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The history of currency is important because it provides a foundation for understanding the principles and systems that shape modern finance. There is a strong correlation between currency and trust. Currency is dependent on trust in the following ways:
Trust in Value: Whether the currency is paper notes, metal coins, or digital, individuals must trust that the currency holds worth and can be exchanged for goods and services.
Trust in Stability: Stability refers to the confidence that the value of the currency will remain relatively steady over time. Excessive volatility or rapid fluctuations in value can erode trust and undermine the functionality of a currency.
Trust in Issuing Authority: People trust that governments and central banks will implement sound monetary policies, maintain the currency's value, and preserve its integrity.
Without trust, the currency has no utility, and with no utility, the currency has no value.
THE EVOLUTION OF CURRENCY
600 BCE, the Lydians in present-day Turkey introduced standardized metal coins made of gold, silver, and bronze.
During the Tang Dynasty (618-907 CE), China instituted paper money.
In 1933 the United States abandoned the Gold Standard. This is important because it lead to the rise of fiat currencies not being backed by a physical commodity.
In 2009, the pseudonym Satoshi Nakamoto introduced Bitcoin, a decentralized digital currency based on blockchain technology marking the birth of cryptocurrencies
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