By Phin Upham
Money hasn’t always been a part of human history. Only within the past 3,000 or so years have we come into the idea of using some object to trade with each other. Money has no inherent value. The $100 bill in your pocket only has value because the rest of us collectively agree that it does. It’s a very strange system, but it has proven to be far more efficient for trading than the alternative.
A world without money actually isn’t so difficult to imagine.
One of the first examples of money we find is the bartering of goods. During the early days of the Roman empire, a healthy pig might be considered a suitable tax for the rights to live on Roman land and become a Roman citizen. Neighbors bartered goods or services, and kept ledgers that recorded those deeds. Early bookkeeping wasn’t all that accurate, failing to take into account the true scope of profits and losses, but they served as legal documents representing an agreement.
Unit values were highly negotiable. The price of one cabinet might be eggs for a year in one village and a horse in another. Those who were able to sell usually benefitted well from this economy, but the trade system was not sustainable at the national level. Kingdoms needed some form of currency, something neutral they could trade to represent value.
Barter never faded from human history and is still utilized in some parts of the world. It’s still a good system between acquaintances, but lacks the recognized authority of currency. We also barter for currency, as is the case with selling a home or investing in stocks.
About the Author: Phin Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media and Telecom group. You may contact Phin on his Phin Upham website or Facebook page.