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Payment transactions: From bartering to online payments

People can give you things for free, but historically, there has to be an exchange for goods or services. We cannot expect to be given a commodity by anyone, hence we have to make a payment transaction. If there was a way to get the commodity by finding it, one can become rich.

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Bartering 

At first, during the dawn of mankind, there was bartering. A person would exchange livestock for other goods such as food crops or hard labor. Yet, bartering was deemed to be an inefficient payment system. Coinage was developed to standardize value. These ancient coins were made of silver and gold, a much-desired commodity. 

Searching for gold 

People who want to get rich quickly look for that treasured gold. The Gold Rush is one example of how people traveled far to be able to pan gold. Those who mine for gold, silver, and precious gems get to become wealthy. Gold is a commodity that is sought-after and there can be an exchange using gold, but it is extremely heavy. 

Backed by gold 

When governments created their local currency that is banknotes and bills, these were backed by gold, held in reserve. Now, the money that is circulating is no longer backed by gold. It is called fiat currency. It is said that fiat currency is more stable than money that is backed by commodities such as gold as the value of the commodity changes. 

Acceptance of a medium for an exchange 

There was a time when cowrie shells were the medium of exchange. Widely accepted in places such as China, these seashells are a form of money. Since it was desired and accepted, cowrie shells were given value and the frequency of exchange made it become a kind of currency. 

Bitcoin and other cryptocurrencies 

There is money that exists only virtually. These are cryptocurrencies such as Bitcoin and Monero. These are not commodity money, though there are some cryptocurrencies that are said to be backed by gold. Cryptocurrency gains value through time and frequency of use. 

Online payment 

It is possible to make an online payment using fiat currency or cryptocurrency such as Bitcoin. The money that goes through the various payment system online can be cashed out to become paper money and coins. Virtual money like cryptocurrency is accepted for making a payment transaction. From bartering to online payment, it is the commodity or the thing that is assigned to have value by the consumers that make it have value.

Gaining trust as a payment instrument 

Because of the frequency of use, money in any form gets to gain trust. When before, the value of a Bitcoin was hardly anything and it was being given away, now one Bitcoin has more value than any fiat currency. When it comes to using cryptocurrency for making an online payment transaction, it used to be only exchange in the blockchain and then cashed out as fiat currency, but now there are online retailers that accept Bitcoin as payment.