How do you make them? Well, the government hasn’t limited their production yet so all you have to do is assign a computer to making bitcoins it it will produce them very, very slowly. In fact, to prevent endless bitcoins, the time the takes to make one bitcoin increases with every bitcoin made. I think that is even more genius than the credit card! Some other important people think so too! They predict that the bitcoin might one day replace paper money!
What did I think of his lecture? Well, I thought it was very interesting. I liked how he went into tons of detail. I also like how he gave us a sense that money wasn’t done changing. I wonder what the world of economics will bring next?
wow Nate!!! Great job!!!!!!!
Thank you so much!