From bartering and trades to Apple Pay and Bitcoin, this is the history of how we save — and how we spend.
Before actual currencies existed, goods and services were traded amongst people in what is commonly referred to as a barter system. Goods that were commonly bartered include crops, general services or even slaves during these times. Some common problems with this early form of “payment” include the varied seasonal value of certain goods, as well as goods changing in value dependent on their prevalence in the marketplace — for example, if a lot of people sell apples, it’s hard to sell them at a higher price than anyone else.
The first coins were made by the Lydians between 610-600 B.C., in an area that has now become the European country of Turkey. The coins (or “trite” as they referred to them) were made of a gold and silver alloy and printed with a lions head on either side. Nowadays, these coins can set a collector back around $1,000 to $2,000 a pop!
The first paper money, however, has been attributed to the Chinese during the Tang Dynasty (around A.D. 618-907), who carried folded credit bills and exchange notes around for more than 500 years before the practice caught on elsewhere.
Although the first coins are still pricey today — at around $1,000 to $2,000 each — the most expensive coin in the world would set you back around $10,016,875!
The title of the world’s most expensive coin belongs to the 1794 Flowing Hair Dollar, which was one of the first dollar coins ever minted by the U.S. Federal Government. It was sold at an auction in New York City in January 2013 for a whopping $10,016,875.
The largest US bill ever printed for public consumption was the $10,000 bill, which featured the face of Salmon P. Chase, who served as Secretary of the Treasury under Abraham Lincoln and became Chief Justice of the Supreme Court. It was first printed in 1934 and was discontinued in 1969 along with the $5,000 bill due to lack of use.
In 2016, the cost to produce the one-cent coin increased to 1.5 cents — up .07 cents from 2015. Experts say it’s unlikely that it will ever cost less than a penny to manufacture the copper coin.
In 1659, the first check was written in England by Nicholas Vanacker for £400 (around $59,000 today). While the earliest checks were all written in letter form (Mr. Handler [the Chief Cashier], please pay…) — the first check written on a printed form came from the Bank of England in 1717.
Then, in 1918, Federal Reserve Banks began to move currency via telegraph, which some historians mark as the birthplace of electric money, and where many types of international money transfers originated.
It wasn’t long after — around the 1920s — that credit cards became a popular payment option in the United States. They were initially issued by individual firms such as oil companies and hotel chains to their customers. The first credit card issued by a bank was named “Charge-It” and created by John Biggins who worked in Brooklyn, New York at the Flatbush National Bank. Initially designed for smaller businesses looking to work with local customers, these business owners would deposit the sales slips at Flatbush National and in turn the bank would proceed to bill the customer.
In 1958, Bank of America issued its first credit card called BankAmericard, which it renamed Visa in 1976. In fact, the Visa logo colors represent the blue of the sky and the gold of the hills in California, where Bank of America was founded.
Things were ramping up significantly in the payments space!
The first ATM was invented by John Shepherd-Barron in 1967 and was installed at Barclays Bank in London. Two years later, in 1969, the first ATM in the United States was installed at Chemical Bank in Rockville Center, New York.
And ATMs are still being used more than ever today! In fact, according to the Bank Fee Finder 2017 Summary Report, the average American pays $329 in bank fees per year, including ATM fees, overdraft fees, monthly account fees and other fees. To put that into perspective, average annual bank fees cost more than Netflix, Spotify and Amazon Prime combined.
The first contactless payment occurred in 1997, when ExxonMobil’s Speedpass system allowed motorists to wave their Speedpass to pay at gas stations. It wasn’t long after this introduction that contactless credit and debit cards popped up in countries like the United Kingdom, Canada and Australia — where 66% of cardholders had a contactless card that allowed them to tap and pay in 2016.
However, the United States has been a bit slower to adapt the “tap and pay” technology, largely because the US payment infrastructure is so much more complex than that of other countries. For example, Canada has 10 major banks while the US has over 14,000 financial institutions. The costs of implementing the “tap and pay” technology in retailers across the US is another reason for the delay. That’s not to say that tap-and-go payments will never become popular in the US. According to ABI Research, contactless cards — which numbered 25.7 million in 2016 — are expected to reach 229.6 million in the US in 2021.
Using mobile wallets for purchases in the US has also been increasing with the popularity of Apple Pay, Android Pay and Samsung Pay. Moreover, Starbucks mobile orders have become so out of control that the coffee chain is having a difficult time keeping up with them on top of their IRL customers. In 2016, mobile payments made up 27% of US Starbucks transactions.
Just as contactless payments are done electronically, the emergence of cryptocurrencies has taken this concept one step further, creating a world of digital tokens that have value, much like a $10 bill is a physical token that happens to have $10 worth of value. The invention of blockchain technology makes it so that each cryptocurrency is unique and virtually unreplicable.
Bitcoin was the first currency to be transacted on the blockchain in 2008, and today it can be used to book hotels on Expedia, make international payments or just buy as an investment. What makes cryptocurrencies unique is the fact that all of these transactions are made with no middle men — meaning, no bank — and that they aren’t tied to any country or yet subject to much regulation. Bitcoin eventually gave rise to hundreds of cryptocurrencies, known collectively as altcoins.
Today, there are many benefits to using altcoins, and individuals just like you and me are using them to complete simple, fast money transfers with no or low fees, buy goods or simply as a means of investment.