History of money: from cowries to bitcoins


March 04, 2022, 11:45 a.m.

Last modification: March 04, 2022, 1:37 PM

Illustration: TBS


Illustration: TBS

Admit it or not, the thought of money revolves around almost every adult thinking most of the time about increasing the amount of money and ways to use it to fulfill their long-held desires.

But what do we know about money? Honestly, most of us know very little. Let’s no longer be in the dark and discover the history of money.

Cowry and other natural materials

In the very beginning, various natural elements served as currency. One such important ingredient was the cowrie which was first used as currency around 1200 BC. Cowries may seem strange as interchangeable items to many people today, but they had several advantages. They are small and all are almost identical in size. In addition, they are very resistant.

The mollusk that produces cowries is mainly found in the coastal areas of India and the Pacific Ocean. As a result of the expansion of trade, even some European countries began to accept cowries as currency.

Native Americans used a type of shell beads called wampum as currency. Another natural coin is the whale teeth used by the Fijians. The island of Yap (now part of Micronesia) used to carve huge discs of limestone as currency. These are still the cultural heritage of the island.

fake banknotes

Money has been counterfeit since the beginning of its introduction. Even the wampum was the target of fraudsters. Counterfeiting has become such a big problem all over the world that even severe penalties have been used to deter it.

There was a warning on 14th century Chinese money that anyone who counterfeited money would be beheaded. Forgers have been burned alive in England. In the early days of the American colonies, too, the punishment for counterfeiting was the death penalty.

In the past, various measures have been taken to prevent counterfeiting. For example, American polymath Benjamin Franklin, who owned printing presses in several colonies, once deliberately misspelled the word “Pennsylvania” on silver. He thought the forgers would correct the spelling in print and their forgery would be revealed.

Jannatul Naym Pieal. Sketch: TBS

Jannatul Naym Pieal.  Sketch: TBS

Jannatul Naym Pieal. Sketch: TBS

Later, stricter measures were taken to prevent counterfeiting. The $20 bill, for example, is the most counterfeited in the United States, and watermarks and security threads have been added to make them visible when held up against the light. However, the level of punishment for counterfeiting currency has been reduced – the maximum penalty in the United States is 20 years in prison.


Evidence of the use of the metal as currency is found in Babylon in 2000 BC. However, standard and certified forms of coin usage probably did not begin until the 7th century BC. According to many historians, coins were introduced administratively in Lydia (present-day Turkey) at this time. The coins were made of electrum during the reign of King Aliat (610 BC to 560 BC).

Electrum is a natural mixture of gold and silver. The royal symbol was the lion. Aliat’s son, Croesus (who ruled 560–546 BC), then changed the monetary system of the state. He introduced silver and gold coins. The use of coins quickly spread to other parts of the world.


Parchment is a stiff, flat, thin material made from the prepared hide of an animal and used as a durable writing surface in ancient and medieval times. Around the 6th century BC, animal skin was introduced to mint silver in ancient Rome. The parchment was also used in Carthage, in present-day France and even during the reign of Peter the Great (1682-1725) in Russia. Chinese Emperor Yudi (reigned 141-87 BC) used to mint coins from his collection of white deer skins. Various designs have been inserted into the silver having fringes.

Although animal skin silver is no longer seen, it had a long tradition. The use of the word “buck” – the male of certain horned animals, especially fallow deer, roe deer, reindeer and antelope – as dollar slang is said to have started because of leather.

paper notes

It is widely believed that the origin of paper is in China. It is said that this invention probably took place during the reign of Emperor Zheng Zhong (997-1022). Paper money was then made from the bark of the mulberry tree.

Paper money reached other parts of the world in the late 18th and early 19th centuries. Of course, at that time, paper money was not considered real money. Now, just as a check can be used to mean that someone can withdraw money by depositing the check, paper money was a kind of pledge that a certain amount of gold or silver can be obtained in exchange for this paper money. But even then, the combination of gold and silver with paper money was crucial for the development of the banking sector.

gold standard

Needless to say, money leads to many problems. One such problem is printing as much paper money as a country wants. A country can become rich overnight by printing a huge amount of money, which should not be acceptable. So in 1821, the United Kingdom, which was the strongest economy in the world at the time, introduced the Gold Standard. Through this, they started printing paper money based on their gold reserves and also determined the value of silver accordingly. Soon, countries like Germany, France, and the United States also adopted the Gold Standard.

However, there were a few obstacles to the Gold Standard. For example, it compromises a country’s ability to remain isolated from the rest of the world in the event of an economic recession or inflation. After the Great Depression of 1929-1939, the best nations in the world began to rethink the Gold Standard.

The comparison of the gold standard with currency ceased in the 1970s. But since then there have been several instances of hyperinflation or extreme inflation. For example, in Zimbabwe in the early 90s, they even issued a $100 trillion coin, with which you could only buy a loaf of bread!

Credit card

Credit cards have been around for centuries, but the advent of the universal credit card didn’t happen until the 1950s. That same year, two Americans, Ralph Schneider and Frank McNamara founded the Diners Club. Before long, other cards also arrived. In 1959 American Express introduced a plastic card.

In the 1960s, IBM introduced a magnetic stripe on credit cards. Account information could be stored there. As a result, merchants no longer need to call credit companies for authorization. In the 1990s, chips were embedded in cards that encrypted account information, increasing security.

There is also a change in the account balance. Initially, credit card users had to pay the full balance before the end of the month. Finally, American Express allows its customers to carry the balance. Other companies are following suit. Of course, interest would apply in this case. Even then, taking advantage of this opportunity, clients began to abuse the procedure. And at one point, the problem got so bad that it drove US customers’ credit card debt to top $1 trillion in 2017.

mobile money

Mobile phones have been used in Bangladesh since the early 1990s. But the use of the device as a means of financial transaction is not more than a decade old. You can easily open an account on your mobile phone and use it. Your phone number becomes your mobile financial service account. MFS has revolutionized the transaction of money. Anyone can send money anywhere in the country by mobile phone, which would otherwise have to be sent by courier or banks. MFS providers like Bkash, Nagad, and Rocket are now household names. Their agents are at your fingertips everywhere for collection and withdrawal services. In addition to sending and receiving money, you can pay utility bills or application fees at government and private offices using one of these services. MFS has become a savior during the pandemic and the government has used this tool to distribute cash to millions of people during difficult times.


A digital currency system called bitcoin was born in 2009 by undercover computer programmer Satoshi Nakamoto or a group of computer programmers. However, this currency is not issued by any central bank and is not regulated by any formal restrictions. A decentralized network of computers keeps track of all transactions.

The identities of bitcoin users are also kept secret. They can only be identified by their digital wallet ID. The value of bitcoin is determined by auctions. This method is very similar to the evaluation of a stock.

Bitcoin is made in a process called mining. There is a competition between multiple computers to solve complex mathematical problems, and through this transaction blocks are verified. It may sound easy, but it’s not. It is estimated that seven trillion attempts are made before a solution can be found. In the end, the owner of the winning computer receives the newly created bitcoins. This makes the new system even more secure.

To date, it was possible to make 21 million bitcoins. The number of bitcoins already mined worldwide is around 19 million. New blocks are constantly mined, so the number of bitcoins increases every 10 minutes.


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