Exploration of Forces and Catalysts for the Evolution of Money: From Barter to Digital

Introduction

An interesting part of human history is the evolution of money, which reflects the development and complexity of economic systems across time. It is a fascinating journey that reflects the advancement of human civilization and the needs of societies over time. From the earliest days of barter trade to the contemporary era of digital currencies, the history of money tracks an incredible narrative of human development. Money evolves along with technology, and as we continue to digitise, the never-ending stream of financial innovation compels us to reconsider even the most fundamental aspects of money (Pender, 2022). E-money is a new currency emerging from the computer industry. The role of money as a medium of trade and the inherent qualities that increase its stability and credibility as the most liquid store of value have been primarily emphasized by economists throughout the history of monetary philosophy. The development of money is an amazing example of how sociological, technological, and economic factors have continuously modified our financial structures.

The reason behind the shift from the use of one medium of exchange to another remains a mystery to this day. Menger (1892) demonstrates that less valuable commodities were commonly employed as media of exchange in the past, even though it is evident that an owner should give up a commodity in exchange for one that is more helpful to him. The question of why individuals have historically chosen certain commodities, whether in need of them or not, remains unresolved. On the other hand, despite the widespread use of cryptocurrencies and electronic money today Ogachi et al. (2021) express reservations and call for regulatory measures to curb potential illicit activities. This chapter will unveil the driving factors behind shifts in media of exchange and provide insights into the recent progression toward digital currencies.The chapter investigates the evolution of money with digitalization and explores the forces responsible for the evolution of money.