11th–12th centuries
Coins disappeared from Japan, and people started counting in rice and silk.
So, did they go back to bartering?
Considering Digital Money from a Historical Perspective
Will payments continue even without cash? We compare past finance with current digital payments.
Time to read the text: about 7 min
The review questions are optional and not included in this time.
What you can read: the course opening and contents are free; the full text is for those who have purchased
After purchase, you can read the full text once your access starts.
Digital Money and History in 3 Minutes
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Government offices issued payment slips for warehouses, settling accounts on paper.
An era without coins wasn't an era without finance.
A grandfather paid with coins, his grandchild paid with silk. The memory vanished in 3 generations.
Changing the form of money takes time, more than laws.
Deposits are already just numbers written on a computer.
The only thing fading away now is the cash that's left.
With electronic money issued by the state, someone has to keep the transaction ledger.
Where is the ledger kept, and who can read it?
2009
Even money not belonging to a state has its price quoted in dollars.
Measure, exchange, store. The functions of money can be separated.
November 8, 2016
In India, high-value banknotes became invalid overnight.
Over 80%
The portion of money in circulation that became just paper.
The lighter the form of money, the heavier the reliance on trust.
Numbers in a ledger can disappear faster than paper.
2In numbers
80% or more
Percentage of money in circulation in India that became paper overnight in 2016.
3generations
How long it took for the memory of living with coins to disappear from the country.
3What would you do?
I heard that 'cash is disappearing from this country.' Will money transactions themselves also stop?
Pick one
If cash disappears, transactions will also stop.
In Japan 900 years ago, even when coins disappeared, settlements continued using payment slips for warehouses. The disappearance of cash and the disappearance of credit are two different things.
Even if the form disappears, the system of credit can remain.
This is the first key idea of this course. Deposits have long been electronic records, and salaries and rent move from one ledger to another.
However, the lighter the form of money, the more it relies on trust. Just like how banknotes became paper overnight by a government decree.
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What you will understand after this course
- Be able to cite the historical precedent of a 'cashless economy' (11th-century Japan) and describe its similarities and differences with the present.
- Be able to explain with concrete examples that the three functions of money (unit of account, medium of exchange, store of value) can be separated.
- Be able to position Bitcoin and the digital Yuan within the theoretical framework of F1 and F9.
More about this course
Course number: F10
Supervised by: Mitsuru Hayama
Beyond the text: 6 exercises · 4 readings · 1 references How reading times are calculated
You will also understand
- Be able to discuss digitalization by distinguishing between the 'disappearance of physical form' and the 'persistence of credit'.
You can start this course without reading any other course.
Also worth reading, to see the connections (optional)
- Why can banknotes be used as money?
What you learn: You can explain the difference between convertible and inconvertible notes by what happens at the window.
The text refers to this course in sections 3, 5.
If you want to know more about checking sources (optional)
- Is It Really True? Checking History
We re-examine the origins of money and famous anecdotes, comparing them with historical records and actual artifacts.
Assessment
6 exercises in this course (4 check, 1 compare, 1 written). Progress is recorded by self-assessment.
The 6 chapters of this course
- The Island That Abandoned Coins — The First Cashless SocietyAn age without coins was not an age without finance. The disappearance of cash and the disappearance of credit are two different things.
- Money Loses Its Form — Confirming Our Current PositionDeposits are already numbers on a computer. Digitalisation is not the future, but a present we are late to acknowledge.
- The Inventor of Banknotes Moves Ahead Again — QR and the Digital YuanA thousand years since the jiaozi. The country that first changed the form of money is again the first to move to the next form, with the added issue of a state ledger.
- The challenge of stateless currency — How to measure BitcoinThe price of a currency not belonging to a state continues to be quoted in dollars. The three functions separate.
- Becoming Paper Overnight — An Experiment in DemonetizationOver eighty percent of the money in circulation became paper overnight. The less physical its form, the heavier the dependence on trust.
- The Toolbox — What History Can Offer the Digital AgeThree guidelines and two theoretical lines. Instead of prophecies, take home the tools for judgment.
Readings (4)
- The country that threw away its coinage Japan the 11th–12th centuries The Heian Capital
Section 1. The first cashless era—a time without coins was not a time without finance - The digital shore United States 2009 Upon the internet
Section 4. The challenge of stateless currency and the persistence of the dollar as a yardstick - China Overview: the world the present Toward the First Nation to Abandon Paper Money
Section 3. The inventor of the banknote is the first to abandon it—a thousand years since the Jiaozi - India Overview: the world AD 2016 Demonetisation
Section 5. Eighty percent becomes paper overnight—an experiment in currency as credit itself
References
- BIS Innovation Hub work on central bank digital currency (CBDC) — Bank for International Settlements A proof-of-concept project for a central bank digital currency. A primary record of design issues and national trials.
The books and materials referred to in this course.
Price
After purchase, the full courses, the illustrated books, every country’s story and the numismatics examination are open to you.
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