Task In the past, people used barter trade as a medium of exchange, whereby goods were exchanged for other goods, and services exchanged for other services. The problem was that the value of a commodity could be of a different value from the commodity exchanged, thus there was introduction of coins to represent money (Basel, 2006). It was easier to find out the worth of coins with the cost of merchandise people wanted. There was introduction of representative money where there was paper currency, and this replaced the commodity money.
Fiat money replaced representative money, and this is whereby, the government gave money value through enforceable laws for legal tender (Basel, 2006). Currently, people are using credit cards or electronic banking, and in addition to this, the banking industry has been computerized and people are using the internet for transactions. Currency is important since people can buy what they want so as to make their life more comfortable. With money, good and quality education is acquired and this is important to a country’s economy, since educated people get well paying jobs in the market.
In the past, people used currency as a form of exchange for goods or services needed, and this is also done in the contemporary world (Kondabagi, 2007). In businesses, most transactions need transportation of services or goods, and financial compensation is required which involves exchange rates or currency valuation. Today, with improvement of technology, credit cards facilitate transactions, making it possible to buy goods in cases of unavailability of currency or checkable deposits. However, credit cards are a liability because the purchase becomes completed until the credit liability is eventually paid off (Arnold, 2008).
Electronic money can be viewed as prepaid mechanism of payment where funds records are stored on electronic devices, which are usually in a consumer’s possession. In most developed countries, people use credit cards to make payments instead of using currency. Carrying a lot of money in bags or putting cash in pockets is not effective since the money can be easily lost. Most people consider using credit cards as an alternative of carrying a lot of money wherever a person goes, since credit cards are portable as compared to carrying cash.
Credit cards are used to make payments in places like supermarkets when one does not have cash on them (Randel, 2009). In future, credit cards will replace the use of currency since credit cards are easily portable, and payments can be made in any place a person is, provided there is an electronic device from which the service can be accessed. Electronic banking enables people to make transfers of money easily between countries or within the country. This is of great advantage to the people, since travel cost to the destinations where payment is supposed to be made, is saved.
People are able to transfer funds from one country to the other using electronic devices, such as smart cards or credit cards without necessarily having to go there (Kondabagi, 2007). If currency is used, then people would have to travel from one place to the other, carrying money in order to transfer funds. It is expected that in the future, people be using electronic money rather than using currencies, because it is easier to make transfers of funds using electronic devices.
References Arnold, C. (2008). How You Can Profit from Credit Cards. California: FT Press Basel, R. (2006). The History of Money. Alabama: Capstone Press. Houghton, G. (2009). The Rosen Publishing Group. New York: The Rosen Publishing Group. Haydon, J. (2006). The History of Money. California: Black Rabbits Books. Kondabagil, J. (2007). Risk Management in Electronic Banking: Concepts and Best Practices. New Jersey John: Wiley and Sons. Randel, J. (2009). The Skinny on Credit Cards: How to Master the Credit Card Game. Chicago: RAND Media Co.