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Aggression

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'''Aggression''' is defined as the ''initiation of physical force'' against other persons or their [[property]], the [[threat]] of such, or [[fraud]] upon other persons or their property.

Synonymous to the word ''physical force'', simply the word ''force'' or the word ''violence'' is often used. Strictly speaking force is only violence when it is used against another persons property instead of ones own property.

The word ''initiation'' means that the force can be causally traced back to the [[will]] of a person, while this person did not have [[permission]]. The relation between force and will is called [[causation]].

If the property A' of person A damages the property B' of person B then this is an example of A initiating force against B because person A has taken [[ownership]] over property A by his will and therefore has [[responsibility]] over A'.

==Examples of aggression==
[[Spying]] is an example of aggression, because it requires the gaining of access to another persons property (force) without permission.

Note that [[communication]] requires the initiation of force to gain access to another persons sensory organs. If [[politeness]] is kept, permission for communication is usually given after the fact.

== See also ==
* [[Coercion]]

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[[Category:Concepts]]

Aggression

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'''Aggression''' is defined as the ''initiation of physical force'' against other persons or their [[property]], the [[threat]] of such, or [[fraud]] upon other persons or their property.

Synonymous to the word ''physical force'', simply the word ''force'' or the word ''violence'' is often used. Strictly speaking force is only violence when it is used against another persons property instead of ones own property.

The word ''initiation'' means that the force can be causally traced back to the [[will]] of a person, while this person did not have [[permission]]. The relation between force and will is called [[causation]].

If the property A' of person A damages the property B' of person B then this is an example of A initiating force against B because person A has taken [[ownership]] over property A by his will and therefore has [[responsibility]] over A'.

==Examples of aggression==
[[Coercion]] is

[[Spying]] is an example of aggression, because it requires the gaining of access to another persons property (force) without permission.

Note that [[communication]] requires the initiation of force to gain access to another persons sensory organs. If [[politeness]] is kept, permission for communication is usually given after the fact.

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[[Category:Concepts]]

Non-aggression principle

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#REDIRECT [[principle of non-aggression]]

Libertarianism

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{{Wikipedia text||395539108}}
'''Libertarianism''' is a [[Political philosophy|political philosophy]]<ref>[[Stanford Encyclopedia of Philosophy]] entry on [http://plato.stanford.edu/entries/libertarianism Libertarianism], [[Stanford University]], July 24, 2006 version.</ref> that views respect for individual choice and individual [[liberty]]<ref>{{citation |contribution-url=http://www.merriam-webster.com/dictionary/libertarianism |url=http://www.merriam-webster.com/dictionary/ |contribution=libertarian |title=[[Merriam-Webster Dictionary]] |publisher=[[Merriam-Webster]]}}</ref> as the foundation of the ideal society, and seeks to minimize or abolish the coercive actions of the [[State]].<ref>Professor Brian Martin, [http://www.uow.edu.au/arts/sts/bmartin/pubs/95state.html Eliminating state crime by abolishing the state].</ref><ref>Murray Rothbard, [http://www.lewrockwell.com/rothbard/rothbard75.html Do You Hate the State?], [[The Libertarian Forum]], Vol. 10, No. 7, July 1977.</ref> Broadly speaking, libertarianism focuses on the rights of the individual to act in complete accordance with his or her own subjective values,<ref>[http://www.lewrockwell.com/orig6/george4.html Libertarian Does Not Equal Libertine]</ref> and argues that the coercive actions of the state are often (or even always) an impediment to the efficient realization of one's desires and values.<ref>[http://www.lewrockwell.com/orig/feser2.html What Libertarianism Isn't]</ref><ref>[http://www.lewrockwell.com/orig7/alston3.html A Libertarian Cheat Sheet] by Wilton D. Alston</ref> Libertarians also maintain that what is immoral for the individual must necessarily be immoral for all state agents, and that the state should not be above the natural law.<ref>[http://www.lewrockwell.com/rothbard/rothbard168.html Myth and Truth About Libertarianism] Murrary Rothbard</ref><ref>[http://www.lewrockwell.com/rockwell/liberal-post-interview.html Do You Consider Yourself a Libertarian?]</ref> The extent to which [[government]] is necessary is evaluated by libertarian moral philosophers from a variety of perspectives.<ref name=Encyc-Philo>{{citation |contribution-url=http://www.iep.utm.edu/l/libertar.htm |url=http://www.iep.utm.edu/ |contribution=Libertarianism |first=Matt |last=Zwolinski |title=[[Internet Encyclopedia of Philosophy]] |accessdate=2008-08-09}}</ref><ref>[http://www.lewrockwell.com/gregory/gregory165.html Blaming Liberty for the State's Depradations]</ref> The word ''libertarian'' is an [[antonym]] of ''[[Authoritarianism|authoritarian]]''.<ref>{{citation |contribution=Authoritarian |title=Student Britannica |url=http://student.britannica.com/comptons/thesaurus?va=authoritarian}}</ref>

==Origins==
The term ''libertarian'' was originally used by late [[Age of Enlightenment|Enlightenment]] [[Freethought|free-thinkers]] to refer to those who believed in [[free will]], as opposed to [[determinism]].<ref name="Boaz">David Boaz, ''Libertarianism: A Primer'', [[Free Press]], 1998, 22-25.</ref> Libertarianism in this sense is still encountered in metaphysics in [[Libertarianism (metaphysics)|discussions of free will]]. The first recorded use of the term was in 1789, by [[William Belsham]], son of a dissenting clergyman.<ref>[http://books.google.com/books?id=Z6Y0AAAAMAAJ&pg=PA11&lpg=PA11&dq=%22william+belsham%22+libertarian&source=web&ots=Pp8NGjBso0&sig=ja2oyNWLuYxsMdeERrc2ZGKKk68&hl=en&sa=X&oi=book_result&resnum=1&ct=result William Belsham, "Essays"], printed for C. Dilly, 1789; original from the University of Michigan, digitized May 21, 2007.</ref> [[Murrary Rothbard]] identified mysterious Chinese philospher Lao-Tzu who lived in the sixth century BC as one of the first libertarian-minded philosphers and another philosopher Chuang-tzu as the first thinker to describe the benefits of "spontaneous order".<ref>[http://mises.org/daily/1967 The Ancient Chinese Libertarian Tradition] </ref>

===Political usage===
The term ''libertarian'' was first popularized in France in the 1890s in order to counter and evade the anti-anarchist laws known as the ''[[lois scélérates]]''.{{Fact|date=September 2008}} According to anarchist historian [[Max Nettlau]], the first use of the term [[Anarchist communism| libertarian communism]] was in November 1880, when a French anarchist congress employed it to more clearly identify its doctrines.<ref>{{cite book |title=A Short History of Anarchism |last=Nettlau |first=Max |authorlink=Max Nettlau |year=1996 |publisher=Freedom Press |isbn=0900384891 |pages=145}}</ref> The French anarchist journalist [[Sébastien Faure]], later founder and editor of the four-volume ''Anarchist Encyclopedia,'' started the weekly paper ''Le Libertaire'' (''The Libertarian'') in 1895.<ref name="RecollectionBooks">[http://recollectionbooks.com/bleed/Encyclopedia/FaureSebastien.htm Le Libertaire], 1895.</ref>

In the meantime, in the United States, libertarianism as a synonym for anarchism had begun to take hold. The anarchist communist geographer and social theorist [[Peter Kropotkin]] wrote in his seminal [[1911 Encyclopaedia Britannica]] article ''Anarchism'' that:
<blockquote>
It would be impossible to represent here, in a short sketch, the penetration, on the one hand, of anarchist ideas into modern literature, and the influence, on the other hand, which the libertarian ideas of the best contemporary writers have exercised upon the development of anarchism.<ref name="EB">[[Peter Kropotkin]], "[http://dwardmac.pitzer.edu/Anarchist_Archives/kropotkin/britanniaanarchy.html Anarchism]" 1911 Encyclopaedia Britannica.</ref></blockquote>

Today, worldwide, anarchist communist, [[libertarian socialist]], and other [[left-libertarian]] movements continue to describe themselves as libertarian, although their continued appropriation of the phrase is open to controversy, with right libertarians maintaining that left-libertarianism is internally inconsistent and should not be associated with modern libertarianism in any way. These "leftist" styles of libertarianism are opposed to most or all forms of private property.

===Usages of "Libertarian"===
[[Age of Enlightenment]] ideas of individual liberty, constitutionally limited government, peace, and reliance on the institutions of civil society and the free market for social order and economic prosperity were the basis of what became known as [[liberalism]] in the 19th century.<ref>[http://www.seop.leeds.ac.uk/archives/win2003/entries/libertarianism/ Stanford Encyclopedia of Philosophy]</ref> While it kept that meaning in most of the world, [[modern liberalism in the United States]] began to mean a more [[Statism|statist]] viewpoint. Over time, those who held to the earlier liberal views began to call themselves [[Market liberalism|market liberals]], [[classical liberals]] or libertarians.<ref>[http://www.cato.org/university/module10.html The Achievements of Nineteenth-Century Classical Liberalism], [[Cato Institute]], Cato University home study course module 10.</ref> While conservatism in Europe continued to mean conserving hierarchical class structures through state control of society and the economy, some [[Conservatism in the United States|conservatives in the United States]] began to refer to conserving traditions of liberty. This was especially true of the [[Old Right]], who opposed [[The New Deal]] and U.S. military interventions in [[World War I]] and [[World War II]].<ref>Murray Rothbard, [http://www.lewrockwell.com/rothbard/rothbard121.html The Libertarian Heritage: The American Revolution and Classical Liberalism], excerpted from the first chapter of ''For a New Liberty: The Libertarian Manifesto'', at [[LewRockwell.com]].</ref><ref>Murray Rothbard, [http://www.lewrockwell.com/rothbard/rothbard25.html The Life and Death of the Old Right], first published in the September 1990 issue of The Rothbard-Rockwell Report, at [[LewRockwell.com]].</ref>

Later, the [[Austrian School]] of economics also had a powerful impact on both economic teaching and classical liberal and libertarian principles.<ref>[http://mises.org/etexts/austrian.asp What is Austrian Economics?], [[Ludwig Von Mises Institute]].</ref><ref>Richard M. Ebeling, ''Austrian Economics and the Political Economy of Freedom'', Edward Elgar Publishing, 2003, 163-179 ISBN 1840649402, 9781840649406.</ref> It influenced [[Economics|economists]] and [[political philosophers]] and theorists including [[Henry Hazlitt]], [[Hans-Hermann Hoppe]], [[Israel Kirzner]], [[Murray Rothbard]], [[Walter Block]] and [[Richard M. Ebeling]]. The Austrian School was in turn influenced by [[Frederic Bastiat]].<ref>DiLorenzo, Thomas. "Frederic Bastiat (1801-1850): Between the French and Marginalist Revolutions." Mises.org|http://www.mises.org/fredericbastiat.asp</ref><ref>http://www.mises.org/journals/scholar/BastiatAustrian.pdf|Thornton, Mark. "Frédéric Bastiat as an Austrian Economist." Mises.org.</ref>

Starting in the 1930s and continuing until today, a group of central European economists lead by [[Austria]]ns [[Ludwig von Mises]] and [[Friedrich Hayek]] identified the [[collectivist]] underpinnings to the various new [[Socialism|socialist]] and [[Fascism|fascist]] doctrines of government power as being different brands of [[totalitarianism]].

In the 1940s, [[Leonard Read]] began calling himself libertarian.<ref name="Boaz"/> In 1955, [[Dean Russell]] wrote an article in the [[Foundation for Economic Education]] magazine pondering what to call those, such as himself, who subscribed to the classical liberal philosophy. He suggested: "Let those of us who love liberty trademark and reserve for our own use the good and honorable word "libertarian.""<ref>Russell, Dean. [http://www.boogieonline.com/revolution/politics/name.html ''Who is a Libertarian?''], [[Foundation for Economic Education]], "Ideas on Liberty," May, 1955.</ref>

[[Ayn Rand]]'s international [[best seller]]s ''[[The Fountainhead]]'' (1943) and ''[[Atlas Shrugged]]'' (1957) and her books about her philosophy of [[objectivism]] influenced modern libertarianism.<ref>[[Brian Doherty]], [http://www.cato.org/research/articles/doherty-050405.html Ayn Rand at 100: "Yours Is the Glory"], [[Cato Institute]] Policy Report Vol. XXVII No. 2 (March/April 2005).</ref> For a number of years after the publication of her books, people promoting a libertarian philosophy continued to call it ''[[individualism]].''<ref>Lee Edwards, Ph.D., [http://www.heritage.org/Research/NationalSecurity/fp8.cfm The Conservative Consensus: Frank Meyer, Barry Goldwater, and the Politics of Fusionism], [[Heritage Foundation]] issue paper, January 22, 2007.</ref> Two other women also published influential pro-freedom books in 1943, [[Rose Wilder Lane]]’s ''The Discovery of Freedom'' and Isabel Paterson’s ''The God of the Machine''.<ref name="Blanchette">Jude Blanchette, [http://www.lewrockwell.com/orig5/blanchette1.html What Libertarians and Conservatives Say About Each Other: An Annotated Bibliography]], [[LewRockwell.com]], October 27, 2004.</ref>

According to libertarian publisher [[Robert W. Poole]], [[Arizona]] [[United States Senate|United States Senator]] [[Barry Goldwater]]'s message of individual liberty, economic freedom, and [[anti-communism]] also had a major impact on the libertarian movement, both with the publication of his book ''[[The Conscience of a Conservative]]'' and with his [[United States presidential election, 1964| run for president in 1964]].<ref>Robert Poole, [http://findarticles.com/p/articles/mi_m1568/is_n4_v30/ai_20954419 In memoriam: Barry Goldwater - Obituary], [[Reason Magazine]], August-Sept, 1998.</ref> Goldwater's speech writer, [[Karl Hess]], became a leading libertarian writer and activist.<ref>Hess, Karl. [http://fare.tunes.org/books/Hess/dop.html ''The Death of Politics''], Interview in [[Playboy]], July 1976.</ref>

