Keeping currency current: The future of money

By Alejandro Freixes, CCNN Head Writer

Bitcoins
Bitcoins and USB devices may one day replace normal currency with a brave new digital world.

Money makes the world go ’round, but how exactly does it work? From as early as 12,000 B.C., humans have traded objects that are valuable either because they’re useful (like furs to keep warm), rare (like gold and jewels), or an agreed-upon substitute for value (like paper money). Now that money can be traded electronically and the world is more interconnected than ever, it takes high-tech and fast-paced innovation to keep money secure and valuable.

These days, rather than hauling around a heavy bag of gold coins and risking back injury or a robbery, you can just give your money to a bank. If they’re part of the recognized banking system in the world, they have to play by the rules, so they’ll hold onto your cash while adding electronic proof of your funds online. However, gold is still very valuable, which is why a Northern California couple was thrilled when they found $10 million worth of rare gold coins buried beneath an old tree! As for where the majority of American gold is stored, it’s in the heavily fortified Fort Knox in Kentucky, which holds an estimated $250 billion worth of the shiny goods.

Now, modern government and banking institutions are upping their security game to avoid issues with counterfeit money (illegally copied or printed money) and theft. The Bank of England, for example, is upgrading the cotton paper bills that have been used for 100 years with plastic banknotes, similar to the ones already adopted by more than 20 countries. On the unofficial side of the fence, Bitcoins were created by a software developer codenamed “Satoshi Nakamoto”, as the first ever traded cryptocurrency (a digital form of exchange). It’s highly secure, and countries like the US are already considered Bitcoin-friendly for trade.

Despite money going high-tech, however, criminal hackers are also getting more sophisticated. Recently, they stole $460 million of Bitcoins from one of the biggest Bitcoin exchanges, Mt. Gox. A more traditional shady money tactic, called money laundering, basically involves making it look like illegal money actually came from a legitimate source. Creating this illusion is even easier now that most currency is electronic, as skillful high-tech launderers can hide the ill-gotten cash behind untraceable layers that move at lightspeed.

Featured image courtesy Theodore Scott on Wikimedia. Image of Bitcoins courtesy of Zach Copley on Wikimedia.