History of Money, Emergence of Money as Payment Transactions and Current Developments

Money is a means of payment which is currently used to carry out transactions legally or legally. Money is valued as a commodity that has interest rates and important economic instruments.

In the beginning humans did transactions not with money but through exchanges between goods or services which is also known as barter, this transaction process still does not determine the value of each item or service offered.

Currently money is used as a means of payment to meet the needs of human life through the payment system. Based on its history, money is divided into three types, namely demand deposits, banknotes and goods money. The following is the history of money by type.

History of Goods Money

Humans at first were not aware of trade transactions and fulfilled their needs by exchanging goods. Goods money is a method of payment that was first made by exchanging goods or services for the goods we want.

At this time the value of an item has not been determined, so that everyone does not have a definite assessment regarding the exchange of the product or service.

The use of goods money as a means of payment has a number of drawbacks, including the difficulty of determining the value of an item which causes rejection of the exchange of goods or services, the difficulty of determining the value of goods due to differences in the goods to be exchanged and the difficulty of finding people with the same interests and needs as goods or services that we have.

In the process of exchanging goods for services with this object money, not all goods will be accepted or exchangeable. There must be conditions that determine whether the item is eligible for exchange, such as the object being exchanged is rare or rarely found, has high value or use, and the durability or usage period of the object is for a long period of time.

Another thing to consider is how the goods will be stored, because each type of goods has a different volume and size. In the beginning, people also cheated goods money with precious metals such as gold or silver, because they were considered easier to store, rare and had a longer shelf life. 

The denser the development and creativity of humans, the method of payment transactions is also growing, especially when humans have more complex needs. Money has evolved in terms of value to meet human needs and has shifted to the form of banknotes and demand deposits.

History of Paper Money

Paper money is a means of payment transactions indicating that humans are experiencing developments in meeting their needs. The presence of paper money is proof that, as a means of payment transactions, humans have started to use it to determine the exact value of an item or service.

Paper money is a transaction tool in the form of paper that has value for an item or service and is considered legal or valid in society. One of the reasons paper money is used is because it has low manufacturing costs, sending or transactions with banknotes is also easier because of its size and volume, the amount in the value of banknotes also simplifies the process of calculating the price of an item or service.

The use of paper money as a means of payment transactions was increasingly used when the price of gold and silver decreased during World War I, when the economy was shaken and every country was affected.

Paper money that is also used as a substitute for gold and silver is considered safer to carry compared to precious metals. The more developed human civilization as well as the effectiveness and practical value in the payment process in society.

However, banknotes also have vulnerabilities and are easily damaged if exposed to water. Banknotes also developed because they responded to a security system that had to be borne by the owner for the risk of theft or loss, so that a payment system using demand deposits appeared.

History of Demand Deposits

Based on its history and development, demand deposits exist to overcome security problems regarding the storage of banknotes with a fairly high number and nominal value. Demand deposits are used as a practical, safe and easy means of payment or exchange. Demand deposits are money officially issued by responsible parties such as commercial banks by issuing checks and giro payment instruments. 

Demand deposits can be used when someone becomes a customer of a bank and takes the money he has saved with the aim of making payments. In general, the use of demand deposits is needed when a bank customer will make a payment transaction with a relatively large nominal price.

Demand deposits are used because they increase the security of storing currency values, meaning that demand deposits can only be used by parties who are entitled to the money so that if there is a loss of demand deposits it can still be traced back, demand deposits can be given to other people at a lower cost and money giral can write down the nominal more efficiently because the customer only needs to write down the nominal amount of the transaction.

Various demand deposits that can be found have several forms, such as checks, demand deposits and telegraphic transfer. This form is a form of demand deposit used in society. 

The history of money that has been described previously has experienced various developments and updates on payment methods made by humans. Currently, the means of payment for the transaction process of exchanging goods or services is also carried out using digital methods such as QRIS. 

QRIS as a digital payment method is used to send nominal money stored in banks or other supporting applications such as OVO, Funds, Gopay and others to other account owners. Digital payment methods currently also function to simplify the payment process.

Consumers or the public only need to scan Barcode that has been prepared by the seller or provider of goods and services on his payment account, then enter the nominal and password to verify the money transfer.

This is how the history of money has developed to date, the presence of creativity and people's needs to become one of the drivers of the payment system have also changed. The various types of payment instruments described above can also be used by you.