The [[Cold War]] mentality of military interventionism, which had supplanted Old Right non-interventionism, was promoted by conservatives like [[William F. Buckley]] and accepted by many libertarians, with Murray Rothbard being a notable dissenter.<ref>Murray Rothbard, [http://mises.org/story/2760 The Early 1960s: From Right to Left], excerpt from chapter 13 of Murray Rothbard ''The Betrayal of the American Right'', [[Ludwig von Mises Institute]], 2007.</ref> However, the [[Vietnam War]] split the uneasy alliance between growing numbers of self-identified libertarians, anarcho-libertarians, and more traditional conservatives who believed in limiting liberty to uphold moral virtues. Some libertarians joined the [[draft dodger]], peace movements and [[Students for a Democratic Society (1960 organization)|Students for a Democratic Society]]. They began founding their own publications, like [[Murray Rothbard]]'s ''[[The Libertarian Forum]]'' and organizations like the Radical Libertarian Alliance. The split was aggravated at the 1969 [[Young Americans for Freedom]] convention, when more than 300 libertarians organized to take control of the organization from conservatives. The burning of a draft card in protest to a conservative proposal against draft resistance sparked physical confrontations among convention attendees, a walkout by a large number of libertarians, the creation of new purely libertarian organizations like the [[International Society for Individual Liberty|Society for Individual Liberty]], and efforts to recruit potential libertarians from conservative organizations.<ref>Rebecca E. Klatch, [http://books.google.com/books?id=61oY9P7RrmcC ''A Generation Divided: The New Left, the New Right, and the 1960s''], [[University of California Press]], 1999 ISBN 0520217144, 215-237.</ref> The split was finalized in 1971 when conservative leader [[William F. Buckley]], in a 1971 ''New York Times'' article, attempted to weed libertarians out of the freedom movement. He wrote: "The ideological licentiousness that rages through America today makes anarchy attractive to the simple-minded. Even to the ingeniously simple-minded."<ref name="Blanchette"/>

In 1971, [[David Nolan]] and a few friends formed the [[Libertarian Party (United States)|Libertarian Party]].<ref>Bill Winter, [http://health.groups.yahoo.com/group/cp3/message/9701 "1971–2001: The Libertarian Party's 30th Anniversary Year: Remembering the first three decades of America's 'Party of Principle'"] LP News</ref> Attracting former [[Democratic Party (United States)|Democrats]], [[Republican Party (United States)|Republicans]] and [[Independent (voter)|independents]], it has run a [[President of the United States| presidential candidate]] every election year since 1972, including [[Ed Clark]] (1980), [[Ron Paul]] (1988), [[Harry Browne]] (1996 and 2000) and [[Bob Barr]] (2008). By 2006, polls showed that 15 percent of American voters identified themselves as libertarian.<ref>[http://www.cato.org/pubs/pas/pa580.pdf The Libertarian Vote], by David Boaz and David Kirby. [[Cato Institute]] policy analysis paper 580, October 18, 2006. [https://www.cato.org/pub_display.php?pub_id=6735 The Libertarian Vote]</ref> Over the years, dozens of libertarian political parties have been formed worldwide. Educational organizations like the [[Center for Libertarian Studies]] and the [[Cato Institute]] were formed in the 1970s, and others have been created since then.<ref>[http://www.isil.org/network/global/C19/ International Society for Individual Liberty Freedom Network list].</ref>

Philosophical libertarianism gained a significant measure of recognition in academia with the publication of [[Harvard University]] professor [[Robert Nozick]]'s ''Anarchy, State, and Utopia'' in 1974. The book won a [[National Book Award]] in 1975.<ref>David Lewis Schaefer, [http://www.nysun.com/sports/reconsiderations-robert-nozick-and-coast-utopia Robert Nozick and the Coast of Utopia], [[The New York Sun]], April 30, 2008.</ref> According to libertarian essayist [[Roy Childs]], "Nozick's ''Anarchy, State, and Utopia'' single-handedly established the legitimacy of libertarianism as a political theory in the world of academia."<ref>[http://www.theadvocates.org/celebrities/robert-nozick.html The Advocates Robert Nozick page].</ref>

==Libertarian principles==
According to the [[Internet Encyclopedia of Philosophy]]:
<blockquote>Libertarians are committed to the belief that individuals, and not states or groups of any other kind, are both ontologically and normatively primary; that individuals have rights against certain kinds of forcible interference on the part of others; that liberty, understood as non-interference, is the only thing that can be legitimately demanded of others as a matter of legal or political right; that robust property rights and the economic liberty that follows from their consistent recognition are of central importance in respecting individual liberty; that social order is not at odds with but develops out of individual liberty; that the only proper use of coercion is defensive or to rectify an error; that governments are bound by essentially the same moral principles as individuals; and that most existing and historical governments have acted improperly insofar as they have utilized coercion for plunder, aggression, redistribution, and other purposes beyond the protection of individual liberty.<ref name="Encyc-Philo"/></blockquote>

The [[Stanford Encyclopedia of Philosophy]] states "libertarianism holds that agents initially fully own themselves and have moral powers to acquire property rights in external things under certain conditions." It notes that libertarianism is not a “right-wing” doctrine because of its opposition to laws restricting adult consensual sexual relationships and drug use, and its opposition to imposing religious views or practices and compulsory military service. However, it notes that there is a version known as “[[left-libertarianism]]” which also endorses full self-ownership, but "differs on unappropriated natural resources (land, air, water, etc.)." "Right-libertarianism" holds that such resources may be appropriated by individuals. "Left-libertarianism" holds that they belong to everyone and must be distributed in some egalitarian manner.<ref name=StanfordEncyclopedia>[[Stanford Encyclopedia of Philosophy]] entry on [http://plato.stanford.edu/entries/libertarianism Libertarianism], [[Stanford University]], July 24, 2006 version.</ref>

Like many libertarians, Leonard Read rejected the concepts of "left" and "right" libertarianism, calling them "authoritarian."<ref>Leonard E. Read, [http://www.fee.org/Publications/the-Freeman/article.asp?aid=3184 Neither Left Nor Right], [[The Freeman]], February 1998, Vol. 48 No. 2.</ref> Libertarian author and politician [[Harry Browne]] wrote: "We should never define Libertarian positions in terms coined by liberals or conservatives – nor as some variant of their positions. We are not fiscally conservative and socially liberal. We are Libertarians, who believe in individual liberty and personal responsibility on all issues at all times. You can depend on us to treat government as the problem, not the solution."<ref>Harry Browne, [http://www.harrybrowne.org/articles/Abortion.htm The Libertarian stand on abortion], [http://harrybrowne.org Harry Browne web site], December 21, 1998.</ref>

[[Isaiah Berlin]]'s 1958 essay "[[Two Concepts of Liberty]]" described a difference between [[negative liberty]] which limits the power of the state to interfere and [[positive liberty]] in which a [[paternalistic]] state helps individuals achieve [[self-realization]] and [[self-determination]]. He believed these were rival and incompatible interpretations of liberty and held that demands for positive liberty lead to [[authoritarianism]]. This view has been adopted by many libertarians including [[Robert Nozick]] and [[Murray Rothbard]].<ref>[http://plato.stanford.edu/entries/liberty-positive-negative/ Positive and Negative Liberty], [[Stanford Encyclopedia of Philosophy]], Oct 8, 2007.</ref>

Libertarians contrast two ethical views: [[consequentialist libertarianism]], which is the support for liberty because it leads to favorable consequences, such as prosperity or efficiency and [[deontological libertarianism]] (also known as "rights-theorist libertarianism," "natural rights libertarianism," or "libertarian moralism") which consider moral tenets to be the basis of libertarian philosophy.<ref>Bradford. R. W. 2008. The Two Libertarianisms. [[Liberty (1987)]]. Liberty Foundation.</ref> Others combine a hybrid of consequentialist and deontologist thinking.<ref>{{cite journal |url=http://www.virginialawreview.org/content/pdfs/92/1605.pdf |last=Wolff |first=Jonathan |title=Libertarianism, Utility, and Economic Competition}}</ref>

Another view, [[contractarian libertarianism]], holds that any legitimate authority of government derives not from the consent of the governed, but from contract or mutual agreement. Robert Nozick holds a variation on this view, as does [[Jan Narveson]] as outlined in his 1988 work ''The Libertarian Idea'' and his 2002 work ''Respecting Persons in Theory and Practice''. Other advocates of contractarian libertarianism include the Nobel Laureate and founder of the [[Public Choice theory|public choice]] school of economics [[James M. Buchanan]], Canadian philosopher [[David Gauthier]] and Hungarian-French philosopher [[Anthony de Jasay]].<ref>[http://plato.stanford.edu/entries/contractarianism/#3 Stanford Encyclopedia of Philosophy entry on "Contractarianism"], revised April 4, 2007.</ref><ref>Anthony de Jasay, [http://mises.org/journals/rae/pdf/RAE9_1_5.pdf Hayek: Some Missing Pieces], The Review of Austrian Economics Vol. 9,NO.1 (1996): 107-18, ISSN0889-3047</ref><ref>Hardy Bouillon, Hartmut Kliemt, [http://books.google.com/books?id=j0609gRca84C ''Ordered Anarchy'']Ashgate Publishing, Ltd., 2007, foreward, ISBN 075466113X, 9780754661139</ref>

==Libertarian viewpoints==
The main differences among libertarians relate to the ideal amount of freedom and the means to that freedom.

===Libertarian conservatism===
{{main|Libertarian conservatism}}
Libertarian conservatism, also known as conservative libertarianism (and sometimes called [[right-libertarianism]]), describes certain political ideologies which attempt to meld [[libertarian]] and [[conservative]] ideas, often called "fusionism."<ref name="Feser">Edward Feser, [http://www.lewrockwell.com/orig/feser2.html What Libertarianism Isn’t], [[Lew Rockwell.com]], December 22, 2001.</ref><ref>Ralph Raico, [http://mises.org/story/1784 Is Libertarianism Amoral?], New Individualist Review, Volume 3, Number 3, Fall 1964, 29-36; republished by [[Ludwig von Mises Institute]], April 4, 2005.</ref> Anthony Gregory writes that right, or conservative, "libertarianism can refer to any number of varying and at times mutually exclusive political orientations" such as being "interested mainly in 'economic freedoms'"; following the "conservative lifestyle of right-libertarians"; seeking "others to embrace their own conservative lifestyle"; considering big business "as a great victim of the state"; favoring a "strong national defense"; and having "an Old Right opposition to empire."<ref>Anthony Gregory, [http://www.lewrockwell.com/gregory/gregory127.html Left, Right, Moderate and Radical], [[LewRockwell.com]], December 21, 2006.</ref>

Conservatives hold that shared values, morals, standards, and traditions are necessary for social order while libertarians consider individual liberty as the highest value.<ref>Cathy Young, [http://www.reason.com/news/show/118583.html Enforcing Virtue: Is social stigma a threat to liberty, or is it liberty in action?], review of "Freedom & Virtue: The Conservative Libertarian Debate", ''[[Reason (magazine)|Reason]]'', March 2007.</ref> Laurence M. Vance writes: "Some libertarians consider libertarianism to be a lifestyle rather than a political philosophy... They apparently don’t know the difference between libertarianism and libertinism."<ref>{{cite web |url=http://www.lewrockwell.com/vance/vance133.html |title=Is Ron Paul Wrong on Abortion? |last=Vance |first=Laurence |date=January 29, 2008 |publisher=LewRockwell.com |language=English |accessdate=2008-07-01}}</ref> However, [[Edward Feser]] emphasizes that libertarianism does not require individuals to reject traditional conservative values.<ref name="Feser"/>

Some libertarian conservatives in the United States (known as libertarian constitutionalists) believe that the way to limit government is to enforce the [[United States Constitution]].<ref>{{cite web |url=http://www.lewrockwell.com/dilorenzo/dilorenzo74.html |title=Constitutional Futility |last=DiLorenzo |first=Thomas |publisher=LewRockwell.com |accessdate=2008-07-02}}</ref>

===Objectivism===
{{main|Libertarianism and Objectivism}}
Libertarianism's status is in dispute among those who style themselves [[Objectivism (Ayn Rand)|Objectivists]] (Objectivism is the name philosopher-novelist [[Ayn Rand]] gave her philosophy). Though elements of Rand's philosophy have been adopted by libertarianism, Objectivists (including Rand herself) have condemned libertarianism as a threat to freedom and capitalism. In particular, it has been claimed that libertarians use Objectivist ideas "with the teeth pulled out of them".<ref>[http://www.aynrand.org/site/PageServer?pagename=education_campus_libertarians Ayn Rand’s Q & A on Libertarianism]</ref><ref>[http://www.peikoff.com/opar/home.htm Objectivism: The Philosophy of Ayn Rand]</ref>

Conversely, some libertarians see Objectivists as dogmatic, unrealistic, and uncompromising (Objectivists do not see the last as a negative attribute). According to ''[[Reason (magazine)|Reason]]'' editor [[Nick Gillespie]] in the magazine's March 2005 issue focusing on Objectivism's influence, Rand is "one of the most important figures in the libertarian movement... Rand remains one of the best-selling and most widely influential figures in American thought and culture" in general and in libertarianism in particular. Still, he confesses that he is embarrassed by his magazine's association with her ideas. In the same issue, [[Cathy Young]] says that "Libertarianism, the movement most closely connected to Rand's ideas, is less an offspring than a rebel stepchild." Though they reject what they see as Randian dogmas, libertarians like Young still believe that "Rand's message of reason and liberty... could be a rallying point" for libertarianism.

