The purpose of this chapter is to understand the innovation of our existence. Therefore, let’s take a step back a few hundred years. Trading has always been present in our lives, as it is mandatory for our food chain, and probably will never go away. When you take a closer look at the basic human needs for survival, you quickly realize that the three most important requirements are air, water and food. Because air and water can be found in many locations for free, I will take an example of food and start to analyse it in further detail. Food items have been identified since the early ages as one of the primary human needs for survival. Therefore, we have understood that food has tremendous value. Like anything else that has value, it became part of the global trading chain, and it was one of the first early paying methods amongst humans in exchange for particular goods or services provided. Because food has always helped for basic survival, it was one of the best paying methods for an extended period. In fact, there are many locations existing in the world that still use this approach at present. As civilization has moved on, especially with more developed villages and cities, methods of payments have begun to change. Back then we had no freezers, or fridges, and using payments such as food items like exotic fruits or any meat just went to waste. This caused lots of issues. Therefore, this problem had to be resolved. The solution was a new type of payment method, something that wouldn’t easily rot or waste. Nevertheless, had to be exchangeable for food or any other goods or services. Shiny metals were introduced to the world as a new payment method, and such were silver or gold. Most people didn’t like the idea at first. Still, it was implemented, and slowly it was accepted widely. It was exchangeable for food items, and other goods or services and it was truly revolutionary, and still today, when you look at the silver or gold value, they are continuously increasing. Humans have realized that it is getting much harder to mine gold and silver. Hence, precious metal had to be discontinued as the major payment currency. The introduction of paper money seemed silly, since as humans, we are uncomfortable with change and we are hesitant to adapt to anything that we don’t understand – at least at first. After a while, all sorts of paper money was implemented in a centralized form, nearly every country in the world. The new payment method of paper money was alive and booming all over the globe. Paper money is OK, but we could mention countless countries where paper money has failed again and again due to its value decrease in long term. The reduction in value of paper money has other roots too, such as easily counterfeited in large scale. Additionally, like anything else in the world, we have learned that goods with limited supply have an increase in value, especially in the long term. Conversely, the opposite happens when paper money keeps on getting printed, decreasing in value. When it comes to paper money, it’s a fascinating topic. The fact that we have learned, on various occasions, that paper money is a failure, we keep on re-inventing new ones. We believe, this time, it will be a success. Look at the example of the Euro that has taken over currencies such as; German Mark, French Franc, Italian Lira, Dutch Guilder, Spanish Peseta, Slovak Koruna, Austrian Schilling, Maltese Lira, Finnish Markka, Greek Drachma and more to come. It appears paper money is still going to be present for a while. However, before jumping ahead, we had another currency introduced after the paper form in our new digital world called SWIFT. SWIFT stands for Society for Worldwide Interbank Financial Telecommunication It began in 1973, and this newly created network now enabled all the financial institutions to transfer secured financial transactions in a reliable environment across the globe. This idea was, again, truly revolutionary. Using the internet to make payments is very helpful, not to mention, that nowadays using contactless cards is just extremely comfortable. The speed of implementation, when making payments, becomes very fast. When you are looking at an international bank transaction it might take 3-5 days, but you can do this using your laptop at your home or your mobile device, anywhere. But at first – when it was introduced – it seemed alien and most people didn’t believe that it would ever work. Slowly, we have learned that certain payments can be automated: such as paying your bills or a service that you have subscribed, and of course, most large companies are now paying all their employees through bank transfers. Well, there are still many companies who pay their employees cash in hand, as they don’t wish to pay taxes. These companies choose to remain anonymous instead of sharing with the banks all their assets for various reasons. As always, people had to adapt. The idea that all your wealth is contained on a piece of plastic card was daunting. The world of payment has yet changed again. Centralized banks have scaled, and they have introduced many different systems that one may choose. Some of the most known of virtual payment methods are; Visa Debit, Debit Card, Credit Card and ATM machines. Due to the dot-com boom and the revolution of the internet, other digital payment methods were introduced by various third-party companies, providing additional secure transactions for a particular fee in exchange. Although higher priced, we have now reached the point of enabling international operations with people or companies that we never have to talk to or see. Even if we were to have a problem trusting a business or particular goods; we could still proceed to make transactions, due to the third party that guarantees the payment will be only completed once goods have arrived as described. For example, you make a payment for an individual product using PayPal, simply because you know that, worst case, you can ask for a refund and PayPal will help you out—making sure that you get your refund if the goods or services are not as described when you placed an order. Such well known centralized financial systems are; PayPal, Payoneer, Alipay, eCash and there are many more. In 2008 there was a new currency introduced, but this time it was something very different. It was the first digital currency, called Bitcoin. It was not introduced by a well-known company or bank, neither any government, but in a software form—running on the protocol called Blockchain. As always, not many people were interested in adopting it at first; they didn’t understand its purpose. It might require a bit of research to understand. We know that cash works and that many other currencies exist. We can make payments using our bank cards, and so many other options, when it comes to making a payment—so why bother, right? Well, Bitcoin was the first digital currency that was introduced. However, as of November, 2020 there are more than 7600 different types of digital currencies that exist. What does it mean to us now? I have friends that don’t work in the IT Industry, and when I asked them about Bitcoin or cryptocurrencies, they frequently look at me like I’m speaking in a foreign language. The reality is, that although some might have heard of cryptocurrencies, they still never bother to investigate the potentials—and how much it can, and will, form our future. What I am trying to tell you is that when looking back in time and analysing the history of financial institutions, you may realize that the form of payments has significantly decreased from their physical value. They not only become smaller, lighter, or thinner, but more virtualized, and now to the point where we, people, don’t even have to make them — as the digital currencies are running on our current internet (interconnected networks).
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