Most people don’t understand digital currency because we were born into a world of fiat money. However, the currency we use today has also undergone a long evolution.
In the earliest days of primitive society, people engaged in direct barter trade. For example, if someone needed a cow, they would directly approach a merchant and exchange it for something the merchant needed. Because production resources were simple, bartering fully met people’s daily needs. At this stage, the concept of "money" did not exist, and people had no awareness of using "currency."
However, as trade became more complex, people realized that this model was not only inconvenient but also had a major problem: the exchange rates were chaotic, leading to unequal prices and inconsistent quantities in transactions. People recognized the need for a medium that could serve as a standard to measure the value of other goods, and thus the concept of "money" emerged.
In the early stages, shells and animal hides served as money for a period. However, due to their susceptibility to wear and difficulty in long-term preservation—along with advancements in metallurgy—they were gradually replaced by gold and silver.
For a long time afterward, precious metals like gold, silver, and copper, due to their stable composition, resistance to natural disasters, and ease of storage and transport, became ideal for circulation as "money." Thus, they functioned as "hard currency" for an extended period in human history.
During this era, although many countries attempted to replace gold and silver with paper money—such as China’s Song Dynasty, which introduced the world’s earliest paper currency, Jiaozi—due to historical limitations, people did not understand the laws of financial markets. Uncontrolled money printing eventually led to inflation, making paper money increasingly worthless and untrustworthy, ending in failure.
It wasn’t until the 20th century, after World War II, that the Bretton Woods system, led by the United States, formally brought paper money to the center stage of history. The Bretton Woods system was an international monetary agreement centered around the U.S. dollar, establishing clear rules for currency exchange, international payment adjustments, and the composition of reserve assets. Simply put, the U.S. created a global monetary standard where national currencies were pegged to the dollar, and the dollar was linked to gold, forming the prototype of today’s fiat system.
Later, in 1976, the U.S. dollar decoupled from gold entirely, giving rise to the credit-based monetary system we know today. This marked the first time in human history that money transitioned from physical objects to the concept of "credit" on a global scale. Thus, the current fiat system is the result of a long evolution—it is merely one form of currency today.
In recent decades, with the rise of the internet revolution and the flaws of the dollar system becoming apparent—such as excessive money printing leading to global financial crises—new monetary concepts emerged, giving birth to digital currency.
In summary, as society progresses, money has evolved from shells to gold, then to paper cash. In the long run, digital currency is undoubtedly a future trend in monetary evolution. Rather than clinging to the past, we should embrace innovation and seize opportunities in this new financial wave!