Objectivists reject the rigorous interpretation of the [[non-aggression principle]] which leads anarchist libertarians to reject the State. For Objectivists, a government limited to protection of its citizens' rights is absolutely necessary and moral or at least a "necessary evil". Objectivists are opposed to all anarchist currents and are suspicious of libertarians' lineage with [[individualist anarchism]].<ref>[http://www.lp.org/organization/history.shtml Libertarian National Committee: Our History]</ref>

===Libertarian progressivism===
{{main|Libertarian progressivism}}
[[Libertarian progressivism]] supports the [[civil libertarianism|civil libertarian]] aspect of freedom as well as supporting the kind of [[economic liberalism|economic]] freedom that emphasizes removing corporate subsidies and other favoritism to special interests, and applying a responsible transition toward freedom - for example, some support a transition approach that includes certain trade restrictions on imports from countries that have very little freedom, and free trade with those countries would be phased in if they move toward more freedom. Libertarian progressives are sometimes [[libertarian Democrat]]s.<ref name=autogenerated3>{{cite web
|url = http://www.democraticfreedomcaucus.org/dfc-platform/
|title = DFC Platform
|publisher = Democratic Freedom Caucus
|accessdate=2007-09-16
}}</ref><ref>{{cite web
|last = Capozzi
|first = Robert
|url = http://www.freeliberal.com/archives/001005.html
|title = Another Approach: The Democratic Freedom Caucus
|publisher = ''[[The Free Liberal]]''
|date = [[2005-04-14]]
|accessdate=2007-09-16
}}</ref>

===Minarchism===
{{main|Minarchism}}
[[Minarchism]] is the belief that a state should exist but that its functions should be minimal because its sole purpose is protecting the rights of the people, including protecting people and their property from the criminal acts of others, as well as providing for national defense.<ref>Kevin A. Carson. [http://www.mutualist.org/id45.html Libertarian Property and Privatization: An Alternative Paradigm]</ref>

===Anarchism===
{{main|Anarchism}}
Anarchism is a political philosophy encompassing many theories and traditions, all opposed to [[government]]. Although anarchism is usually considered to be a left-wing ideology, it always has included individualists and, more recently, [[anarcho-capitalists]] who support pro-property and market-oriented economic structures. Anarchists may support anything from extreme individualism to complete collectivism.

===Geolibertarianism===
{{main|Geolibertarianism}}
[[Geolibertarianism]] is a [[political movement]] that strives to reconcile libertarianism and [[Georgism]] (or '''geoism''').<ref name=autogenerated1>Foldvary, Fred E. Geoism and Libertarianism. The Progress Report. [http://www.progress.org/archive/fold251.htm]</ref> Geolibertarians are advocates of geoism, which is the position that all [[land (economics)|land]] is a common asset to which all individuals have an equal right to access, and therefore if individuals claim the land as their property they must pay [[economic rent|rent]] to the community for doing so. Rent need not be paid for the mere use of land, but only for the right to exclude others from that land, and for the protection of one's title by government. They simultaneously agree with the libertarian position that each ''individual'' has an exclusive right to the fruits of his or her [[Labour (economics)|labor]] as their [[private property]], as opposed to this product being owned collectively by society or the community, and that "one's labor, wages, and the products of labor" should not be taxed. In agreement with traditional libertarians they advocate "full civil liberties, with no crimes unless there are victims who have been invaded."<ref name=autogenerated1 /> Geolibertarians generally advocate distributing the land rent to the community via a [[land value tax]], as proposed by [[Henry George]] and others before him. For this reason, they are often called "single taxers". [[Fred E. Foldvary]] coined the word "geo-libertarianism" in an article so titled in ''Land and Liberty'', May/June 1981, pp. 53-55. In the case of '''geoanarchism''', the voluntary form of geolibertarianism as described by [[Foldvary]], rent would be collected by private associations with the opportunity to secede from a geocommunity (and not receive the geocommunity's services) if desired.

===Left-libertarianism===
{{main|Left-libertarianism}}
Left-libertarianism is usually regarded as doctrine that has an [[egalitarian]] view concerning natural resources, believing that it is not legitimate for someone to claim private ownership of resources to the detriment of others.<ref name=StanfordEncyclopedia/><ref>Prof. Will Kymlicka "libertarianism, left-" in {{cite book |last=Honderich |first=Ted |title=The Oxford Companion to Philosophy |publisher=Oxford U Pr, N Y |location=City |year=2005 |isbn=9780199264797}} See also Steiner, Hillel & Vallentyne. 2000. Left-Libertarianism and Its Critics: The Contemporary Debate. Palgrave Macmillan. p. 1</ref><ref name=autogenerated2>Gaus, Gerald F. & Kukathas, Chandran. 2004. Handbook of Political Theory. Sage Publications Inc. p. 128</ref> Most left libertarians support some form of [[income redistribution]] on the grounds of a claim by each individual to be entitled to an equal share of natural resources.<ref name=autogenerated2 /> Left libertarianism is defended by contemporary theorists such as Peter Vallentyne, Hillel Steiner, [[Michael Otsuka]], and [[Noam Chomsky]].<ref>{{cite book |last=Vallentyne |first=Peter |authorlink= |coauthors=Steiner, Hillel |title=Left-Libertarianism and Its Critics Left-Libertarianism and Its Critics: The Contemporary Debate | origdate = |url= |format= |accessdate= |date= |year=2000 |month= |publisher=Palgrave Macmillan |location=Basingstoke |language= |isbn=9780312236991 |pages=page 1 |quote= | ref = }}</ref> The term is sometimes used as a synonym for [[libertarian socialism]] or simply [[socialism]].<ref>e.g. Faatz, Chris, "Toward[s] a Libertarian Socialism."</ref>

Some members of the U.S. libertarian movement, including the late [[Samuel Edward Konkin III]]<ref>Konkin was the founder of [[agorism]], author of the ''[http://agorism.info/docs/NewLibertarianManifesto.pdf New Libertarian Manifesto]'', and founder of the [http://www.geocities.com/mllweb/ Movement of the Libertarian Left]</ref> and [[Roderick T. Long]],<ref>Long is a well-known writer on left-libertarian [[zine]]s and blogs. One of his descriptions of the political spectrum is in his article for the [[Ludwig von Mises Institute]] entitled [http://www.mises.org/story/2099 Rothbard's "Left and Right": Forty Years Later]</ref> employ a differing definition of left libertarianism. These individuals depart from other forms of libertarianism by advocating strong alliances with the Left on issues such as the [[anti-war movement]],<ref>"In 1978, the Movement of the Libertarian Left was formed out of remaining aboveground activists to restore and continue the alliance Rothbard and Oglesby had begun between the New Left and Libertarians against foreign intervention or imperialism." [http://www.bradspangler.com/blog/archives/288]</ref> and by supporting [[labor union]]s.<ref>[http://radgeek.com/gt/2004/05/01/free_the Rad Geek People’s Daily 2004-05-01 – Free The Unions (and all political prisoners)]</ref><ref>[http://praxeology.net/industrial-radical.htm The Industrial Radical]</ref> Some wish to revive voluntary cooperative ideas such as [[Mutualism (economic theory)|mutualism]].<ref>See for example Kevin Carson's ''Austrian and Marxist Theories of Monopoly Capital: A Mutualist Synthesis''</ref>

==Current libertarian movements==

===Europe===
In France, [[Liberté chérie (association)|Liberté chérie]] ("Cherished Liberty") is a pro-liberty think tank and activist association formed in 2003. Liberté chérie gained significant publicity when it managed to draw 30,000 Parisians into the streets to demonstrate against government employees who were striking.<ref>[http://www.liberte-cherie.com/a32-A_Paris_les_antigreves_defilent_pour_soutenir_le_projet_Fillon.html ''In Paris, « antistrike » rally to support Prime Minister Mr. Fillon project'' ], [[Le Monde]], 2003.</ref><ref>Andrew Schwartz, [http://www.theatlasphere.com/columns/040112_schwartz_herold.php An Interview with Sabine Herold on Politics, France, and Freedom], January 12, 2004.</ref>

In Germany, a "Libertäre Plattform in der FDP" ("Liberty Caucus within the [[Free Democratic Party (Germany)|Free Democratic Party]]") was founded in 2005.

The [[Russian Libertarian Movement]] (''Rossiyskoye Libertarianskoye Dvizhenie'', RLD; 2003-2006) was a short-lived political party in the Russian Federation, formed by members of the [[Institute of Natiology (Moscow)]], a libertarian [[Think tank|think-tank]]. After electoral failure and government failure, it disbanded.

===Commonwealth of Nations===
The [[Libertarian Alliance]] was an early libertarian educational group. It was followed by British think tanks such as the [[Adam Smith Institute]]. A British [[Libertarian Party (United Kingdom)|Libertarian Party]] was founded on January 1, 2008.

===United States===
Well known libertarian organizations include the [[Center for Libertarian Studies]], the [[Cato Institute]], the [[Foundation for Economic Education|Foundation for Economic Education (FEE)]], the [[International Society for Individual Liberty|International Society for Individual Liberty (ISIL)]] and the [[Ludwig von Mises Institute]]. The [[Libertarian Party (United States)|Libertarian Party of the United States]] is the world's first such party.

The activist [[Free State Project]], formed in 2001, works to bring 20,000 libertarians to the state of [[New Hampshire]] to influence state policy. They had signed up 1,033 people by 2008. Similar, but less successful, projects include the [[Free West Alliance]] and [[Free State Wyoming]]. (There is also a [http://www.europeanfreestate.net/ European Free State Project].)

The [[Tea Party Movement]] is arguably a recent revival of mainstream libertarianism in the United States. [[Ron Paul]] and his son [[Rand Paul]]'s increasing visibility and popularity with the electorate could also be signs of a revival of libertarianism in mainstream political consciousness in the United States.

===Latin America===
[[Costa Rica]]'s [[Movimiento Libertario]] ("Libertarian Movement") is libertarian party which holds roughly 10% of the seats in Costa Rica's national assembly (legislature). The Limón REAL Project seeks for autonomy in a province in Costa Rica.<ref>[http://www.limonreal.com Limón REAL - A Free and Autonomous Region].</ref>

==See also==
*[[Anarchism]]
*[[Praxeology]]
*[[Socialism]]

