For over thousands of years, humans have used different mediums of exchange to obtain and satisfy their needs. , but the 2008 Financial Crash could be a glimpse to the flaws with our current payment method and traditional banking systems. That same year also introduced a concept called blockchain and bitcoin, which is looking to reshape and revolutionize our current method of exchange. Let’s look at the evolution of how our payments system began and the breakthrough that comes along the way. And can Cryptocurrency be the solution to the challenges in our current payment systems?
How did our Payments Systems begin and the breakthrough that comes with it?
Bartering: Essentially our Payment System begins around 6000 BC by Mesopotamia which introduced Bartering as a way of exchanging the things they own with the things they need. This system was then developed by the Fenisia Civilization and then adopted by Babylonian Civilization. At that time anything could be bartered and this established the system of Exchange in order to fulfill people’s demands. Although it also came with a flaw as it was quite difficult to find people who would like to exchange with the goods we have and secondly there is no measurement of value on the things we exchange such as a Cow will be much more valuable than Wheat. To tackle this problem, it led to the invention of a constant method of exchange for example which presented a uniformity in value.
Gold: The next evolution in our payment system was the use of commodities like Gold and Silver which was introduced in 600BC where King Alyattes of Lydia, an ancient kingdom in modern-day Turkey, oversaw the first gold coin which used a mixture of silver and gold to be used as a payment system. The use of gold as a payment system was technically a preview of our modern payment system in which it is the first time where all our goods had a certain value. It also serves as an efficient store of value as Gold is limited in supply and also portable as gold coins are easy to carry. Essentially Gold as a payment system was an amazing invention but due to the greed of the people in power willing to increase the money supply to further bolster their private wealth. Gold unfortunately came to a decline as a payment system with the introduction of the Gold Standard.
Fiat Currencies: Fiat currencies which is the system we are using today originally began as a claim check for the Gold we have as deposit. Gold eventually disappeared from our payment system when President Richard Nixon abolished the pegging of the US Dollar to Gold and this was what gave birth to the free floating fiat currencies, although many central banks still maintain substantial gold reserves, but no current modern monetary system officially backs its currency by gold. The introduction of currency brought with it the modern banking as we know of today for example Credit Cards, Digital Payments, Investment tools and financing have become much easier to reach more people. Although our Fiat Currencies have the traits that a money should have, it still lacks the aspect of store of value which was present in its predecessor like Gold. With our increasing money supply, the value aspect with it decreases as more money is present in the market chasing too few goods and finally our present payment system only depends on how much trust we placed in it.
Can Cryptocurrency solve the problem with our current payment system?
Throughout the evolution of our payment system, there have been breakthroughs that solved the flaws present in its predecessors. Our Fiat Currencies have been essential in the development of the economies and also our banking system but as mentioned before it suffers from debasement and centralization issues. This was what Cryptocurrency was built upon as its blockchain technology is laying its foundation to be the future of our payment system.
Cryptocurrency with its decentralized network solves the centralization issue which occurs in our modern banking as it puts the faith not in people with power but in the community that seeks to promote trust and transparency amongst its users. Cryptocurrency also has a capped supply to solve the debasement issues to maintain and store its value against inflation. Although Cryptocurrency is still an imperfect solution as it also still faces frequent issues with scam and ties that came along with Criminal activities but the proper regulations could be the solution to these issues. As Cryptocurrency gains more adoption and utilities in our daily lives, we could well be heading into a new era of our payment system where global transactions take place in the Blockchain network.
We in Nagaya Technologies Pte Ltd surely believe that utilities are crucial to bolster Cryptocurrency to become a payment system. As our Nagaya Coin which is still in its pre — ICO stage has been accepted as a payment system in the mall P4 Lala Square which is due to finish construction and open to the public by 2023. You can find more information regarding the world’s first hybrid cryptocurrency and snap up your coin in its Pre — ICO stage, by visiting us at nagaya.io
Or you can talk to us at t.me/nagayaofficial