Views on crypto-currencies range across the spectrum. For some often older more conservative types, crypto-currencies are all just a fad. At the other extreme the millennials and Gen Z’s see crypto-currencies as here to stay and very much the future.
Whilst the jury remains out, a look at the Dollar's own growth and adoption as a currency may hold some clues. The Dollar itself had its own humble roots as a rival currency replacing more established ones.
Where did the Dollar come from?
The word ‘Dollar’ is derived from the German word ‘Thaler’. The ‘Thaler’ being a silver coin minted in Bohemia and in use throughout Central Europe in the 16th Century.
The word Thaler was a shortened form of the word ‘Joachimsthaler’, a coin from the Czech city of Jachymov, formerly called Joachimsthal in German.
The ‘Joachimsthaler’ was a great success as a new currency. It had been part of a revolution in European coinage which had been occurring since the late 15th century.
This desire for new coinage was a reaction to repeated debasement which had seen an erosion of the silver content of existing coinage. This debasement occurred due to rulers needing to finance the costs of virtually continual wars, and by the unremitting one-way transfer, over many centuries, of silver and gold to India and the Far East to pay for the importation of sought after raw materials, spices and fine cloth.
The continual debasement had seen the silver content in the dominant European coinage of the time drop to less than five per cent, making them worth far less than their perceived value.
Following the success of the ‘Joachimsthaler’, similar coins started to be minted from other rich seams of silver elsewhere in Europe. Soon there were many such coins in circulation.
All these new coins soon became known as ‘Thalers’.
With increasing circulation, the name ‘Thaler’ found its way into various other languages. In Dutch it was known as ’Daler' which into English became pronounced ‘Dollar’.
So there is the name. But how did it this become the dominant currency in the early United States?
During the latter 16th Century the ‘Republic of the Seven United Netherlands’ issued a coin known as a ‘Rijksdaalder’ (Dutch for ‘National Dollar’). This coin was minted to the same standards as the Thalers which were common throughout Western and Central Europe.
The Dutch also minted a coin known as a ‘Leeuwendaalder’, or ‘Lion Dollar’; it depicted a Lion, the emblem of the ‘Union of Utrecht’, the treaty which founded the ‘Republic of the Seven United Netherlands’.
The Leeuwendaalder had a slightly lower silver content to the ‘Rijksdaalder’, and hence was of less cost to merchants. Because of this it was beneficial for Dutch merchants to pay foreign debts in ‘Leeuwendaalder’, rather than ‘Rijksdaalder’.
At the time, the Dutch were prominent in overseas trade, and the Leeuwendaalder’ soon became a favoured coin for foreign trade, particularly in their Dutch colonial province on the East Coast of North America.
The provincial capital of this colony was New Amsterdam, which of course later changed its name to New York. At the time New Amsterdam was protected to its north by a wall. The route of which later was replaced by a road known as ‘Wall Street’.
From New Amsterdam, the Leeuwendaalder’s usage spread to the Thirteen British colonies on the Atlantic coast of North America, where it was anglicised to the ‘Lion Dollar’, and later, the Dollar.
The term ‘Dollar’ soon came to be applied to other similar large silver coins which were practically identical in weight and fineness to the ‘Leeuwendaalder’, or ‘Lion Dollar’.
The Spanish Peso also become widely acceptable as one of the world’s major trading currencies. As a shortage of official British coinage impacted the British North American colonies, people started using the Spanish Peso (known in the British North American Colonies as the ‘Spanish Dollar’). This began to circulate widely in North America.
When the United States gained its independence, making a kind of 18th century Brexit, the newly independent nation chose the "Dollar" as the name of its currency rather than keeping the British Pound.
And that is how the Dollar got its name and became the United States currency.
The mighty US Dollar came from humble beginnings. Its forerunners replaced the existing predominant coinage which had been debased over many centuries by rulers to pay for the cost of international wars and to meet the cost of obligations to China and the Far East. Overtime merchants and traders preferred the new coinage mined from alternative sources until eventually it became the established dominant currency.
So whilst it took a journey of centuries for the dollar to become accepted as 'currency', in modern times, what took centuries, now take decades, and what took decades no takes sometimes just months. Who know where Bitcoin, or some other cryptocurrency is on that journey! Nothing scares leaders and presidents, than another currency replacing theirs, devaluing their wealth. What similarity could there possibly be to today’s cryptos!!!
‘Investment – Nest Egg’image courtesy of jscreationzs / FreeDigitalPhotos.net".
Article by Steven Goldstein
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