As the human race evolves, our means of exchanging value also continuously develops. From the barter system that dates back to 6,000 B.C. to the present-day use of fiat currency, the human race has been on a nonstop journey toward creating more efficient exchange methods. Factors such as convenience, availability, stability and sustainability have played crucial roles in the evolution of exchange methods.
Fiat currency is essentially paper money backed solely by the government’s word and central bank regulations. It became the preferred method of exchange globally at the expense of other methods such as commodity-based currencies and barter. This was owing to its convenience, the relative stability of value and also because it is under government control. Fiat currencies gained prominence in the 20th century partly because governments sought to insulate their economies from the worst effects of the natural fluctuations of the business cycle.