There is a reluctance among Singaporeans to accept or even consider the money that is not in the form of Singapore Dollars (SGD). Various types of digital currency have recently reached the worldwide market and some have found their way into select nations. Digital currencies like Bitcoin continue to gain popularity, but they aren’t yet a serious challenge to the status quo of conventional paper money. Most of us prefer to hold on to our paper money due to the perceived security risks associated with digital currency’s convoluted nature.
There is no doubt that the world is preparing to shift away from the use of traditional cash, as shown by the Bitcoin example. And if you really think about it, all you’re doing is hoarding a pile of worthless paper. It’s only because it’s widely accepted as money that you may feel more comfortable with it in your hand.
Money has always existed in a variety of forms throughout history. To be clear, we’re not advocating a return to these old practices, but we thought it’d be fun to provide some historical examples of commodity money.
Gold
People who have no knowledge of economics may grasp gold since it’s the most frequent sort of commodity money. Gold has always been a valuable commodity, regardless of time or place. According to “The Gold Standard,” the value of the US dollar was evaluated in terms of the country’s gold holdings.
First and foremost, you may keep gold for a long time without fearing that it would rust, expire, or begin to degrade. Secondly, it’s a lot easier to move about. Gold coins, for example, are easy to carry about and may be used to pay for products or services. As a commodity, gold has a considerable inherent value since it is utilized widely in jewelry and electrical components.
Moreover, It’s possible that in times of uncertainty like it’s shown here, individuals may choose to use gold as a means of payment rather than the local currency, as indicated by its recent surge. Furthermore, the government cannot generate gold, but the local currency may be issued at will.
Humanity has been enthralled by gold for millennia. There was an upsurge in financial instability and inflation after the demise of the gold standard.
It’s a common misconception that gold isn’t really money in the present monetary system. Because gold is frequently sold in US dollars, it has been associated with the US dollar. In the long run, gold and the dollar have a negative correlation. Consider these elements when we realize that the gold price is only an exchange rate. Paper money may be traded for gold in the same way that US dollars can be exchanged for the Japanese yen. The genesis of money was also influenced by the use of gold.
It is important to note that the price of gold will fluctuate in relation to other forms of currency, like the US dollar and the euro. Although gold may be purchased and held, most people do not utilize it as a form of payment. It is, on the other hand, very liquid and may be exchanged for cash in almost any currency.
In many respects, gold is similar to other currencies. Other currencies and asset classes often outperform gold at certain periods of the year. In times of economic uncertainty, conflict, and stock market declines, we may expect gold to do well.
Investing in gold may be done in a variety of ways, including via real gold, futures contracts, and gold ETFs. By acquiring a contract for difference, investors may participate in price changes without owning the underlying asset.
Rice
Rice was the primary currency in Japan in the early 17th century because of the Asian love affair.
Being paid in rice in those days, when life was all about having enough food and making it through the winter, was a good idea. When a hard-working person’s family has a surplus of rice, he might utilize it to purchase other necessities.
If you’re still baffled by this, consider the following hypothetical situation. If Singapore is in the midst of a battle and food supplies are at a premium.
Salt
It’s no coincidence that the term “Salary” comes from the Latin word “sal”.
During the Roman Empire, soldiers received compensation in the form of salt as a kind of payment. As a condiment or preservative, salt has some inherent worth. However, the Roman soldiers who requested payment in salt had certain savvy economic principles in mind.
There will always be a scarcity of supply and an excess demand during times of conflict, which will lead to severe inflation.
To avoid losing their buying value after the war, troops preferred to be paid with commodities such as salt, which could be used as a measure of inflation. In addition, since salt can endure for a long period, its value didn’t go down.
Shell Money
Every continent on the planet has used some form of fake currency at some point. Even in the early 20th century, several African countries were still utilizing it as legal money.
Decorative shells are the primary source of shells’ commercial worth. It may also survive for a long time, which means that its worth will be preserved for a long period of time as well. Intricately crafted and difficult to manufacture, the shells were one of the causes why the Cowrie Shell has been used by numerous people, across a wider geographic area, and for a longer length of time than precious metals have been used as money. History also shows that only a fool would trade a Cowrie Shell for a gold coin at one time.
The shells have also made their way into popular culture, as seen on SpongeBob SquarePants’ banknotes and coins.
