The World’s Strangest Currencies
For centuries, humans from all around the world have tried to use different things as money. Some forms, which most people are familiar with today, have been effective catalysts for trade over thousands of years. Other currencies, from squirrel pelts to parmesan cheese, have had their time or place in human history, but were ultimately unsuccessful or made obsolete.
The path to finding the best money has been long and riddled with trial and error. Here are just some of the world’s strangest currencies that we discovered in our research.
The importance of salt to ancient civilizations cannot be understated. The first written record on salt appears in 2700 BCE in China.
Salt was highly valued for food preservation, but its production was very limited. As a result, in many places of the world, salt was used as currency.
- As early as the 6th century, Moorish merchants in sub-Saharan Africa routinely traded salt and gold at the same value per ounce.
- In what is now modern-day Ethiopia, slabs of rock salt were used as coins. Each coin was 10 inches long and two inches thick.
- Salt was also used as pay soldiers in Ancient Rome. This became known as “solarium argentum”, from which we now derive the word “salary”
- A soldier’s salary was cut if he was “not worth his salt”, a phrase that still exists today.
Bricks of tea leaves were used for currency in many places in Asia. However, it was the nomads in Mongolia and Siberia that actually preferred tea bricks to metallic coins.
Tea leaves, either whole or ground, would be dried and compressed into bricks using flour, manure, or blood. The bricks could be used as a means of exchange, or they could be eaten, used to make tea, or brewed for medicine.
In Italy, the hard, dry cheese made from skim milk is not just for pasta. It was also used as a currency.
As early as the year 1200, wheels of parmesan were used as a medium of exchange for other goods.
Even as recent as 2009, the New York Times reported some banks in the region using parmesan wheels as collateral for farmers’ loans. Each compact wheel holds the equivalent of 550 liters of milk.
In the Solomon Islands, one of the world’s strangest currencies was born: the rai stone. These limestone discs with the hole in the center were up to 12 feet in diameter and weighed up to eight tons.
It was not unusual for buyers and sellers of this currency to have their boats capsize due to their sheer weight.
Animal skins have a surprisingly important history as currency in different parts of the world.
In Russia and Finland, squirrel pelts were a key medium of exchange during medieval times. Even today, the Finnish word “raha”, which now refers to money, originally meant the “fur of squirrel”.
In North America, the European settlers and First Nations tribes found skins to be one commodity they both agreed had value.
In 1748, Beaver pelts became the “standard of trade” in the north. One pelt could buy two pounds of sugar.
Lastly, the use of buck skins in trade gave rise to “buck” as a slang word for currency, which we still use to describe dollars today.
Merging the ideas of weapons and currency is not new. Many cultures have used arrowheads as currency throughout the world.
However, Chinese “knife money” is certainly an original idea: around 600 BCE, at the time of the Zhou dynasty, these knives were inscribed with numbers or single words such as “sheep” or “fish” to determine their value.
These were used for hundreds of years, and eventually it was declared by the emperor that only circular coins with square holes could be used for Chinese currency.
What Gives a Currency Staying Power?
Currencies come and go.
Some of the world’s strangest currencies, like rai stones, did not have the staying power or value to be used universally. They would eventually fade away into the history books.
Other currencies around the world would experience hyperinflation and ultimately became worthless.
What gives a currency staying power? What makes a currency “money”?
The Money Project acknowledges that the very concept of money itself is in flux – and it seeks to answer these questions.
About the Money Project
The Money Project aims to use intuitive visualizations to explore ideas around the very concept of money itself. Founded in 2015 by Visual Capitalist and Texas Precious Metals, the Money Project will look at the evolving nature of money, and will try to answer the difficult questions that prevent us from truly understanding the role that money plays in finance, investments, and accumulating wealth.
Why Gold is Money: A Periodic Perspective
Gold has been used as money for millennia. People often attribute this to beauty, but there are basic physical properties for why gold is money.
Why Gold is Money
The economist John Maynard Keynes famously called gold a “barbarous relic”, suggesting that its usefulness as money is an artifact of the past. In an era filled with cashless transactions and hundreds of cryptocurrencies, this statement seems truer today than in Keynes’ time.
However, gold also possesses elemental properties that has made it an ideal metal for money throughout history.
Sanat Kumar, a chemical engineer from Columbia University, broke down the periodic table to show why gold has been used as a monetary metal for thousands of years.
The Periodic Table
The periodic table organizes 118 elements in rows by increasing atomic number (periods) and columns (groups) with similar electron configurations.
Just as in today’s animation, let’s apply the process of elimination to the periodic table to see why gold is money:
- Gases and Liquids
Noble gases (such as argon and helium), as well as elements such as hydrogen, nitrogen, oxygen, fluorine and chlorine are gaseous at room temperature and standard pressure. Meanwhile, mercury and bromine are liquids. As a form of money, these are implausible and impractical.
- Lanthanides and Actinides
Next, lanthanides and actinides are both generally elements that can decay and become radioactive. If you were to carry these around in your pocket they could irradiate or poison you.
- Alkali and Alkaline-Earth Metals
Alkali and alkaline earth metals are located on the left-hand side of the periodic table, and are highly reactive at standard pressure and room temperature. Some can even burst into flames.
