The form of currency continues to evolve with technological advancements. In the mid-20th century, banks began using computers, giving rise to electronic currency transfers. By the 1970s, the SWIFT system enabled instant global movement of funds through electronic signals, replacing the need for physical cash. At the consumer level, payment cards have changed the way people obtain currency, starting with the Diners Club credit card in 1950 and the widespread adoption of credit and debit cards in the 1960s and 1970s. By the end of the 20th century, most currencies existed in the form of digital ledger entries rather than paper currency. The Internet has accelerated this transformation. By the 1990s and 2000s, platforms such as online banking and PayPal enabled anyone to send currency electronically. In the 2010s, mobile payment and financial technology innovation surged, from M-Pesa in Kenya to applications such as Alipay and Venmo. Nowadays, in developed economies, most currencies are fully digitized, and physical cash only accounts for a small portion of the total money supply.
Throughout history and civilization, currency has evolved independently around a set of fundamental characteristics that enable it to effectively serve as a medium of exchange, a store of value, and a unit of account. These attributes include:
Interchangeability: Each currency unit must be interchangeable with other units of the same denomination. For example, a $100 banknote has exactly the same functionality as any other $100 banknote, ensuring uniform value and eliminating the need to distinguish between different units.
Durability: Currency must be able to withstand long-term physical wear and tear. It should be able to maintain its shape and function after repeated use and trading, ensuring long-term circulation.
Portability: Effective currency must be easy to transport and use over long distances. Whether it is physical currency or digital currency, it must be able to efficiently transfer between parties, avoiding excessive friction or costs.
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Separability: Currency must be easily divisible into smaller units to facilitate transactions of different scales.
Consistency: All banknotes of the same denomination should have identical appearance and value. Standardization can enhance trust, simplify identification, and reduce transaction errors.
Scarcity: In order to maintain purchasing power, currency must exist in a limited supply. If the supply grows too fast relative to demand, the value of money will shrink, leading to inflation and a collapse of trust.
Acceptability: Currency must be widely recognized and accepted as an effective form of payment. Widespread social and institutional recognition is the foundation of its practicality and legitimacy.
Over time, the essence of currency continues to evolve in the pursuit of higher efficiency. People have always been committed to developing currency forms with faster transaction settlement speed, lower circulation costs, and no geographical restrictions, from localized barter systems to global digital networks.