A Monetary History of the World: Why Bitcoin Fits a Historical Pattern

Bitcoin is not the first attempt at private digital money, nor is it the first hard money. Understanding the 5,000-year history of monetary competition reveals why Bitcoin fits a pattern and what its chances of success actually are.

The Pre-Monetary Era (3000+ years ago)

Before money, trade was barter. The problems were obvious:

Double coincidence of wants: I have wheat, I want cattle. But the cattle owner wants cloth, not wheat. Trade requires finding someone who both wants what you have and has what you want.

Indivisibility: Some goods can’t be divided. A cow can’t be divided to purchase a small amount of grain.

Storage: Some goods spoil. Grain stored for years becomes worthless. How do you save wealth?

Transportation: Some goods are heavy or bulky. Transporting 1,000 cattle to purchase a ship is impractical.

Money emerged to solve these problems. Shells, beads, salt, cattle, grain — different societies chose different items as money based on local conditions.

The Precious Met