The Evolution of Money: Vocabulary Flashcards

Vocabulary flashcards covering key concepts from the lecture notes on the evolution of money, from barter to digital currencies and future trends.

Evolution of Money

The progression from barter to digital money, reflecting social values, technological capabilities, and economic needs.

Barter

Direct exchange of goods and services without money or intermediary payment.

Double coincidence of wants

The requirement that both trading parties desire what the other has, a limitation of barter.

Quid pro quo

Latin phrase meaning ‘something for something’; a foundational concept of reciprocal exchange.

Shekel

An early Mesopotamian unit of value dating from around 3000 BCE.

Code of Hammurabi

Ancient code detailing monetary roles, including wages, loans, and debts.

Zhou Dynasty (cast bronze shells)

Ancient China used cast bronze shells as a medium of exchange around 1000 BCE.

Medium of Exchange

An asset generally accepted as payment for goods and services.

Unit of Account

A standard measure for pricing and comparing values.

Store of Value

An asset that retains purchasing power over time.

Standard of Deferred Payment

A basis for credit and future payment obligations.

Coinage

Standardized metal money that is portable, divisible, and durable.

Lydia

Kingdom in western Anatolia that produced the first standardized metal coins.

Electrum

Gold-silver alloy used in some of the earliest coins.

Swedish Plate Money

Large copper plates used as currency in 17th–18th century Sweden, valued by material weight.

Plate Money

Copper plates used as coins due to material-value-based worth.

Spartan Iron Money

Iron currency chosen by Sparta to discourage wealth accumulation.

US Steel Pennies

WWII pennies (1943) made of zinc-coated steel to conserve copper.

Paper money

Money based on promises and authority, not intrinsic material value.

Tang Dynasty paper money

First appeared in China (618–907 CE) as privately issued certificates.

Song Dynasty banknotes

Government-issued currency developed from earlier private notes.

Marco Polo and paper money

Helped introduce the idea of paper money to Europe, though adoption was slow.

Banknotes backed by precious metals

Early banknotes were often redeemable by metals stored in vaults.

Gold Standard

System where paper money is backed by gold reserves, offering stability but less flexibility.

Gold Standard Act (1900)

U.S. act officially adopting the gold standard.

Bretton Woods Agreement (1944)

International monetary system with USD-based reserve currency backed by gold.

Nixon ends gold convertibility (1971)

End of the gold standard era; USD no longer convertible to gold.

Fiat currency

Money whose value derives from government decree and public confidence, not material backing.

Central Bank

Institution (e.g., Fed, ECB, BoJ) that controls money supply and monetary policy.

Monetary Policy Tools

Tools such as interest rates, reserve requirements, and open market operations used to influence the economy.

Diners Club (1950)

First general-purpose credit card introduced in 1950.

Magnetic stripe

Technology enabling card payments introduced in the 1960s.

ATMs (Automated Teller Machines)

Machines that allow customers to perform banking transactions; widely deployed in the 1970s.

Electronic Funds Transfer Act (1978)

Legislation providing a legal framework for digital payments.

Credit Card

A card allowing the cardholder to borrow funds from a lender to pay vendors; fees and interest apply if unpaid.

Cardholder

Person who uses a credit or debit card to make purchases.

Merchant

Business that accepts card payments and pays processing fees.

Card Issuer

Financial institution that issues payment cards and extends credit.

Processing fee

Fee paid by merchants for card transactions, typically around 1.5–3.5% of value.

Bitcoin

First cryptocurrency (2009) created by Satoshi Nakamoto; uses blockchain and has a capped supply of 21 million.

Satoshi Nakamoto

Pseudonymous creator of Bitcoin.

Blockchain

Decentralized ledger technology that records transactions securely.

Mining (Bitcoin)

Process of using computational power to validate transactions and create new coins.

Altcoins

Other cryptocurrencies beyond Bitcoin with diverse features and purposes.

CBDCs (Central Bank Digital Currencies)

Government-issued digital currencies combining fiat stability with digital efficiency.

Digital yuan

China's advanced CBDC in testing for official deployment.

M-Pesa

Mobile money system in developing economies that enables digital payments via mobile phones.