==References==
{{reflist|2}}

==Bibliography==
<div class="references-small" style="-moz-column-count:2; column-count:2;">
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* {{cite news|first=Brooke Shelbey |last=Biggs |title=You're Not the Boss of Me! |work=[[Wired magazine|Wired]] |date=[[21 July]] [[1997]]}}
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* [[Brian Doherty]] ''Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement'', [[PublicAffairs]], (2007)
* Franzen, Don. ''Los Angeles Times Book Review Desk'', review of "Neither Left Nor Right". January 19, 1997. Franzen states that "Murray and Boaz share the political philosophy of libertarianism, which upholds individual liberty--both economic and personal--and advocates a government limited, with few exceptions, to protecting individual rights and restraining the use of force and fraud." ([http://www.libertarianism.org/reviews.html Review on libertarianism.org]). MSN ''[[Encarta]]''<nowiki>'</nowiki>s [http://encarta.msn.com/encyclopedia_761551995/Libertarianism.html entry on Libertarianism] defines it as a "political philosophy" (Both references retrieved June 24, 2005). The ''Encyclopedia Britannica'' defines Libertarianism as "Political philosophy that stresses personal liberty." ([http://www.britannica.com/ebc/article?tocId=9370164&query=libertarian link], accessed June 29, 2005)
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* {{cite book|last=Friedman |first=Milton | chapterurl = http://www.druglibrary.org/special/friedman/socialist.htm |chapter=The Drug War as a Socialist Enterprise |title=Friedman & Szasz on Liberty and Drugs |editor=Arnold S. Trebach and Kevin B. Zeese (eds.) |location=Washington, D.C. |publisher=The Drug Policy Foundation |year=1992}}
* {{cite web|last=Gillespie |first=Nick |url=http://www.reason.com/0503/ed.ng.editors.shtml |title=Rand Redux |work=Reason |date=March 2005}}
* {{cite web|last=Goldberg |first=Jonah |url=http://www.nationalreview.com/goldberg/goldberg121201.shtml |title=Freedom Kills |work=[[National Review|National Review Online]] |date=[[December 12]] [[2001]]}}
* {{cite book|editor=Harwood, Sterling (ed.) |title=Business as Ethical and Business as Usual |location=Belmont, CA |publisher=Wadsworth Publishing}}
* {{cite book|last=Hayek |first=F.A. |title=Why I am not a Conservative |publisher=[[University of Chicago]] Press |year=1960 |url=http://hem.passagen.se/nicb/cons.htm}}
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* {{cite web|last=Huben |first=Michael |url=http://world.std.com/~mhuben/faq.html#nolan |title=The World's Smallest Political Quiz. (Nolan Test) |work=A Non-Libertarian FAQ |date=[[March 15]] [[2005]] |accessdate=2006-07-10}}
* {{cite web|last=Kangas |first=Steve |url=http://www.huppi.com/kangaroo/L-chichile.htm |title=Chile: The Laboratory Test |work=Liberalism Resurgent |accessdate=2006-07-10}}
* {{cite book|last=LaFollette |first=Hugh |chapter=Why Libertarianism is Mistaken |editor=Harwood, Sterling (ed.) |title=Business as Ethical and Business as Usual |location=Belmont, CA |publisher=Wadsworth Publishing |pages=58–66}}
* {{cite book|last=Lester|first=J.C. |title=Escape from Leviathan: Liberty, Welfare and Anarchy Reconciled|location=Basingstoke, UK/New York, USA |publisher=Macmillan/St Martin's Press|year=2000}}
* {{cite journal |last=Lester |first=J.C. |url=http://www.la-articles.org.uk/wwwl.pdf |title=What's Wrong with "What's Wrong with Libertarianism": A reply to Jeffrey Friedman |journal=Liberty |issue=August |year=2003}}
* {{cite web|last=Levy |first=Jacob |url=http://volokh.com/2003_03_16_volokh_archive.html#200013465 |title=Self-Criticism |work=[[The Volokh Conspiracy]] |date=[[March 19]] [[2003]] |accessdate=2006-07-10}}
* {{cite web|last=Machan |first=Tibor R. |url=http://www.liberalia.com/htm/tm_minarchists_anarchists.htm |title=Revisiting Anarchism and Government |accessdate=2006-07-10}}
* {{cite web|authorlink=James Madison |last=Madison |first=James |title=The Federalist No. 10: The Utility of the Union as a Safeguard Against Domestic Faction and Insurrection (continued) |work=Daily Advertiser |date=[[November 22]] [[1787]] |url=http://www.constitution.org/fed/federa10.htm |accessdate=2006-07-10}}
* {{cite book|authorlink=John Stuart Mill |last=Mill |first=John Stuart |chapter=Introduction |title=[[On Liberty]] |location=London, UK |publisher=Longman, Roberts & Green |date=1869}}
* {{cite book|last=Nelson |first=Quee |chapter=Quotations Concerning Libertarianism (Often Called Classical Liberalism) |editor=Harwood, Sterling (ed.) |title=Business as Ethical and Business as Usual |location=Belmont, CA |publisher=Wadsworth Publishing |page=67}}
* {{cite book|last=Nettlau |first=Max |title=A Short History of Anarchism|year=2000 |page=75}}
* {{cite book|last=Partridge |first=Ernest | chapterurl = http://gadfly.igc.org/papers/liberty.htm |chapter=With Liberty and Justice for Some |title=Environmental Philosophy |editor=[[Michael Zimmerman]], [[Baird Callicott]], [[Karen Warren]], [[Irene Klaver]], [[John Clark]] (eds.) |year=2004 |accessdate=2006-07-10}}
* Rand, Ayn. [http://www.aynrand.org/site/PageServer?pagename=education_campus_libertarians "Ayn Rand’s Q&A on Libertarians"], from a 1971 interview.
* {{cite web|last=Rockwell |first=Lew |coauthors=Friedman, Milton |url=http://www.mises.org/fullstory.aspx?control=92&id=79 |title=Friedman v. Rockwell |work=Chronicles |date=December 1998 |accessdate=2006-07-10}}
* {{cite news|last=Sanchez |first=Julian |url=http://www.reason.com/interviews/guevara.shtml |title=The Other Guevara |work=[[Reason (magazine)|Reason]] |date=[[August 12]] [[2003]] |accessdate=2006-07-10}}
* {{cite web|last=Yglesias |first=Matthew |url=http://yglesias.typepad.com/matthew/2005/04/health_is_forev.html |title=Health is Forever |date=[[April 15]] [[2005]] |accessdate=2006-07-10}}
* {{cite news|last=Young |first=Cathy |url=http://www.reason.com/0503/fe.cy.ayn.shtml |title=Ayn Rand at 100 |work=[[Reason (magazine)|Reason]] |date=March 2005 |accessdate=2006-07-10}}
* {{cite web |last=Zwolinski |first=Matt |url=http://www.iep.utm.edu/l/libertar.htm|title=Libertarianism |work=The Internet Encyclopedia of Philosophy |date=December 2007 |accessdate=2008-03-28}}
* {{cite web|publisher=[[Advocates for Self Government]] |title=The World's Smallest Political Quiz |url=http://www.self-gov.org/ |accessdate=2006-07-10}}
* {{cite web|url=http://capitalism.org/tour/preamble5b.htm |title=The Capitalism Tour |work=[[Capitalism Magazine]] |accessdate=2006-07-10}}
* {{cite web|publisher=[[Advocates for Self Government]] |title=Russell Means—Libertarian |url=http://www.self-gov.org/means.html |accessdate=2006-07-10}}
* {{cite web| puslisher = City Journal |title=Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement |url=http://www.city-journal.org/html/rev2007-04-20pb.html |accessdate=2006-07-10}}
</div>

==External links==
===General===
* [http://www.cato.org Cato Institute]
* [http://lewrockwell.com LewRockwell.com]
* [http://www.mises.org Mises Institute]
* [http://www.reason.com Reason Magazine]
* [http://books.google.com/books?id=yxNgXs3TkJYC&printsec=frontcover&dq=libertarian+encyclopedia The Encyclopedia of Libertarianism]

===Articles===
* [http://www.mises.org/story/910 Left and Right: The Prospects for Liberty] by [[Murray Rothbard]]
* [http://mises.org/story/2801 Are Libertarians "Anarchists"?] - Article by Murray N. Rothbard
* [http://www.isil.org/resources/introduction.swf "The Philosophy of Liberty"] ([[Adobe Flash|Flash]]) at the [http://www.isil.org International Society for Individual Liberty]

[[Category:Ideologies]]

History of money and banking

2011-01-01T20:05:17Z

213.84.251.91: /* France */

[[Trade]] is as old as humanity itself. Long-distance commerce is according to some sources at least 150,000 years old.{{Fact|Quoted from the Wikipedia page on [[Wikipedia:Trade|Trade]], could not check this personally: Watson, Peter (2005). ''"Ideas : A History of Thought and Invention from Fire to Freud."'' HarperCollins. ISBN 0-06-621064-X. Introduction.}} It is ten times older than [[Wikipedia:Agriculture|farming]].<ref name="Ridley_trade">Matt Ridley. [http://www.ted.com/talks/matt_ridley_when_ideas_have_sex.html "Matt Ridley: When ideas have sex"] (video), 11:00-11:30, filmed in July 2010. Referenced 2010-07-23.</ref> Most types of food and perishables could be only traded locally, preferred were durable goods with large value for a small weight. Some of them have begun to be used as [[money]], examples as diverse as cattle, seashells, beads, nails, tobacco, cotton, and so on; but since the 17th century the most common forms have been metal coins, paper notes, and bookkeeping entries.<ref name="Britannica_money">Encyclopedia Britannica. [http://www.britannica.com/EBchecked/topic/389170/money "Money"], referenced 2009-08-09.</ref> The wide use of cattle as money in primitive times survives in the words like pecuniary (coming from the Latin ''pecus'', meaning cattle) and fee (Old English ''feoh'', ‘cattle owned’, still used as livestock in German ''Vieh'').<ref name="Cow_Words">[http://www.billcasselman.com/unpublished_works/cow_words_one.htm "Cow Words & financial Origin of Words like Fee, Cattle, Pecuniary]" from Bill Casselman's Canadian Word of the Day, referenced 2009-08-09.</ref>

==Ancient History==
Ancient times record the rise of great civilizations, growth of trade and development of new technologies. They also show many experiments with [[price controls]], inflation, and even attempts at total control over the market.

===First Coins===
The use of metal for [[money]] can be traced back to [[Wikipedia:Babylon|Babylon]] more than 2000 years BC, but standardization and certification in the form of ''[[Coin|coinage]]'' did not occur except perhaps in isolated instances until the 7th century BC.<ref name="Britannica_money" />

One of the precursors were metal ingots. On [[Wikipedia:Minoan civilization|Crete]] were found [[Wikipedia:Oxhide ingot|copper ingots]] from 17th century BC, in the shape of oxskins, with writings about their purity and full weight. <ref name="Gaettens_Money">Richard Gaettens. ''Geschichte der Inflationen Von Altertum bis zum Gegenwart'' (German: History of Inflations from Old Ages to the Present), Einleitung (Introduction) p. 15-21. ISBN: ISBN 3-87045-211-0. Referenced 2010-01-16.</ref> Historians generally ascribe the first use of coined money to [[Wikipedia:Croesus|Croesus]], king of [[Wikipedia:Lydia|Lydia]], a state in [[Wikipedia:Anatolia|Anatolia]]. The earliest coins were made of [[Wikipedia:Electrum|electrum]], a natural mixture of [[gold]] and [[silver]], and were crude, bean-shaped ingots bearing a primitive punch mark certifying to either weight or fineness or both.<ref name="Britannica_money" /> Some theorize, that the first stamped coins were issued by priests, and that the first mints were in temples.<ref name="Percy_coins">Gardner, Percy. [http://www.archive.org/details/typesgreekcoins00gardgoog "The types of Greek coins; an archaeological essay (1883)"], Chapter 1. Publisher: Cambridge [Eng.] University Press, 1883. Digitized book at the ''Internet Archive''. Referenced 2010-08-06.</ref>

[[Coin]]s made payment by "tale", or count possible, rather than weight, greatly facilitating commerce. But this in turn encouraged "[[Wikipedia:Coin clipping|clipping]]" (shaving off tiny slivers from the sides or edges of coins) and "sweating" (shaking a bunch of coins together in a leather bag and collecting the dust that was so knocked off). The result is described by [[Gresham's Law]] ("bad money drives out good" when there is a fixed rate of exchange between them): good, heavy coins were held for their metallic value, while light coins were passed on to others. In time the coins became lighter and lighter and prices higher and higher. To correct this problem, the coins were weighed for large transactions, and there was pressure for recoinage. The problem was largely ended by the "[[Wikipedia:Milled coinage|milling]]" of coins (serrations around the circumference of a coin), which began in the late 17th century. A more serious problem was, that the sovereigns often attempted to benefit from the [[monopoly]] of coinage.<ref name="Britannica_money" />

{{See also|Coin}}

===Banking in Ancient Times===
The first precursors of [[bank]]s can be traced as far back as ancient [[Wikipedia:Mesopotamia|Mesopotamia]], where temples, royal palaces, and some private houses served to store valuable commodities like grain, the ownership of which could be transferred via written receipts. There are records of loans by the temples of [[Wikipedia:Babylon|Babylon]] as early as 2000 BC; temples were considered safe, because they were sacred places watched over by gods, and should be protected from theft. Companies of traders in ancient times provided banking services connected to the buying and selling of goods. Many of these early "protobanks" dealt primarily in coin and bullion, money changing and supplied foreign and domestic coins of the correct weight and fineness.<ref name="Britannica_money" /> Around the year 3300 B.C. the temple of Uruk owned the land it exploited, received offerings and deposits and granted loans to farmers and merchants of livestock and grain, probably the first bank in history.<ref name="De_Soto_Banking">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 40-41, referenced 2009-10-29.</ref>

===Sumer===
One of the first recorded reforms to remove corruption comes from [[Wikipedia:Sumer|Sumer]]. King [[Wikipedia:Urukagina|Urukagina]], reigning from about 2350 BC, removed excessive regulations and bureaucracy. What little remains of the records from that time contains possibly the first reference to a word for 'freedom'<ref name="Schuettinger_Price_controls">Robert L. Schuettinger and Eamonn F. Butler. "[[Forty Centuries of Wage and Price Controls]]", Chapter 1 - Ancient World, p. 9-18, referenced 2009-08-09.</ref>, ''[[Wikipedia:Ama-gi|amargi]]'' (some sources interpret it as an exemption of taxes or cancellation of debt<ref name="Hudson_Debt">Dr. Michael Hudson, ISLET. [http://michael-hudson.com/articles/debt/ArchaeologyDebt.html "The New Economic Archaeology of Debt"], CDL Press, Baltimore, 2002, referenced 2009-08-09.</ref>).

===Babylon===
In [[Wikipedia:Babylon|Babylon]], the [[Wikipedia:Code of Hammurabi|Code]] of [[Wikipedia:Hammurabi|Hammurabi]], "the protecting king", explicitly quoted many wages and prices. The decline of the number of merchants and an increase in bureaucracy was followed by an overall economical decline.<ref name="Schuettinger_Price_controls" /> It strictly regulated the rights associated with it, as well as commercial activity, limiting interest rates and even establishing public loans at 12.5 percent. Partnership agreements were also regulated, as was the keeping of accounts of operations.<ref name="De_Soto_Banking" />

===Ancient Egypt===
The rulers of [[Wikipedia:Ancient Egypt|Egypt]] regulated the grain crops, then directed it, until finally land become the property of the monarch to be rented out. "There was a real omnipresence of the state... all prices were fixed by fiat at all levels. There was a whole army of inspectors. There was nothing but inventories, censuses of men and animals. In villages, where disgusted farmers ran away, those, who remained, were responsible for the absentees' production." Egypt collapsed economically and politically at the end of the third century BC.<ref name="Schuettinger_Price_controls" />

Few people were wealthy, but banking was widespread and used by many villagers, farmers, merchants and craftsmen, doing business through banks and making payments out of their deposits and bank accounts. The [[Wikipedia:Ptolemaic dynasty|Ptolemies]] realized how profitable private banks were, and started the first government-run bank which would conduct business with the "prestige" of the state, hold custody of tax revenues and invest in its benefit. The main innovation of Egyptian banking was centralization: the government bank in [[Wikipedia:Alexandria|Alexandria]] had branches in the most important towns and cities. It has outlived its founding dynasty and was preserved during Roman rule.<ref name="De_Soto_Egypt">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 51-53, referenced 2009-10-29.</ref>

