After a tumultuous year of falling prices and exceptional volatility, crypto may seem unlikely to become a widely accepted currency as soon as many hoped. But those paradigm shifts do happen from time to time.
Currency, as it is today, represents not only a means of economic exchange but also a reflection of societal and financial advancement. Seeing what was used in the past may show just how much it’s evolved.
When the British landed in Australia in 1788, they brought with them 775 convicts, two years of food provisions and four years’ worth of rum. The newly-established Colony of New South Wales lacked the provisions for an internal currency, so the new settlers had to rely on the barter system, which was commonly used at the time.
Governor Phillip quickly realised that labourers worked harder when a small amount of rum was issued to them. It didn’t take long for the drink to become the colony’s preferred currency – in fact, records show that land in the Sydney suburb of Pyrmont was once bought for a gallon of rum, Australia’s first church was built in exchange for rum and flour, and one man even sold his wife for four gallons of the stuff. Rum was Australia’s currency for almost 25 years.
It’s not hard to imagine the downsides. With labourers getting paid in booze, most turned into unproductive alcoholics. Their addiction was heavily exploited by the NSW Corps (earning them the nickname “Rum Corps”) which imported rum at 10p a gallon but sold it for £2. Low-quality rum made from potatoes, which could kill instantly when ingested, was also being traded on the market. Counterfeit currency, if you will.
So it’s nice and convenient to have money as legal tender today. Defined as “currency not backed by any commodity”, fiat money is the evolution of centuries of bartering alcohol, gold, goods and services. With the next generation moving deeper into a digital world involving the Metaverse, AI and Web3, it might not be implausible for digital currencies to eventually gain mainstream traction.
Stella is a markets analyst and writer with almost a decade of investing experience. With a Masters in Accounting from the University of Sydney, she specialises in financial statement analysis and financial modelling. Previously, she worked as an equity analyst at Australian finance start-up, Simply Wall St, where she took charge of the market insights newsletter sent out to over a million subscribers. At Stake, Stella has been key to producing the weekly Wrap articles and social media content.