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.
Bitcoin is Near All-Time Highs and the Mainstream Doesn’t Care…Yet
As bitcoin charges towards all-time highs, search interest is relatively low. How much attention has bitcoin’s recent rally gotten?
Bitcoin Near All-Time Highs vs. Search Interest
Just about every financial asset saw a huge drop in March, but few have had the spectacular recovery that bitcoin has had since then.
Up more than 300% from the March lows, bitcoin is within $1,000 of its all-time high ($19,891) established three years ago. While 2017’s run-up saw a huge surge in Google searches, interest this time around is less than a quarter of what it was back then.
This graphic overlays bitcoin’s price changes against Google search interest for “bitcoin” between 2017-Nov 2020, showing the muted relative search interest for its recent rally. Despite Google search interest being low, it is turning upwards, potentially hinting at a rise to cap off 2020.
Nobody’s Searching? Maybe Bitcoin is Already Mainstream
Bitcoin’s mainstream attention in 2017 was exceptional, and was likely the first time many people had even heard about the digital asset.
After doing all of their Google research back then, it’s possible that the general population is now well aware of the cryptocurrency and doesn’t need to search up the basics again. Add to this that bitcoin is now easily purchasable through popular services like Robinhood and Paypal, and you have fewer people who need Google to figure out the intricacies of bitcoin wallets and transactions.
While people might not be searching for information on bitcoin, the media has certainly picked up on its movement over the past year. Mainstream coverage regarding the cryptocurrency is currently at a relative all-time high for the past 12 months.
Even if current mainstream coverage isn’t far from previous peaks, it’s still likely that people are seeing an increase in bitcoin content in their news feeds following the recent surge.
This rally is also attracting increased talk on social media sites like Twitter. That said, while there has been a rise in the volume of bitcoin-related tweets in November 2020, numbers are still quite low compared to the amount of tweets in 2017.
Daily tweet volume reached above 60,000 recently, but is still far from the +100,000 daily tweets that were being sent at the top of 2017’s bull run.
Where in the World is Google Search Interest for Bitcoin?
Even if worldwide search interest isn’t as high as it was in 2017, there is one country where bitcoin is being googled more now: Nigeria.
Since 2015, the Nigerian Naira has lost more than 50% of its value against the U.S. dollar. This, coupled with the country’s high share of unbanked citizens means that alternative currencies and payment methods have steadily risen in popularity and utility.
FinTech startups like Chipper Cash are providing Nigeria and other African nations with no-fee P2P payment services, along with the ability to trade bitcoin. The service is also beta testing the buying and selling of fractional shares of popular U.S. stocks.
Started up in 2018, Chipper Cash’s monthly payment values are now over $100 million, and the company has attracted investment from top VC funds like Bezos Expeditions as they provide a valuable service in an emerging market.
If Bitcoin is Mainstream, Where Does It Go From Here?
While bitcoin is proving itself to be a useful medium of exchange around the world, it’s still primarily a speculative asset. As 2020 saw massive increases in money supply across the board, bitcoin reacted best compared to other speculative assets, with its ascent to $19,000 almost completely uninterrupted since the $10,000 price area.
Time will tell if 2017 is set to repeat itself, or if bitcoin is getting ready to set new all-time highs going into 2021.
Ranking Asset Classes by Historical Returns (1985-2020)
What are the best-performing investments in 2020, and how do previous years compare? This graphic shows historical returns by asset class.
Historical Returns by Asset Class (1985-2020)
Mirror, mirror, on the wall, is there one asset class to rule them all?
From stocks to bonds to alternatives, investors can choose from a wide variety of investment types. The choices can be overwhelming—leaving people to wonder if there’s one investment that consistently outperforms, or if there’s a predictable pattern of performance.
This graphic, which is inspired by and uses data from The Measure of a Plan, shows historical returns by asset class for the last 36 years.
Asset Class Returns by Year
This analysis includes assets of various types, geographies, and risk levels. It uses real total returns, meaning that they account for inflation and the reinvestment of dividends.
Here’s how the data breaks down, this time organized by asset class rather than year:
|U.S. Large Cap Stocks||U.S. Small Cap Stocks||Int'l Dev Stocks||Emerging Stocks||All U.S. Bonds||High-Yield U.S. Bonds||Int'l Bonds||Cash (T-Bill)||REIT||Gold|
*Data for 2020 is as of October 31
The top-performing asset class so far in 2020 is gold, with a return more than four times that of second-place U.S. bonds. On the other hand, real estate investment trusts (REITs) have been the worst-performing investments. Needless to say, economic shutdowns due to COVID-19 have had a devastating effect on commercial real estate.
Over time, the order is fairly random with asset classes moving up and down the ranks. For example, emerging market stocks plummeted to last place amid the global financial crisis in 2008, only to rise to the top the following year. International bonds were near the bottom of the barrel in 2017, but rose to the top during the 2018 market selloff.
There are also large swings in the returns investors can expect in any given year. While the best-performing asset class returned just 1% in 2018, it returned a whopping 71.5% in 2009.
Variation Within Asset Classes
Within individual asset classes, the range in returns can also be quite large. Here’s the minimum, maximum, and average returns for each asset class. We’ve also shown each investment’s standard deviation, which is a measure of volatility or risk.
Although emerging market stocks have seen the highest average return, they have also seen the highest standard deviation. On the flip side, T-bills have seen returns lower than inflation since 2009, but have come with the lowest risk.
Investors should factor in risk when they are looking at the return potential of an asset class.
Variety is the Spice of Portfolios
Upon reviewing the historical returns by asset class, there’s no particular investment that has consistently outperformed. Rankings have changed over time depending on a number of economic variables.
However, having a variety of asset classes can ensure you are best positioned to take advantage of tailwinds in any particular year. For instance, bonds have a low correlation with stocks and can cushion against losses during market downturns.
If your mirror could talk, it would tell you there’s no one asset class to rule them all—but a mix of asset classes may be your best chance at success.
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