===Ancient Greece===
[[Wikipedia:Solon|Solon]], on taking office in [[Wikipedia:Classical Athens|Athens]] in 594 BC, instituted a partial debasement of the currency (there is some disagreement on this matter{{Fact|reason="Taken from Wikipedia, could not check this personally: Stanton G.R. Athenian Politics c800-500BC: A Sourcebook, Routledge, London (1990), page 61 note 4."}}). For the next four centuries the [[Wikipedia:Greek drachma|drachma]] had an almost constant silver content (67 grains of fine silver until [[Wikipedia:Alexander the Great|Alexander]], 65 grains after) and became the standard coin of trade in Greece and in much of Asia and Europe. Even after the Roman conquest of Greece in roughly the 2nd century BC, the drachma continued to be minted and widely used.<ref name="Britannica_money" /> The Greek city-states were largely independent, though there was an awareness of Hellenic identity. Each city-state had its own coinage. There was an active trade in these currencies, and probably few laws limiting citizens of a given city-state to the use of their own money.<ref name="Edwards_Greece">James Rolph Edwards. [http://mises.org/journals/jls/4_1/4_1_7.pdf "Monopoly and Competition in Money"] (pdf), The Journal of Libertarian Studies Vol.IV, No.1, Winter 1980. Referenced 2010-06-26.</ref> Debasement of the currency either for state profit or for the accommodation of changes in the ratio was rare in Greek history (with the notable exception of [[Wikipedia:Dionysius I of Syracuse|Dionysius]] of Syracuse<ref name="Chodorov_Dionysius">Frank Chodorov. [http://mises.org/daily/3936 "Tyranny and Finance"], from ''Mises Daily'', December 30, 2009; excerpted from chapter 9 of [http://mises.org/resources/3091 The Rise and Fall of Society]. Referenced 2010-09-19.</ref><ref name="Bullock_Dionysios">Jesse Bullock Charles. [http://www.archive.org/details/economicessays029061mbp "Economic Essays (1936)"], p. 502-519. "''Having borrowed money from citizens of Syracuse and being pressed for repayment, he ordered all the coin in the city to be brought to him, under penalty of death. After taking up the collection, he restamped the coins, giving to each drachma the value of two drachmae, so that he was enabled to pay back both the original loan and the money he had ordered brought to the mint.''" Referenced 2010-09-19.</ref>). On the contrary, there are cases of actually raising the standard of the coinage for the greater prestige which a coinage of high intrinsic value seemed to offer. In the sixth century B.C., the Euboean unit was increased in a number of cities by about five grains, in emulation of an increase introduced by [[Wikipedia:Peisistratos|Pisistratus]] in Athens.<ref name="Groseclose_Greece">Elgin Groseclose. [http://mises.org/books/money.pdf "Money And Man - A Survey of Monetary Experience"] (pdf), Bimetallism and the Rise of the Gold Standard, p.146-147. Referenced 2010-06-25.</ref>

Banking, bank fraud and even banking crises were very well known. After the revolt against [[Wikipedia:Mithridates VI of Pontus|Mithridates]], a serious banking crisis in [[Wikipedia:Ephesus|Ephesus]] followed. The banking industry received here its first express, historically-documented privilege, which established a ten-year deferment on the return of deposits.<ref name="De_Soto_Greece">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 41-51, referenced 2009-10-29.</ref>

===Ancient Rome===
{{Main|Money and banking in Ancient Rome}}
From at least the 4th century B.C.. the Roman government bought grain in times of shortage and resold it at a lower price. At 58 B.C. was the law changed: every citizen should become free wheat. To the surprise of the government, most farmers left the country to live in Rome without working. To deal with the increasing economical problems, the emperors gradually began to devalue their currency.<ref name="Schuettinger_Rome">Robert L. Schuettinger and Eamonn F. Butler. "[[Forty Centuries of Wage and Price Controls]]", Chapter 2 - The Roman Republic and Empire, p. 19-27, referenced 2009-08-09.</ref>

The silver [[Wikipedia:Denarius|denarius]], patterned after the Greek drachma, was introduced about 212 BC. Soon after, the prior copper coin (''[[Wikipedia:As (Roman coin)|aes]]'', or libra) began to be debased until, by the onset of the empire, its weight had been reduced from 1 pound (12 Roman ounces) to half an ounce. By contrast the silver denarius and the gold [[Wikipedia:Aureus|aureus]] (introduced about 87 BC) suffered only minor debasement until the time of [[Wikipedia:Nero|Nero]] (AD 54), when almost continuous tampering with the coinage began. The metal content of the gold and silver coins was reduced, while the proportion of alloy was increased to three-fourths or more of its weight. <ref name="Britannica_money" />

The prices have risen in response and reached unprecedented heights under Emperor [[Wikipedia:Diocletian|Diocletian]]. The once silver denarius was by then a tin plated copper coin, silver and gold coins were no longer in circulation. Diocletian issued a new denarius from pure copper and instituted further reforms, to fix still rising prices and the wages of many workers. Death was the punishment for dealing at higher prices or hoarding, and much blood was shed before the law was finally ignored. A tax reform has bound the lower classes to the soil and made them effective serfs.<ref name="Schuettinger_Rome" />

The silver currency was basically abandoned, so much that the government started to demand payment of taxes in kind and in services instead of coin. [[Wikipedia:Constantine I|Constantine]] issued the golden [[Wikipedia:Solidus (coin)|solidus]] in large numbers (but taxes had to be paid in gold [[Wikipedia:Precious metal#Bullion|bullion]], as the government had trouble knowing how debased its coinage was). But the inflation of lesser coins continued, even cities were free to make their own token coins. Most people had to buy gold coins to pay taxes with, those who couldn't afford it lost their lands or became delinquents. So there was a relatively stable 'gold standard' used by the growing number of soldiers and civil servants, and an increasingly worthless currency for the rest of the citizenry. A rapid decline of their fortunes and personal freedoms followed.<ref "Peden_Inflation_Fall_of_Rome">Joseph R. Peden. [http://mises.org/story/3663 "Inflation and the Fall of the Roman Empire"], posted on 2009-09-07 in Mises Daily, referenced 2009-09-11.</ref>

And so has debasement contributed to the collapse of the empire.

Banking was highly developed and subject to [[Wikipedia:Roman Law|Roman Law]], money deposits were to be safeguarded and not lent out. A specialty were banker associations or ''societates argentariae'', where members supplied capital to form them, but they had unlimited liability to prevent fraud. Most banks failed during the economic crises of the third and fourth centuries A.D.<ref name="De_Soto_Rome">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 53-58, referenced 2009-10-29.</ref>

===Ancient China===
In China, the economic doctrines of [[Wikipedia:Confucius|Confucius]] held that "government interference is necessary for economic life and competition should be reduced to a minimum." A large bureaucracy was formed to regulate in detail commercial life and prices. In natural calamities, like famines, the merchants were not allowed to raise prices. The collection and raising of crops was regulated similarly.

But the results were not very favorable and the officials learned the lesson: "...whenever the government adopted any minute measure, it failed, with few exceptions.... since the Ch'in dynasty (221-206 B.C.), the government of modern China has not controlled the economic life of the people as did the government of ancient China. "

Even in those times, there were economic thinkers pointing out the rising prices were caused by inflation. [[Wikipedia:Ye Shi|Yeh Shih]] (A.D. 1150-1223), for instance, anticipated by several centuries the principle known as [[Gresham's Law]]: "The men who do not inquire into the fundamental cause," he wrote, "simply think that paper should be used when money is scarce. But as soon as paper is employed, money becomes still less. Therefore, it is not only that the sufficiency of goods cannot be seen, but also that the sufficiency of money cannot be seen."<ref name="Schuettinger_Price_controls" />

==Middle Ages==
The Middle Ages saw widespread use and standardization of coins, and their extensive debasement, in almost every country in Europe.<ref name="Rothbard_livre">[[Murray N. Rothbard]]. [http://mises.org/books/mysteryofbanking.pdf "The Mystery of Banking"] (pdf), online version, Chapter I. Money: its Importance and Origins, p.12, referenced 2009-08-20.</ref> But there were also clear ideas about what constitutes good money. [[Charlemagne]] made his son Louis swear to never make the coinage worse. [[Louis the Pious]] kept his word and the following kings of this line kept the same coin. But the later Frankish emperors began to devalue their coins, and did so frequently. The dean of the church of Prague, [[Cosmas of Prague|Cosmas]] (~1045-1125), reports of changes in coinage 3 to 4 times a year, their effect worse than pestilence, looting armies and arson.<ref name="Kosmas_Letopis">Kosmas. [http://www.archive.org/details/kosmwletopisesk00tomegoog "Kosmůw Letopis český s pokračowáními kanowníka Wyšehradského a mnicha Sázawského (1882)"] (in ''Czech''), p.37-38; [http://ia700302.us.archive.org/16/items/kosmwletopisesk00tomegoog/kosmwletopisesk00tomegoog.pdf pdf], on ''The Internet Archive''. [http://daten.digitale-sammlungen.de/~db/bsb00000683/images/index.html?seite=2 "Cosmas <Pragensis> / Bretholz, Berthold: Die Chronik der Böhmen des Cosmas von Prag, Berlin, 1923"] ''(in Latin)'', on ''Monumenta Germaniae Historic'', p.59. Referenced 2010-12-02.</ref> Thomas Aquinas, the great sage of the 13th century. stressed the importance of an unchanging coin and demanded from the rulers to hold to the true inner worth of things. [[Nicholas Oresme]], one of the first economic theoreticians, demonstrated the effects of currency depreciation. And according to the philosopher [[Gabriel Biel]], to withdraw a good coin and issue a less worthy one with the same nominal value is clearly fraud.<ref name="Gaettens_Closing">Richard Gaettens. ''Geschichte der Inflationen Von Altertum bis zum Gegenwart'' (German: History of Inflations from Old Ages to the Present), ''Schlusswort'' (Closing words) p. 302. ISBN: ISBN 3-87045-211-0. Referenced 2010-11-01.</ref>

The devaluations were certainly not rare. For example, in 1200, the French ''[[Wikipedia:Livre tournois|livre tournois]]'' was defined as 98 grams of fine silver; by 1600 it equaled only 11 grams. When the [[Wikipedia:Gold Dinar|dinar]], the coin of the [[Wikipedia:Saracen|Saracens]] in [[Wikipedia:Al-Andalus|Spain]] was first coined at the end of the seventh century, it consisted of 65 gold [[Wikipedia:Grain (mass)|grains]]. The Saracens kept the dinar’s weight relatively constant, and as late as the middle of the twelfth century, it still equaled 60 grains. At that point, the Christian kings [[Wikipedia:Reconquista|conquered]] Spain, and by the early thirteenth century, the dinar, called [[Wikipedia:Spanish maravedí|maravedi]], had been reduced to 14 grains of gold. The [[gold]] coin was soon too lightweight to circulate, and was converted into a [[silver]] coin weighing 26 grains of silver. But by the mid-fifteenth century, the maravedi consisted of only 1½ silver grains, and was again too small to circulate.<ref name="Rothbard_livre" />

The modern banking industry was born and discovered the profits and bankruptcies associated with [[fractional reserve banking]].
{{See also|Inflations}}

===China===
[[Wikipedia:History of China|China]] was a pioneer of banking practices. Deposit banking ''per se'' began in the eighth century A.D., when shops would accept valuables, in return for warehouse receipts, and receive a fee for keeping them safe. After a while, the deposit receipts of these shops began to circulate as money. Finally, after two centuries, the shops began to issue and lend out more receipts than they had on deposit; they had caught on to fractional reserve banking.<ref name="Rothbard_History" />

Printing was first invented in ancient China and paper money began there as well. The government sought a way to avoid physically transporting gold collected in taxes from the provinces to the capital at Peking. In the mid-eighth century, provincial governments began to set up offices in the capital selling paper drafts which could be collected in gold in the provincial capitals. In 811–812, the central government outlawed private firms involved in this business and established its own system of drafts on provincial governments (called "[[Wikipedia:Chinese currency#Imperial China|flying money]]").<ref name="Rothbard_paper">[[Murray N. Rothbard]]. [http://mises.org/books/mysteryofbanking.pdf "The Mystery of Banking"] (pdf), online version, Chapter IV. The Supply of Money, p.56-57, referenced 2009-08-20.</ref>

The governments have tried to keep their issues constant at first, and to redeem them at predefined times. But they soon turned to solving their fiscal troubles with printing money. In the province of [[Wikipedia:Sichuan|Szechuan]], the first 'extra issues' were made in 1072. The expansion continued until around 1200 was the currency started to be abandoned. In [[Wikipedia:Song Dynasty|Southern Sung]], from the beginning of inflation in 1176 it took to the thirteenth century for a serious decline in value. In northern [[Wikipedia:Jin Dynasty (1115–1234)|Chin]] was the amount of paper money held stable from 1153 until 1190. Following various experiments, attempts to pay for military expenditures have completely destroyed its value by the second decade of 13th century.

After the [[Wikipedia:Mongol Empire|Mongols]] entered China, in 1260 were the various regional currencies replaced with a national currency fixed to silver. The issues started to multiply and even the growth of the area, where they were legal tender, didn't prevent their fall in value. Several reforms later, by 1356 was the paper money practically worthless and the dynasty ended in 1368. The [[Wikipedia:Ming Dynasty|Ming]] were similarly reckless in their monetary policy and by 1500 were the notes becoming collector's items. After some 500 years experience, the Chinese abandoned the use of state-sponsored paper money and returned to a combination of hard currency and private bank notes.<ref name="Tullock_paper">Gordon Tullock. [http://www.terry.uga.edu/~last/classes/4100/readings/tullock_ehr.pdf "Paper money - a cycle in Cathay"] (pdf), The Economic History Review, Second series, Vol. IX, No. 3, 1957, referenced 2009-09-14.</ref> The government superseded the paper money by a metallic currency, and for ever abolished paper money issued by the State.<ref name="Vissering_Chinese">Vissering, Willem. [http://www.archive.org/details/cu31924023306875 "On Chinese currency. Coin and paper money"], Chapter VI, p.218. Publisher: Leiden, E. J. Brill 1877, digitized book at the Internet Archive. Referenced 2010-08-09.</ref>

===Banking in Europe===
The fall of the Roman Empire meant the feudalization of economic and social relationships. The reduction in trade and division of labor dealt a heavy blow to financial activities, especially banking, the effects lasting for centuries, the revival started by the end of 11th century and beginning of 12th (from this period stems also the practice of [[Wikipedia:Double-entry bookkeeping system|double-entry bookkeeping]].) Only monasteries were secure enough to guard economic resources. Particularly important were the [[Wikipedia:Knights Templar|Templars]], an internationally active military and religious order, they kept deposits in safe custody, transferred funds and made loans of their own resources. Their growing prosperity aroused the fear and envy of many, until [[Wikipedia:Philip IV of France|Philip the Fair]], the King of France, disbanded the order to get their riches.

