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6 Part I  Overview of Commerce
became apparent. Introduction of money into commerce was a major leap toward
making commerce scalable and to enable it to expand across the world. In this
section, we discuss the foundation of payment, its main component (money),
and the mechanics of money movement in modern systems.
Money
Early barter systems did not include a notion of money as it was a more advanced
economic (and of course, social) construct that came in later. Money was invented
to further facilitate commercial exchange. With the advent of money, humans
were able to separate the notion of value from goods, represent it in an abstract
form, and use it as an intermediary medium for commerce. Earliest forms of
money were themselves material of intrinsic value (usually noble metals such
as gold and silver), but the concept of it as an intermediary applies whether or
not the medium has value itself. Money enables portability of value, scalability
of exchange, and more novel governance and manipulation of value such as
saving, investment, and other forms of economic growth. The scientific defini-
tion of money and its role in modern economy, in commerce, and in our social
fabric are beyond the scope of this book, but suffice it to say that without money,
civilization as we know it would most likely not exist.
Money is conceptually nothing other than a level of indirection to measure
and represent value. Value demands management; therefore it would make
perfect logical sense to assume that with the introduction of this concept (that
is, money) came people and establishments that focused specifically to govern,
manage, and handle it: the banks. Well, that’s not exactly how it happened. In
fact, the notion of a bank predates money. The first banks were probably the
religious temples of the ancient world, and were probably established in the
third millennium BC. Deposits initially consisted of grain and later other goods
(including cattle, agricultural implements, and eventually precious metals such
as gold, in the form of easy-to-carry compressed plates). Temples and palaces
were the safest places to store gold as they were constantly attended and well
built. As sacred places, temples presented an extra deterrent to would-be thieves.
There are extant records of loans from the 18
th
century BC in Babylon that were
made by temple priests/monks to merchants.
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Financial Networks
Money carried out commerce and humans’ economic interactions for a couple of
thousand years, but it had its limitations. For example, money wasn’t a suitable
system to manage credit (borrowing to spend, and paying at a later time) in a
scalable way. Further innovations were needed to address such shortcomings,
namely the introduction of credit and ways to manage value in forms suitable
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