OUGD406 - Studio Brief 02 - License to Print Money

In an age of Apple Pay, Bitcoin, contactless, Paypal and other options for the transferring of funds, is there a future for "real" money?

Brief History of the Banknote

The use of a durable light-weight substance as evidence of a promise to pay a bearer on demand was a concept that originated in China in 118 BC (3rd century). The first material to be used was leather, and it wasn't until the 11th century that paper currency first appeared. Again originating in China, and moving across to Europe in the early 13th century, paper money originated in two forms: drafts, which were receipts for value held on account, and bills, which were issued with a promise to convert at a later date.

Originally, money was based on a Commodity Money System, in which a commodity such as gold is made the unit of value and physically used as money. The money retains its value because of its physical properties, and can be used outside of the monetary system. Now, we use a Fiat Money System - fiat money's value is unrelated to the value of any physical quantity, and so a coin is fiat currency to the extent that its face value, as defined by law, is greater than its market value as metal.

The Rise Of Cyber Money

Since the mid 90's, the use of electronic money has become increasingly popular, with the Oyster Card and other European equivalents becoming the preferred method of payment on frequently used public services, making the need for coins or notes to buy a ticket redundant. E-money, as it has been termed, has also become frequently abundant in everyday life, starting with Paypal to avoid the unnecessary sharing of personal information, and with the introduction of contactless payments, the need for physical money has seen a recent decline.

This has been furthered with the introduction of Bitcoin. Bitcoin is an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees. It is created entirely digitally by a community of people that anyone can join. Bitcoins are ‘mined’, using computing power in a distributed network. The bitcoin protocol states that only 21 million bitcoins can ever be created by miners. However, these coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the founder of bitcoin).

Bitcoin possesses several important features that set it apart from government-backed currencies: It's decentralized, meaning that it isn’t controlled by one central authority. It's anonymous as Bitcoin users aren't linked with names, it's fast, and it's completely transparent - bitcoin stores details of every single transaction that ever happened in the network in a digital ledger, called the blockchain. It is a fully virtual and immaterial monetary system.

Although Bitcoin has many, many potentially great aspects, there will always be an uncertainty about an entirely digital system, and probably may never overtake the traditional use of physical money