The bankers preserved their deposits fully at first, but later began to use them for their own purposes, creating deposits and granting credits out of nowhere. Since the canonical law banned the charging of [[interest]] on loans, bankers would instead pay "penalties" for "delays" in payment and in effect pay interest on a disguised loan, and justified any misappropriations on this basis. [[Fractional reserve banking]] has created periods of growth, followed by an economical crisis and failure of banks.

The authorities failed to enforce sound banking practices, and often granted banks a government license to operate with a fractional reserve, while taking advantage of easy loans to finance governments and public officials. Some rulers created government banks to reap the profits. But banks were still required to guarantee deposits.<ref name="De_Soto_Medieval">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 3. Bankers in the Late Middle Ages, p. 59-69, referenced 2009-11-05.</ref>

===Medieval Italy===
In western Europe, the use of private bank notes and deposits, redeemable in specie, had begun in fourteenth century [[Wikipedia:History of the Republic of Venice|Venice]]. Firms granting credit to consumers and businesses existed in the ancient world and in medieval Europe, but these were "money lenders" who loaned out their own savings. "Banking" in the sense of lending out the savings of others only began in England with the "scriveners" of the early seventeenth century. (The scriveners were clerks who wrote contracts and bonds and so were in a position to learn of mercantile transactions and engage in money lending and borrowing.)<ref name="Rothbard_History">Murray N. Rothbard. [http://mises.org/books/historyofmoney.pdf "History of Money"] (pdf), Private Bank Notes, p. 56-57, referenced 2009-08-18.</ref> The term banker originated in Florence, where bankers were called either ''banchieri'' or ''tavolieri'', because they worked sitting behind a bench (''banco'') or table (''tavola'').<ref name="De_Soto_Banking" />

And it was in [[Wikipedia:History of Florence|Florence]], where the growing banking industry gained great importance by the fourteenth century. From that time have the bankers begun to misuse a portion of their deposits, inevitably causing a boom and a recession. This recession was triggered not only by Neapolitan princes’ massive withdrawal of funds, but also by England’s inability to repay its loans and the drastic fall in the price of Florentine government bond. The public debt was financed by these speculative new loans created. A general crisis of confidence occurred, causing the most important banks to fail between 1341 and 1346. The recovery did not come until after the [[Wikipedia:Black Death|plague]].

The powerful [[Wikipedia:Medici bank|Medici bank]] initially didn't accept demand deposits. Later on, their reserve ratio gradually worsened, and by its end dropped even below 10 percent. The bank was ruined by the end of the 14th century like its competitors, and all of its assets fell into the hands of creditors.<ref name="De_Soto_Italy">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 70-75, referenced 2009-11-07.</ref>

==Modern History==
The modern times were witness to the rise of central banks. Experiments with using multiple metals for coinage and bimetallism have led to the domination of the Gold Standard. Fractional reserve banknotes have been widespread by the end of 18th century and the trend continued. They have turned into paper money in most countries by the beginning of World War I.<ref name="Hulsmann_Modern_Banking">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 15. Fiat Monetary Systems in the Realm of the Nation-State p.199-203, referenced 2009-08-20.</ref>

But coins still freely circulated for a long time. For example, the [[Wikipedia:Spanish dollar|Spanish silver dollar]] was from the sixteenth to the nineteenth century the relatively most stable and least debased coin in the Western world, and thus the world's outstanding coin.<ref name="Rothbard_Spanish">[[Murray N. Rothbard]]. [http://mises.org/books/historyofmoney.pdf "History of Money and Banking in the United States: The Colonial Era to World War II"] (pdf), A history of money and banking in the United States before the twentieth century, p. 49, referenced 2009-09-14.</ref>

Europe was also impacted by the inflow of precious metals from the [[Wikipedia:New World|New World]], but it was not a dramatic [[Wikipedia:Price revolution|price revolution]]. The money stock (gold and silver) increased depending on various estimates by 50 to 500% from the year 1500 over a period of 150 years (an average growth rate of the money supply somewhere between 0.3 and 3.3 percent per annum).<ref name="Hulsmann_New_World">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 4. Utilitarian Considerations on the Production of Money, p.73-74, referenced 2010-03-04.</ref> Where many complained about rising prices, some have recognized (often ascribed to [[Wikipedia:Jean Bodin|J. Bodin]] in 1568, but first recognized by Azpilcueta Navarro from the [[Wikipedia:School of Salamanca|School of Salamanca]] in 1556<ref name="Hutchinson_Navarro">Marjorie Grice-Hutchinson. [http://mises.org/books/salamanca_grice-hutchinson.pdf "The School of Salamanca"] (pdf), p.52, referenced 2010-03-11.</ref>), that the goods have not risen in value, but silver has fallen; from 1500 to 1700 it was estimated to be 1/20 of its former value.<ref name="Gaettens_Law_France">Richard Gaettens. ''Geschichte der Inflationen Von Altertum bis zum Gegenwart'' (German: History of Inflations from Old Ages to the Present), ''John Law und die französischen Finanzprobleme nach dem Tode Ludwigs XIV.'' (John Law and the French financial troubles after the death of Louis XIV.) p. 100-126. ISBN: ISBN 3-87045-211-0. Referenced 2010-02-27.</ref>

The [[Wikipedia:Industrial Revolution|Industrial Revolution]], that accelerated in the second half of the 18th century, opened an age of mass production for the needs of the masses.<ref name="Mises_Industrial">Ludwig von Mises. [http://mises.org/daily/4604 The Popular Interpretation of the "Industrial Revolution"], Mises Daily, August 2010, excerpted from chapter 21 of [[Human Action]]. Referenced 2010-08-09.</ref>

===Netherlands===
{{See also|Inflations#Vellon inflation in Spain}}
At the beginning of the 16th century, the currency reforms of [[Wikipedia:Charles V, Holy Roman Emperor|Charles V]] proved unpopular, although he was able to suppress any upheaval. Under his son [[Wikipedia:Philip II of Spain|Philip II.]] and his lack of religious tolerance, the revolution broke out in full. One of the first measures of the revolutionary government was "free" or "individual" coinage, where the state would coin any metal delivered to it at no or very small cost. Free coinage was an immediate success. As the seventeenth century began, the Dutch were the driving force behind European commerce. The coins, that had legal tender status were often worn and damaged, so it was not easy to exchange them. To do so, the [[Wikipedia:Bank of Amsterdam|Bank of Amsterdam]] was founded in 1609. Coins were taken in as deposits based not on the face value, but on the real value of their metal weight, with credits, known as bank money, issued against them. And so was created a perfectly uniform currency. This, along with the convenience and security of the new money - and the guarantee of the city of [[Wikipedia:Amsterdam|Amsterdam]], caused the bank money to trade at an [[Wikipedia:Agio (commerce)|agio]], or premium over coins.

The Bank was at first a strictly deposit bank with 100 percent backing, but secretly allowed some depositors to overdraw their accounts as early as 1657 and later provided large loans to the [[Wikipedia:Dutch East India Company|Dutch East India Company]] and the Municipality of Amsterdam. By 1790 these loans became public and the premium on the bank money disappeared, by the end of that year the Bank virtually admitted insolvency by issuing a notice that silver would be sold to holders of bank money at a 10 percent discount. The City of Amsterdam took the Bank over, and eventually closed it for good in 1819.

But throughout 17th century, precious metals from the New World, Japan and other locales have been channeled into Europe, with corresponding price increases. Thanks to the free coinage, the Bank of Amsterdam, and the heightened trade and commerce, Netherlands attracted even more coin and bullion. One of the results of the boom was the [[Wikipedia:Tulip mania|Tulip mania]] (1634-37). The popular flower became a status symbol, the rare bulbs were hard to reproduce and in great demand. A large futures market formed for the seasonal flower and the speculation escalated. At its peak, the prices rose twenty-six times in January 1637, only to fall to one-twentieth of its peak price a week later. Finally, the Court of Holland judged the tulip sales to be bets under Roman law and basically cancelled all contracts. The growers of the bulbs absorbed the most of the damage and the number of bankruptcies increased.

Ironically, as kings throughout Europe debased their currencies, the Dutch provided a sound money policy with money backed one hundred per cent by specie. Free coinage laws (later limited) created more money from the increased supply of coin and bullion, than what the market demanded. The acute increase in the supply of money fostered an atmosphere, that was ripe for speculation and malinvestment, and led to one of the first recorded panics or speculative bubbles.<ref name="French_Tulip_mania">Doug French. [http://mises.org/journals/qjae/pdf/qjae9_1_1.pdf "The Dutch Monetary Environment During Tulipmania"] (pdf), Quarterly Journal of Austrian Economics, Vol. 9 Num. 1. 2006, referenced 2009-10-18.</ref>

===England===
In England there were no banks of deposit until the [[Wikipedia:English Civil War|civil war]] in the mid-seventeenth century. Merchants used to store their surplus gold in the king’s mint for safekeeping. But when [[Wikipedia:Charles I of England|Charles I]] needed money in 1638, shortly before the outbreak of the civil war, he confiscated a huge sum of £200,000 of gold, calling it a "loan" from the owners. Although the merchants later got their gold back, instead of the mint they chose to deposit their gold in the coffers of private goldsmiths. The warehouse receipts of the goldsmiths were soon used as a substitute for the gold itself. By the end of the civil war, in the 1660s, the goldsmiths fell prey to the temptation to print pseudo-warehouse receipts not covered by gold and lend them out; in this way [[fractional reserve banking]] came to England.<ref name="Rothbard_History" /> When they refused to grant the king even more loans, he has stopped paying interest, to resume it later at a lowered rate. The new government of William and Mary, ushered in by the "[[Wikipedia:Glorious Revolution|Glorious Revolution]]" after 1688, has simply refused to pay the debt. Finally, the [[Wikipedia:House of Commons of England|House of Commons]] settled the affair in 1701. Half of the capital sum of the debt should be simply wiped out; and the interest on the other half be paid at the remarkable rate of 3 per cent. Even that low rate was later cut to two-and-a-half. Most of the leading goldsmith-creditors went bankrupt by the 1680s, and many ended their lives in debtors' prison.<ref name="Rothbard_goldmiths">Murray N. Rothbard. [http://mises.org/books/histofthought1.pdf "Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Volume I"] (pdf), 7.6 Mercantilism and inflation, p. 228-229. Referenced 2010-06-04.</ref>

Paper money, as we know it today, originates from the European fractional reserve banks of the 17th century, while the search for more money by governments was the main driving force.

The drive for more money for the crown led to the creation and special privileges of the Bank of England. It and the English banking system has become a model for many other countries.

{{See also|Bank of England}}

In 1720s has the Prime Minister [[Wikipedia:Robert Walpole|Sir Robert Walpole]] introduced the [[Wikipedia:Sinking fund|sinking fund]], a funding system designed to pay down England's [[public debt]]. Taxes, which had before been laid on for limited periods, were rendered perpetual, and the fund should not be used for any other purpose. The government obtained a reduction on the interest of the public debt. The savings were added to the fund and it was for some time regularly applied to the discharge of debt. But soon, the principle of an inviolable sinking fund was abandoned. During the wars which were waged while it subsisted, the whole of its produce was applied to the expense of the war; and even in time of peace, large sums were abstracted from it for current services. The sinking fund has greatly increased debt instead of diminishing it.<ref name="Ricardo_debt">David Ricardo. [http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=205&chapter=38605&layout=html&Itemid=27 "Funding System An Article in the Supplement to the Fourth, Fifth and Sixth Edition of the Encyclopaedia Britannica 1820], Part of: The Works and Correspondence of David Ricardo, Vol. 4 Pamphlets and Papers 1815-1823; 11 vols (Sraffa ed.). Referenced 2010-06-24.</ref>

From then on, government debt never needed be repaid. It was enough to create a regular and dependable source of revenue and use it to pay the annual interest and the principal of maturing bonds. Then for every retired bond would be sold a new one. In this way, a national debt could be made perpetual. Walpole's system proved its worth in financing British overseas expansion and imperial wars in the eighteenth and nineteenth centuries. The government could now maintain a huge peacetime naval and military establishment, readily fund new wars, and need not retrench afterward. The British Empire was built on more than the blood of its soldiers and sailors; it was built on debt. The ever-growing debt had the ancillary benefit of attaching the interests of wealthy creditors to the government. This example was not lost on some leaders of the infant American Republic, [[Wikipedia:Alexander Hamilton|Alexander Hamilton]] for one.<ref name="Trask_debt">H.A. Scott Trask. [http://mises.org/article.aspx?control=1419 "Perpetual Debt: From the British Empire to the American Hegemon"], Mises Daily, January 2004. Referenced 2010-06-24.</ref>

In the first decades of the Industrial Revolution, Great Britain was confronted by a very serious small change shortage. The bimetallic legislation then in effect undervalued silver, so that few if any silver coins were minted, while those already in circulation tended either to be melted into bullion or to be very badly impaired. The [[Wikipedia:Royal Mint|Royal Mint]] suspended copper coinage altogether for a generation beginning in 1775, leaving British factory owners and retailers more desperate than ever for small change.