- Transition, Post Transition Metals, and Metalloids
There are about 30 elements that are solid, nonflammable, and nontoxic. For an element to be used as money it needs to be rare, but not too rare. Nickel and copper, for example, are found throughout the Earth’s crust in relative abundance.
- Super Rare and Synthetic Elements
Osmium only exists in the Earth’s crust from meteorites. Meanwhile, synthetic elements such as rutherfordium and nihonium must be created in a laboratory.
Once the above elements are eliminated, there are only five precious metals left: platinum, palladium, rhodium, silver and gold. People have used silver as money, but it tarnishes over time. Rhodium and palladium are more recent discoveries, with limited historical uses.
Platinum and gold are the remaining elements. Platinum’s extremely high melting point would require a furnace of the Gods to melt back in ancient times, making it impractical. This leaves us with gold. It melts at a lower temperature and is malleable, making it easy to work with.
Gold as Money
Gold does not dissipate into the atmosphere, it does not burst into flames, and it does not poison or irradiate the holder. It is rare enough to make it difficult to overproduce and malleable to mint into coins, bars, and bricks. Civilizations have consistently used gold as a material of value.
Perhaps modern societies would be well-served by looking at the properties of gold, to see why it has served as money for millennia, especially when someone’s wealth could disappear in a click.
The 7 Major Flaws of the Global Financial System
Since the invention of banking, the global financial system has increasingly become more centralized. Here are the big flaws it has, as a result.
The 7 Major Flaws of the Global Financial System
Since the invention of banking, the global financial system has become increasingly centralized.
In the modern system, central banks now control everything from interest rates to the issuance of currency, while government regulators, corporations, and intergovernmental organizations wield unparalleled influence at the top of this crucial food chain.
There is no doubt that this centralization has led to the creation of massive amounts of wealth, especially to those properly connected to the financial system. However, the same centralization has also arguably contributed to many global challenges and risks we face today.
Flaws of the Global Financial System
Today’s infographic comes to us from investment app Abra, and it highlights the seven major flaws of the global financial system, ranging from the lack of basic access to financial services to growing inequality.
1. Billions of people globally remain unbanked
To participate in the global financial sector, whether it is to make a digital payment or manage one’s wealth, one must have access to a bank account. However, 1.7 billion adults worldwide remain unbanked, having zero access to an account with a financial institution or a mobile money provider.
2. Global financial literacy remains low
For people to successfully use financial services and markets, they must have some degree of financial literacy. According to a recent global survey, just 1-in-3 people show an understanding of basic financial concepts, with most of these people living in high income economies.
Without an understanding of key concepts in finance, it makes it difficult for the majority of the population to make the right decisions – and to build wealth.
3. High intermediary costs and slow transactions
Once a person has access to financial services, sending and storing money should be inexpensive and fast.
However, just the opposite is true. Around the globe, the average cost of a remittance is 7.01% in fees per transaction – and when using banks, that rises to 10.53%. Even worse, these transactions can take days at a time, which seems quite unnecessary in today’s digital era.
4. Low trust in financial institutions and governments
The financial sector is the least trusted business sector globally, with only a 57% level of trust according to Edelman. Meanwhile, trust in governments is even lower, with only 40% trusting the U.S. government, and the global country average sitting at 47%.
5. Rising global inequality
In a centralized system, financial markets tend to be dominated by those who are best connected to them.
These are people who have:
- Access to many financial opportunities and asset classes
- Capital to deploy
- Informational advantages
- Access to financial expertise
In fact, according to recent data on global wealth concentration, the top 1% own 47% of all household wealth, while the top 10% hold roughly 85%.
On the other end of the spectrum, the vast majority of people have little to no financial assets to even start building wealth. Not only are many people living paycheck to paycheck – but they also don’t have access to assets that can create wealth, like stocks, bonds, mutual funds, or ETFs.
6. Currency manipulation and censorship
In a centralized system, countries have the power to manipulate and devalue fiat currencies, and this can have a devastating effect on markets and the lives of citizens.
In Venezuela, for example, the government has continually devalued its currency, creating runaway hyperinflation as a result. The last major currency manipulation in 2018 increased the price of a cup of coffee by over 772,400% in six months.
Further, centralized power also gives governments and financial institutions the ability to financially censor citizens, by taking actions such as freezing accounts, denying access to payment systems, removing funds from accounts, and denying the retrieval of funds during bank runs.
7. The build-up of systemic risk
Finally, centralization creates one final and important drawback.
With financial power concentrated with just a select few institutions, such as central banks and “too big too fail” companies, it means that one abject failure can decimate an entire system.
This happened in 2008 as U.S. subprime mortgages turned out to be an Achilles Heel for bank balance sheets, creating a ripple effect throughout the globe. Centralization means all eggs in one basket – and if that basket breaks it can possibly lead to the destruction of wealth on a large scale.
The Future of the Global Financial System?
The risks and drawbacks of centralization to the global financial system are well known, however there has never been much of a real alternative – until now.
With the proliferation of mobile phones and internet access, as well as the development of decentralization technologies like the blockchain, it may be possible to build an entirely new financial system.
But is the world ready?
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