Editor’s note: This is the second installment of the series in which we are looking at how money evolved, with the aim of helping people understand why cryptocurrencies are the next in line. You can read — you should actually — the first installment here.
The move to Fiat money finds its root in the huge need of improved trust and transparency
The first installment talked about how governments started issuing promissory notes called IOU in order to ease the trade process for travelers who needed to earn the trust of foreigners.
But, like every medium of exchange before it, IOU had its own limitations too. For instance, IOUs weren’t designed to inherently imply the time, date, interest and payment type when they were issued. As international trade grew, standardized currencies started surfacing around the world to solve this problem. Still, precious metals (mostly gold) remained the backbones of the newly standardized currencies, with the precious metals usually kept in state-owned vaults. This system of money issuance was called gold standard. …