How banks and money were developed

At Super-Advice we are about all things financial, but more importantly, helping people understand so they can get ahead financially.

In today’s blog post we share a bit of history and a story about how banks and money were developed.

Early trading

Back in the early, early days, people would trade items.

For example, 10 chickens for one goat, or a net of oranges for a net of apples.

The one problem with that form of trade is you needed two groups of things or two singular things that had around the same value, otherwise, it wasn’t gonna work.

Then they used a medium of exchange which is what money is, and you would have things like pretty stones or nice shells.

Eventually, early communities settled on gold and silver. The reason they settled on gold was that it is easy to mold, it is malleable, it is non-corrosive but more importantly, it is scarce.

You can’t just go and find loads of gold and then be a rich guy that easily. So they needed it to be scarce. But as human nature is always to find shortcuts and possibly cheat, people used to try and counterfeit gold.

Enter the gold smith

It was the Goldsmith who rose to be the standard deliverer of quality gold because they could use their skills to build intricate designs and make nice coins.

These Goldsmiths needed safes to hold all the gold, very secure safes and people would say to the Goldsmith, “Look, I’ve got a bit of gold stacked up here. Is it possible that I could pay you a small fee and you could keep my gold in your vault?”

Banking begins!! When you deposited your gold into the Goldsmiths vault, he would essentially print you out a receipt, and the receipt might say this bit of paper’s worth 10 bits of gold.

Receipts were easier

What eventually happened is people found it easier to walk around and trade using receipts rather than gold.

Those receipts evolved into paper money or bank notes.

And that is how banks and money were developed.

That’s a wrap

So what do you think? Have you got a better understanding of what income protection is? Do you think you will grab yourself some?

If you need any financial help or advice please get in touch with us at Super-Advice.

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