British businessmen, starting in 1787 with [[Wikipedia:Thomas Williams of Llanidan|Thomas Williams]] (who owned what was then the world’s biggest copper mine, in Wales), took to minting and issuing their own token coins. Between 1787 and 1797, when the government finally attempted to reform its own token coinage, a score of private mints had supplied several hundred private coin issuers with some 600 tons of custom made copper pennies and halfpennies, which was more copper coin than the Royal Mint had issued over the course of the previous half century. By 1811 change was again in very short supply, the government’s reform efforts having proven inadequate. Consequently, another round of private coinage took place, this time involving silver as well as copper tokens. That round ended several years later, when the government decided to outlaw private coins.<ref name="Selgin_English coins">George Selgin. [http://mises.org/journals/qjae/pdf/qjae12_1_1.pdf "100 Percent Reserve Money: The Small Change Challenge] (pdf), The Quarterly Journal of Austrian Economics 12, No. 1 (2009): 3–16. See also the book [http://blog.mises.org/8464/good-money-reviewed-by-tabarrok/ Good Money]. Referenced 2010-08-02.</ref>

===France===
{{see also|John Law inflation in France}}
{{see also|Inflation during the French Revolution}}

===United States===
In the British colonies of North America, the local governments pushed for paper notes with [[legal tender]] privileges. The first to do so was the province of [[Wikipedia:Massachusetts|Massachusetts]] in 1690, after a failed raid against [[Wikipedia:Quebec|French Quebec]]. It paid off its soldiers with paper notes and pledged to redeem them out of taxes soon and that no more notes would be ever printed. Both promises were quickly broken.<ref name="Rothbard_paper" />

This practice was replicated in five other colonies before 1711, and eventually spread to all British colonies. The merchants forced to accept the rapidly depreciating paper notes complained to the [[Wikipedia:Parliament of the United Kingdom|British Parliament]], which first limited and in 1764 prohibited the issue of any legal-tender paper in all colonies. To some, this might have been one of the roots of the American revolution.<ref name="Hulsmann_Modern_Banking" />

After winning independence, the opponents of inflation have been for long successful. The "founding fathers" strove to avoid paper money, and using anything but gold and silver as legal tender was even [[Wikipedia:Article One of the United States Constitution#Section 10: Limits on the States|forbidden]] in the constitution. The power to [[Wikipedia:Article One of the United States Constitution#Section 8: Powers of Congress|coin money]] was given to the federal government, not the states.

The [[Wikipedia:First Bank of the United States|first central bank]] lasted from 1792 to 1812. To finance the war of [[Wikipedia:War of 1812|1812–14]], the federal government issued legal-tender treasury notes and a second bank was founded. In the 1830s, President [[Wikipedia:Andrew Jackson|Jackson]] refused to extend the charter of the [[Wikipedia:Second Bank of the United States|Second Bank of the United States]] (1816-1836<ref name="Lilburne_Second_bank">Lilburne. [http://mises.org/story/3632 "The 19th-Century Bernanke"], Mises Daily posted on 2009-09-01, referenced 2009-09-01.</ref>), withdrew all public funds from private or state (fractional-reserve) banks, and cut down the public debt from some $60 million at the beginning of his administration to a mere $33,733.05<ref name="Treasury_Debt">Treasury Direct. [http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo1.htm "Historical Debt Outstanding - Annual 1791 - 1849"], Public Debt Reports, referenced 2009-08-21</ref> on January 1, 1835. His successors neutralized these reforms to some extent, especially by bringing the public debt back to more than $60 million within fifteen years of the end of the second Jackson administration.

For a long time, foreign coins of gold and silver circulated freely, in general use were Spanish, English, and Austrian gold and silver pieces. Finally, Congress outlawed the use of foreign coins within the U.S. by the [[Wikipedia:Coinage Act of 1857|Coinage Act of 1857]], forcing all foreign coinholders to go to the U.S. Mint and obtain American gold coins.<ref name="Rothbard_foreign_coins">[[Murray N. Rothbard]]. [http://mises.org/books/mysteryofbanking.pdf "The Mystery of Banking"] (pdf), p.10, referenced 2009-08-24.</ref>

The breakthrough for the inflation party came with [[Wikipedia:Abraham Lincoln|Abraham Lincoln]] and the [[Wikipedia:American Civil War|War Between the States]]. To finance it, the federal government issued a legal tender paper money in 1862, the so-called [[Wikipedia:United States Note|greenbacks]]. This experiment ended in [[Wikipedia:Specie Payment Resumption Act|1875]], when the government turned the greenbacks into credit money, by announcing that as from 1879 they would be redeemed into gold. Meanwhile, in [[Wikipedia:National Banking Act|1863–65]], the Lincoln administration had created a new system of privileged "national banks" that were authorized to issue notes backed by federal government debt, while the notes of all other banks were penalized by a 10 percent federal tax. As a consequence was American banking centralized around the privileged national banks.

In 1913, the American banking system received a [[Federal Reserve System|central bank]] on the European model. The U.S. was the last great nation to introduce central banking.<ref name="Hulsmann_US">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 15. Fiat Monetary Systems in the Realm of the Nation-State p.203-206, referenced 2009-08-20.</ref>

{{Main|History of money and banking in the US}}

===Gold Standard===
In the "classical" '''gold standard''' was a [[central bank]] of each country expected to hold enough gold in its reserves, while the commercial [[bank]]s would rely mainly on its banknotes. The advantage were greater possibilities of inflation for the banks and more power for the central bank.

Gold was legal tender in Great Britain since 1821 (when the [[Bank of England]] resumed redemption of its notes<ref name="Bank_Gold">Bank of England. [http://www.bankofengland.co.uk/education/museum/walkthrough/1821.htm "1821: End of the Restriction Period"], Bank of England Museum, referenced 2009-08-27.</ref>) and the ''de facto'' currency in the US since the [[Wikipedia:Coinage Act of 1834|1834]]. Australia and Canada followed 20 years later. The breakthrough for gold and the era of the classic gold standard began after the war between [[Wikipedia:Franco-Prussian War|France and Germany]] (1870-1871). The German government received war damages of 5 billion francs in gold and made it fiat currency instead of silver, that was losing popularity at the time. The Prussian Bank ('Preusische Bank') was turned into a central bank ('[[Wikipedia:Reichsbank|Reichsbank]]'). Its notes became legal tender in 1909, following the example of the British system.

There were several reasons for using gold. Great Britain, with the largest capital market in the world, was using it. Several major lands using silver (Russia, Austria) have suspended payments by the time. Finally, silver has less purchasing power than gold, making its weight for large transfers rather problematic. Practically all western lands and many of their colonies have followed suit.

The gold standard has eliminated the fluctuations between gold and silver (though they were less than between today's paper currencies{{Fact|would be nice to have it somewhere}}). It also caused a significant forced [[deflation]]. But the gold standard was still coupled with the practice of [[fractional reserve banking]], and hence unstable. The coming of World War I. ended it before it could collapse.

The '''Gold Exchange Standard''' enhanced the already existing international cooperation between banks. The American [[Fed]] and the [[Bank of England]] would be the central banks for the whole world (with a few exceptions, notably France). Inflating slowly, others would rely on the pound and the dollar for backing, and could inflate much more. This unstable system lasted only from 1925 to 1931, the '''[[Great Depression]]''' of 1929 caused a rise of protectionist policies and foreign exchange controls, that choked the international currency trade. The Bank of England could not renew its gold reserves and suspended its payments, followed by other banks. From then on currencies fluctuated freely, which lasted until the end of [[Wikipedia:World War II|World War II.]]<ref name="Hulsmann_Gold_Standard">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 16. International Banking Systems, 1871–1971, p.209-222, referenced 2009-08-27.</ref> But the actual gold standard was abandoned, instead of coins could be notes converted only to gold bullion, suitable only for large international transactions. The people were ''de facto'' prohibited from using gold as their medium of exchange.<ref name="Rothbard_exchange_standard">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America's Great Depression"] (pdf), Chapter 5: The Development of Inflation, p.148-149, referenced 2009-10-03.</ref>

{{Main|Gold standard}}

==Recent history==
The history from the gold standard into the present.

===Bretton Woods system===
A new system was designed in 1944 in [[Wikipedia:Bretton Woods, New Hampshire|Bretton Woods]] (New Hampshire US), to make the production of banknotes even more 'flexible'. The gold reserves of the whole world should be concentrated in a single pool, the [[Fed]] would redeem its notes while all others would keep the US dollar as reserve. It was a logical choice, as the United States have attracted much gold and after WWII [[Wikipedia:United States Bullion Depository|Fort Knox]] became the largest gold storage in the world. (England, represented by [[Wikipedia:John Maynard Keynes|Lord Keynes]], tried to push for a pure paper money, but it didn't come to be.)

To reduce the resulting dependency on the Fed, and to make it politically acceptable, two organizations were created: the [[Wikipedia:International Monetary Fund|International Monetary Fund]] (IMF) and the [[Wikipedia:World Bank Group|World Bank]], both to influence the distribution of new banknotes. They would supply short-term (IMF) and long-term (WB) credit to member states in trouble, primarily the board members. They survived the collapse of Bretton Woods.

The growth of inflation, the main purpose of the Bretton Woods, was so successful, that the Fed eventually ran out of gold and had to suspend its payments in [[Wikipedia:Nixon Shock|1971]]. That was the end of the so-called gold standard and its variants.<ref name="Hulsmann_Gold_Standard" />

The system was criticized from the outset by [[Henry Hazlitt]] and he predicted its eventual fall.<ref name="Rockwell_Hazlitt">Llewellyn H. Rockwell Jr. [http://mises.org/daily/4511 "Hazlitt's Battle with Bretton Woods"], Mises Daily, June 2010, referenced 2010-06-19.</ref>

===The Paper Standard===
After the last link to gold was broken, a large number of paper currencies was created. Every country could set its monetary policies as it desired and their exchange rates fluctuated wildly. But attracting foreign investment is much easier in stable conditions. Many states float bonds in other currencies than their own, like in the Euro or the U.S. dollar. Some give public or implicit guarantees that the exchange rate to important currencies will be maintained. It is claimed, that the [[Fed]] gave such guarantees to several countries in the 90s, and after they were ended, financial crises in these countries followed (Mexico 1994, Asia 1997). Some states have created [[Wikipedia:Currency board|currency boards]], issuing notes, that backed by and mere substitutes for foreign paper money. It is used by e.g. Hong Kong, Bulgaria, Estonia, Lithuania, Bosnia and Brunei. Lastly, some abandon their national currency completely and use the currency of their lenders. This is called "dollarization" (does not have to be U.S. dollars). Recent examples include Ecuador, El Salvador, Kosovo and Montenegro.

And so have the international paper currencies - the [[Wikipedia:Yen|Yen]], [[Wikipedia:United States dollar|Dollar]] and newly the [[Wikipedia:Euro|Euro]] - dominated the scene.<ref name="Hulsmann_Paper_Money">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 17. International Paper-Money Systems, 1971-?, p.223-236, referenced 2009-08-29.</ref>

===The Eurozone===
After the fall of the Bretton Woods system began the governments of Wester Europe to amass public debt to grow their welfare states. But it was soon recognized their wildly fluctuating currencies hindered international trade and could so undermine their income.

The first attempt was the European Monetary System ([[Wikipedia:European Monetary System|EMS]], founded 1978). It was a [[cartel]] of paper money producers, who agreed to stabilize the exchange rates between their currencies at certain levels, or parities. In practice, those inflating the least would determine the inflation rates of all others. If someone were to inflate more, they would have to persuade others to do the same, or risk a change of parity. The [[Wikipedia:Deutsche Bundesbank|German Bundesbank]] was the most conservative of the central banks. A few years after the rejoining of East and West Germany were the paper money producers united in the [[European Central Bank]] (ECB, started operation in 1999 and issued Euro notes and coins by 2002.<ref name="Hulsmann_Paper_Money" />

{{Main|Eurozone}}

===The Great Recession===
The [[Wikipedia:Late-2000s recession|economical crisis]], that began in 2007, has been named the '''Great Recession''' due to its impact on the American and worldwide economy.<ref name="Zuckerman_recession">Zuckerman, Mortimer. [http://online.wsj.com/article/SB10001424052748703837004575013592466508822.html "Mortimer Zuckerman: The Great Recession Continues - WSJ.com"], ''The Wall Street Journal'', referenced 2010-07-23.</ref><ref name="Evans-Pritchard_recession">Evans-Pritchard, Ambrose. [http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html "With the US trapped in depression, this really is starting to feel like 1932"]. ''The Daily Telegraph'' (London). Referenced 2010-07-27.</ref>

{{Main|The Great Recession}}

==References==
{{Reflist}}

==External links==
* Wikipedia on [[Wikipedia:Trade|trade]], history of [[Wikipedia:History of money|money]] and [[Wikipedia:History of banking|banking]].

[[Category:Banking|*]]
[[Category:History|Money and Banking, History of]]
[[Category:Money|*]]

History of money and banking

2010-12-31T18:07:29Z

213.84.251.91: /* England */

[[Trade]] is as old as humanity itself. Long-distance commerce is according to some sources at least 150,000 years old.{{Fact|Quoted from the Wikipedia page on [[Wikipedia:Trade|Trade]], could not check this personally: Watson, Peter (2005). ''"Ideas : A History of Thought and Invention from Fire to Freud."'' HarperCollins. ISBN 0-06-621064-X. Introduction.}} It is ten times older than [[Wikipedia:Agriculture|farming]].<ref name="Ridley_trade">Matt Ridley. [http://www.ted.com/talks/matt_ridley_when_ideas_have_sex.html "Matt Ridley: When ideas have sex"] (video), 11:00-11:30, filmed in July 2010. Referenced 2010-07-23.</ref> Most types of food and perishables could be only traded locally, preferred were durable goods with large value for a small weight. Some of them have begun to be used as [[money]], examples as diverse as cattle, seashells, beads, nails, tobacco, cotton, and so on; but since the 17th century the most common forms have been metal coins, paper notes, and bookkeeping entries.<ref name="Britannica_money">Encyclopedia Britannica. [http://www.britannica.com/EBchecked/topic/389170/money "Money"], referenced 2009-08-09.</ref> The wide use of cattle as money in primitive times survives in the words like pecuniary (coming from the Latin ''pecus'', meaning cattle) and fee (Old English ''feoh'', ‘cattle owned’, still used as livestock in German ''Vieh'').<ref name="Cow_Words">[http://www.billcasselman.com/unpublished_works/cow_words_one.htm "Cow Words & financial Origin of Words like Fee, Cattle, Pecuniary]" from Bill Casselman's Canadian Word of the Day, referenced 2009-08-09.</ref>

==Ancient History==
Ancient times record the rise of great civilizations, growth of trade and development of new technologies. They also show many experiments with [[price controls]], inflation, and even attempts at total control over the market.

