The future of money!


Money: coins, paper, cards, or just some digital numbers in a computer system. All of them, without any real intrinsic value. Still, we can hardly imagine our lives without it. Keep reading for a short history of money and how we can create new forms of money that work better for communities and local economies.

Money, money, money!

Does thinking about money make you feel overwhelmed, confused, depressed, or anxious? Money is probably the one human invention that has had the most profound impact on our society. It is very hard, almost impossible, to imagine our lives without ... "money".

Money and economics

Money is the lifeblood of our economies. It facilitates the exchange of goods and services and helps in carrying on trade smoothly. Our present advanced economic system would not function without money!

Money and finance

Money is the raw material of our complex and powerful financial industry which deals with how to deliver money through debts to individuals, businesses, and governments, and how they then spend or invest that money.

Money and society

Money is the principal measure of wealth and consequently organizes and divides society. Money impacts our morality, our status, and our relationships. Money drives our society, creates opportunities, or opens and closes doors. Money has become a very effective instrument of control and power!

Money and scarcity

The lack of money or financial volatility dominates our mindset and favors short-term decisions, leaving us with less buffer stock and even more vulnerable to external events in the future. We get stuck in scarcity and debt traps, difficult to escape.

Money and happiness

Money changes us and defines how we think, and how we behave. Money can provide us with security and quality of life which is important for our well-being. However, the dogged pursuit of money itself can also become a compulsive and addictive behavior. Money and happiness have an enriching but often conflicting relationship.

Money can increase our short-term happiness by giving us more control over how we spend our time. Tom Rath (Author of "Wellbeing").

What is money?

Before explaining how we can make something so magical and powerful as money, let us have a quick look at its origins and complex history. 


The word "money" refers to the surname of the Roman goddess Juno. The temple of Juno Moneta (literally Juno the "Warner" or "Adviser") on Capitoline, one of Rome's seven hills, was the place where the mint of Ancient Rome was located.

From this temple, "moneta" quickly gained the meaning "mint", and soon after extended to the concept of "money" in general.


Money can be seen as any item or verifiable record that is "generally" accepted as payment for goods and services and repayment of debts. The main functions of money are distinguished as:


Money can thus be defined as any item, commodity, or verifiable record, accepted by general consent, that fulfills these different functions.

Consequently, any kind of money is a social contract created as a result of a consensus on an alterable game rule or agreement to use something as a medium of exchange.

Money does not exist by nature, but by law. Aristotle.

History of money

It is of course not fair to resume the complex and fascinating evolution of money with all its struggles for power in just a few lines. So we just highlight some major events and structural shifts. 

The history of "money" is much older than the word or the invention of coins. Before there was money, there was debt. For more than 5,000 years, since the beginnings of the first agrarian empires, humans have used elaborate credit systems to buy and sell goods. It is in this era that we also first encounter a society divided into debtors and creditors—which lives on in full force to this day. 

Gift economies

"Non-monetary" societies operated exchanges primarily along the principles of gift culture, generalized reciprocity, and redistribution. Valuables such as goods and services were not sold, and exchanges were not driven by an individual's self-interest but were organized to serve the interests of society.

Barter trade

Bartering is the direct or explicit trade or exchange of goods and services. Though the use of barter-like methods or reciprocal exchange between societies may date back to at least 100,000 years ago, it was mostly used marginally and more specifically for trade between strangers or potential enemies.

Commodity money

Societies around the world eventually developed the use of commodity money that gains its value primarily in virtue of the substance it is made of, the potential use, or its intrinsic beauty. Most forms of money throughout history have been commodity currencies such as salt, shells, gold, cocoa beans, tobacco, barley, animal skins but also large stones and so many others.


The use of metal as money can be traced back to Babylon, prior to 2000 BC. However, the first official currency is believed to be minted in Lydia (today west Turkey) around 600 BC as a mixture of silver and gold, stamped with pictures representing different denominations.

Coins became a popular form of money and parts of Europe used coins as their sole form of currency until the 16th century. And while coins started as a commodity currency, made of a precise amount or weight of precious metals backing them. Over time they lost their intrinsic value and became just a unit of value for exchanges.

Paper money

Paper notes are a also kind of representative money, meaning they represent something of value supporting the face value but have little or no value of their own.

In the seventh century, Chinese merchants started issuing receipts of deposits which later inspired the Yuan dynasty of China to be the first to move from coins to paper money around 1260.

In medieval Europe, Italian and Flemish merchants started issuing promissory notes, easier and safer to carry around than large sums of coins. The notes were accepted because they could be taken to the issuer at any time and exchanged for their face value in metals.

Toward the end of the Middle Ages and with the further expansion of European trade, bills of exchange became prevalent. Goods were supplied to a buyer against a bill of exchange, which constituted the buyer's promise to make payment at some specified future date.

Since the 16th century, money was being issued, borrowed, and changed by goldsmiths, money traders, and other private agents acting as financial intermediaries. Soon, they started issuing notes far in excess of the gold and silver they kept on deposit. Modern private banking, based on money as credit, was founded!

Money is the agreement within a community to use something as a medium of exchange. Bernard Lietaer (author of the "Future of money").

Modern money

While the basic principle of money as credit did not change, the use of banknotes issued by private agents and commercial banks as legal tender was gradually replaced by the issuance of bank notes authorized and controlled by national governments during the emergence of centralized states and the industrial revolution at the end of the 18th century. Since then, central banks were granted the rights for the emission of money and held the monopoly until today.

National or fiat money drives out local money

Fiat is any money issued by a government and not backed by any physical commodity. Fiat money, as a country's standard unit of money, obtains its value simply because the government legislates and regulates its use.

Central banks put money into circulation by lending it to banks and the federal government. The banking and financial system can then multiply the money supply by giving loans to individuals, businesses, or governments (money multiplier effect).

Central governments soon observed the economic advantages of printing money. For many years these government-authorized currencies were also forms of representative money since they were partially backed by gold or silver and were theoretically convertible into gold or silver. 

Global money drives out national money

At the end of World War II with the Bretton Woods agreement and system, the developed countries committed their currencies to the U.S. dollar with a fixed exchange rate and gold convertibility. In 1971 President Nixon unilaterally terminated the convertibility of the US dollar to gold.

Since then, the US dollar, and most national currencies, are free-floating currencies, though central banks often participate in markets to attempt to influence the value of currency exchange rates. These flexible and floating exchange rates plus the liberalization of capital markets across countries made our financial system more volatile and vulnerable.

Over the last decades, the number of national currencies in circulation has decreased. Monetary blocks such as the EURO and further dollarization have absorbed national currencies worldwide. The U.S. dollar took over the central role that gold had played under the gold standard in the international financial system.

While monetary blocks and dollarization may provide greater monetary stability for countries, there are however important side effects. A country gives up some of its ability to influence its own economy through monetary policy by adjusting its money supply and interest rates.

The dollarizing country effectively outsources its monetary policy to the U.S. Federal Reserve. This can be a negative factor, to the extent that U.S. monetary policy is set in the interest of the U.S. economy and not the interests of dollarized countries. A similar reasoning applies to the EURO zone. 

Speculative money drives out productive money

Money used to be created with the sole purpose to foment and facilitate the economy: the production and exchange of goods and services in our society. However, today more than 95% of the money in circulation goes into the financial markets. 

The modern-day equity and debt market has evolved over many centuries. Early brokers traded commodities as well as various types of debt, starting in the 12th century. By the 1600s, it became more common for companies to raise capital by selling shares or debt. 

Today, investors enjoy access to a very robust array of different markets and types of financial instruments that hold some type of monetary value. Globalization made it possible to connect markets everywhere, and technology made it possible for investors to trade online anytime. The financial markets never sleep. 

Financial markets are considered vital to the smooth operation of capitalist economies. Money is transferred quickly from those who have excess funds (Investors/lenders) and made available to those who need additional money (borrowers). Attractive expected returns compensate for the financial risks undertaken. 

But financial markets have also become very interdependent and volatile (driven by expectations that can change quickly), making our economies and societies more fragile and vulnerable. Countries across the globe have been gripped by many financial crises, triggered by systematic overrating, overexposure, and the collapse or default of important financial institutions.

Digital money drives out cash

Cash has been at the heart of our modern monetary and financial system. It is easy to understand and use, with no complications, no restrictions, or transaction fees. Actually, it is the only form of money over which an individual has full control. 

Alternative payment methods, as opposed to coins and notes, have been there for centuries and coexisted with cash. They have diversified and evolved over time, driven by demand, efficiency, and technology.  For most of us, checks, credit and debit cards, bank transfers, and online payments have facilitated our financial life to the detriment of cash. 

However, in recent years, Big Tech,  Big Finance, and Big Government have merged together steadily to fully digitalize money. What seems a natural and inevitable move towards progress is actually the work of powerful interests and a battle for ownership of the digital footprints that make up our lives. 

Cash is real â€” and not just in the sense that it is physical. It is, in fact, the only money of which an individual (as opposed to a bank) has private control. Brett Scott (Author of "Cloudmoney").

The future of money

The history of money has shown too many times how money has become a strategic instrument of power. Over time money has also lost its intrinsic value, and our acceptance of money is now solely based on trust.  When societies lose trust in their monetary system and the forces behind it, it will quickly give birth to alternative payment methods and new money. 

Digital global currencies

Monetary globalization, financial speculation, and digitalization will further advance and flourish, pushed by big corporations and governments, inspired by an unsustainable corporate culture of expansion, growth, profits, and control.

The underlying assumptions and values of this corporate monetary model might not be as solid as they seem. Cryptocurrencies and new stakeholders will struggle for a share of the attractive digital payment and financial markets. Conflicts of power are inevitable and new financial crises are surely waiting ahead of us. 

And what about society? How much do we really value our freedom, privacy, and independence? At what costs, and for which other benefits, are we willing to give them up? The degree to which we, as a society, accept and use the proposed digital payment methods will ultimately determine the future of money. 

Complementary currencies

Parallel to the advances of corporate money, we have also seen emerging complementary currencies rapidly across the globe. More than before, communities and societies create local payment methods driven by different objectives, based on a private agreement, and supported by appropriate technology. 

Many of this special-purpose money won't make it and this diverse ecosystem will remain quite marginal to the turnover of the mainstream financial system. However, for many people,  they can make a real difference by promoting more local economic value, talents and skills, social integration, financial freedom, environmental sustainability, or other objectives.  

We believe that in the future, digital centralized money and complementary currencies should coexist and even cooperate together in transparency. We hope that cash will not disappear to facilitate small and informal transactions, support the unbanked or underbanked, and serve us all when technology fails or when our faith in corporate money slowly disappears. 

The belief that money cannot be reinvented is the biggest obstacle for improvement and progress. Henk van Arkel (Director STRO). 

Key takeaways

The history of money is about the development throughout time of systems that fulfill the basic functions of money and facilitate the exchange of goods and services.

Money is not a static object. Money is social and changes constantly responding to our more complex society, vested groups of power, and technological improvements. 

We are moving steadily into a society characterized by corporate money with advanced levels of monetary globalization, financial speculation, and digitalization. 

Complementary currencies (or special-purpose money) and cash must coexist to bring more humanity,  freedom, community values, and prosperity into our lives and society. 

By: Koen De Beer. CEO at MONEI LAB, a fintech and knowledge center for financial inclusion and complementary currencies.

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