===First Coins===
The use of metal for [[money]] can be traced back to [[Wikipedia:Babylon|Babylon]] more than 2000 years BC, but standardization and certification in the form of ''[[Coin|coinage]]'' did not occur except perhaps in isolated instances until the 7th century BC.<ref name="Britannica_money" />

One of the precursors were metal ingots. On [[Wikipedia:Minoan civilization|Crete]] were found [[Wikipedia:Oxhide ingot|copper ingots]] from 17th century BC, in the shape of oxskins, with writings about their purity and full weight. <ref name="Gaettens_Money">Richard Gaettens. ''Geschichte der Inflationen Von Altertum bis zum Gegenwart'' (German: History of Inflations from Old Ages to the Present), Einleitung (Introduction) p. 15-21. ISBN: ISBN 3-87045-211-0. Referenced 2010-01-16.</ref> Historians generally ascribe the first use of coined money to [[Wikipedia:Croesus|Croesus]], king of [[Wikipedia:Lydia|Lydia]], a state in [[Wikipedia:Anatolia|Anatolia]]. The earliest coins were made of [[Wikipedia:Electrum|electrum]], a natural mixture of [[gold]] and [[silver]], and were crude, bean-shaped ingots bearing a primitive punch mark certifying to either weight or fineness or both.<ref name="Britannica_money" /> Some theorize, that the first stamped coins were issued by priests, and that the first mints were in temples.<ref name="Percy_coins">Gardner, Percy. [http://www.archive.org/details/typesgreekcoins00gardgoog "The types of Greek coins; an archaeological essay (1883)"], Chapter 1. Publisher: Cambridge [Eng.] University Press, 1883. Digitized book at the ''Internet Archive''. Referenced 2010-08-06.</ref>

[[Coin]]s made payment by "tale", or count possible, rather than weight, greatly facilitating commerce. But this in turn encouraged "[[Wikipedia:Coin clipping|clipping]]" (shaving off tiny slivers from the sides or edges of coins) and "sweating" (shaking a bunch of coins together in a leather bag and collecting the dust that was so knocked off). The result is described by [[Gresham's Law]] ("bad money drives out good" when there is a fixed rate of exchange between them): good, heavy coins were held for their metallic value, while light coins were passed on to others. In time the coins became lighter and lighter and prices higher and higher. To correct this problem, the coins were weighed for large transactions, and there was pressure for recoinage. The problem was largely ended by the "[[Wikipedia:Milled coinage|milling]]" of coins (serrations around the circumference of a coin), which began in the late 17th century. A more serious problem was, that the sovereigns often attempted to benefit from the [[monopoly]] of coinage.<ref name="Britannica_money" />

{{See also|Coin}}

===Banking in Ancient Times===
The first precursors of [[bank]]s can be traced as far back as ancient [[Wikipedia:Mesopotamia|Mesopotamia]], where temples, royal palaces, and some private houses served to store valuable commodities like grain, the ownership of which could be transferred via written receipts. There are records of loans by the temples of [[Wikipedia:Babylon|Babylon]] as early as 2000 BC; temples were considered safe, because they were sacred places watched over by gods, and should be protected from theft. Companies of traders in ancient times provided banking services connected to the buying and selling of goods. Many of these early "protobanks" dealt primarily in coin and bullion, money changing and supplied foreign and domestic coins of the correct weight and fineness.<ref name="Britannica_money" /> Around the year 3300 B.C. the temple of Uruk owned the land it exploited, received offerings and deposits and granted loans to farmers and merchants of livestock and grain, probably the first bank in history.<ref name="De_Soto_Banking">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 40-41, referenced 2009-10-29.</ref>

===Sumer===
One of the first recorded reforms to remove corruption comes from [[Wikipedia:Sumer|Sumer]]. King [[Wikipedia:Urukagina|Urukagina]], reigning from about 2350 BC, removed excessive regulations and bureaucracy. What little remains of the records from that time contains possibly the first reference to a word for 'freedom'<ref name="Schuettinger_Price_controls">Robert L. Schuettinger and Eamonn F. Butler. "[[Forty Centuries of Wage and Price Controls]]", Chapter 1 - Ancient World, p. 9-18, referenced 2009-08-09.</ref>, ''[[Wikipedia:Ama-gi|amargi]]'' (some sources interpret it as an exemption of taxes or cancellation of debt<ref name="Hudson_Debt">Dr. Michael Hudson, ISLET. [http://michael-hudson.com/articles/debt/ArchaeologyDebt.html "The New Economic Archaeology of Debt"], CDL Press, Baltimore, 2002, referenced 2009-08-09.</ref>).

===Babylon===
In [[Wikipedia:Babylon|Babylon]], the [[Wikipedia:Code of Hammurabi|Code]] of [[Wikipedia:Hammurabi|Hammurabi]], "the protecting king", explicitly quoted many wages and prices. The decline of the number of merchants and an increase in bureaucracy was followed by an overall economical decline.<ref name="Schuettinger_Price_controls" /> It strictly regulated the rights associated with it, as well as commercial activity, limiting interest rates and even establishing public loans at 12.5 percent. Partnership agreements were also regulated, as was the keeping of accounts of operations.<ref name="De_Soto_Banking" />

===Ancient Egypt===
The rulers of [[Wikipedia:Ancient Egypt|Egypt]] regulated the grain crops, then directed it, until finally land become the property of the monarch to be rented out. "There was a real omnipresence of the state... all prices were fixed by fiat at all levels. There was a whole army of inspectors. There was nothing but inventories, censuses of men and animals. In villages, where disgusted farmers ran away, those, who remained, were responsible for the absentees' production." Egypt collapsed economically and politically at the end of the third century BC.<ref name="Schuettinger_Price_controls" />

Few people were wealthy, but banking was widespread and used by many villagers, farmers, merchants and craftsmen, doing business through banks and making payments out of their deposits and bank accounts. The [[Wikipedia:Ptolemaic dynasty|Ptolemies]] realized how profitable private banks were, and started the first government-run bank which would conduct business with the "prestige" of the state, hold custody of tax revenues and invest in its benefit. The main innovation of Egyptian banking was centralization: the government bank in [[Wikipedia:Alexandria|Alexandria]] had branches in the most important towns and cities. It has outlived its founding dynasty and was preserved during Roman rule.<ref name="De_Soto_Egypt">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 51-53, referenced 2009-10-29.</ref>

===Ancient Greece===
[[Wikipedia:Solon|Solon]], on taking office in [[Wikipedia:Classical Athens|Athens]] in 594 BC, instituted a partial debasement of the currency (there is some disagreement on this matter{{Fact|reason="Taken from Wikipedia, could not check this personally: Stanton G.R. Athenian Politics c800-500BC: A Sourcebook, Routledge, London (1990), page 61 note 4."}}). For the next four centuries the [[Wikipedia:Greek drachma|drachma]] had an almost constant silver content (67 grains of fine silver until [[Wikipedia:Alexander the Great|Alexander]], 65 grains after) and became the standard coin of trade in Greece and in much of Asia and Europe. Even after the Roman conquest of Greece in roughly the 2nd century BC, the drachma continued to be minted and widely used.<ref name="Britannica_money" /> The Greek city-states were largely independent, though there was an awareness of Hellenic identity. Each city-state had its own coinage. There was an active trade in these currencies, and probably few laws limiting citizens of a given city-state to the use of their own money.<ref name="Edwards_Greece">James Rolph Edwards. [http://mises.org/journals/jls/4_1/4_1_7.pdf "Monopoly and Competition in Money"] (pdf), The Journal of Libertarian Studies Vol.IV, No.1, Winter 1980. Referenced 2010-06-26.</ref> Debasement of the currency either for state profit or for the accommodation of changes in the ratio was rare in Greek history (with the notable exception of [[Wikipedia:Dionysius I of Syracuse|Dionysius]] of Syracuse<ref name="Chodorov_Dionysius">Frank Chodorov. [http://mises.org/daily/3936 "Tyranny and Finance"], from ''Mises Daily'', December 30, 2009; excerpted from chapter 9 of [http://mises.org/resources/3091 The Rise and Fall of Society]. Referenced 2010-09-19.</ref><ref name="Bullock_Dionysios">Jesse Bullock Charles. [http://www.archive.org/details/economicessays029061mbp "Economic Essays (1936)"], p. 502-519. "''Having borrowed money from citizens of Syracuse and being pressed for repayment, he ordered all the coin in the city to be brought to him, under penalty of death. After taking up the collection, he restamped the coins, giving to each drachma the value of two drachmae, so that he was enabled to pay back both the original loan and the money he had ordered brought to the mint.''" Referenced 2010-09-19.</ref>). On the contrary, there are cases of actually raising the standard of the coinage for the greater prestige which a coinage of high intrinsic value seemed to offer. In the sixth century B.C., the Euboean unit was increased in a number of cities by about five grains, in emulation of an increase introduced by [[Wikipedia:Peisistratos|Pisistratus]] in Athens.<ref name="Groseclose_Greece">Elgin Groseclose. [http://mises.org/books/money.pdf "Money And Man - A Survey of Monetary Experience"] (pdf), Bimetallism and the Rise of the Gold Standard, p.146-147. Referenced 2010-06-25.</ref>

Banking, bank fraud and even banking crises were very well known. After the revolt against [[Wikipedia:Mithridates VI of Pontus|Mithridates]], a serious banking crisis in [[Wikipedia:Ephesus|Ephesus]] followed. The banking industry received here its first express, historically-documented privilege, which established a ten-year deferment on the return of deposits.<ref name="De_Soto_Greece">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 41-51, referenced 2009-10-29.</ref>

===Ancient Rome===
{{Main|Money and banking in Ancient Rome}}
From at least the 4th century B.C.. the Roman government bought grain in times of shortage and resold it at a lower price. At 58 B.C. was the law changed: every citizen should become free wheat. To the surprise of the government, most farmers left the country to live in Rome without working. To deal with the increasing economical problems, the emperors gradually began to devalue their currency.<ref name="Schuettinger_Rome">Robert L. Schuettinger and Eamonn F. Butler. "[[Forty Centuries of Wage and Price Controls]]", Chapter 2 - The Roman Republic and Empire, p. 19-27, referenced 2009-08-09.</ref>

The silver [[Wikipedia:Denarius|denarius]], patterned after the Greek drachma, was introduced about 212 BC. Soon after, the prior copper coin (''[[Wikipedia:As (Roman coin)|aes]]'', or libra) began to be debased until, by the onset of the empire, its weight had been reduced from 1 pound (12 Roman ounces) to half an ounce. By contrast the silver denarius and the gold [[Wikipedia:Aureus|aureus]] (introduced about 87 BC) suffered only minor debasement until the time of [[Wikipedia:Nero|Nero]] (AD 54), when almost continuous tampering with the coinage began. The metal content of the gold and silver coins was reduced, while the proportion of alloy was increased to three-fourths or more of its weight. <ref name="Britannica_money" />

The prices have risen in response and reached unprecedented heights under Emperor [[Wikipedia:Diocletian|Diocletian]]. The once silver denarius was by then a tin plated copper coin, silver and gold coins were no longer in circulation. Diocletian issued a new denarius from pure copper and instituted further reforms, to fix still rising prices and the wages of many workers. Death was the punishment for dealing at higher prices or hoarding, and much blood was shed before the law was finally ignored. A tax reform has bound the lower classes to the soil and made them effective serfs.<ref name="Schuettinger_Rome" />

The silver currency was basically abandoned, so much that the government started to demand payment of taxes in kind and in services instead of coin. [[Wikipedia:Constantine I|Constantine]] issued the golden [[Wikipedia:Solidus (coin)|solidus]] in large numbers (but taxes had to be paid in gold [[Wikipedia:Precious metal#Bullion|bullion]], as the government had trouble knowing how debased its coinage was). But the inflation of lesser coins continued, even cities were free to make their own token coins. Most people had to buy gold coins to pay taxes with, those who couldn't afford it lost their lands or became delinquents. So there was a relatively stable 'gold standard' used by the growing number of soldiers and civil servants, and an increasingly worthless currency for the rest of the citizenry. A rapid decline of their fortunes and personal freedoms followed.<ref "Peden_Inflation_Fall_of_Rome">Joseph R. Peden. [http://mises.org/story/3663 "Inflation and the Fall of the Roman Empire"], posted on 2009-09-07 in Mises Daily, referenced 2009-09-11.</ref>

And so has debasement contributed to the collapse of the empire.

Banking was highly developed and subject to [[Wikipedia:Roman Law|Roman Law]], money deposits were to be safeguarded and not lent out. A specialty were banker associations or ''societates argentariae'', where members supplied capital to form them, but they had unlimited liability to prevent fraud. Most banks failed during the economic crises of the third and fourth centuries A.D.<ref name="De_Soto_Rome">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 53-58, referenced 2009-10-29.</ref>

===Ancient China===
In China, the economic doctrines of [[Wikipedia:Confucius|Confucius]] held that "government interference is necessary for economic life and competition should be reduced to a minimum." A large bureaucracy was formed to regulate in detail commercial life and prices. In natural calamities, like famines, the merchants were not allowed to raise prices. The collection and raising of crops was regulated similarly.

But the results were not very favorable and the officials learned the lesson: "...whenever the government adopted any minute measure, it failed, with few exceptions.... since the Ch'in dynasty (221-206 B.C.), the government of modern China has not controlled the economic life of the people as did the government of ancient China. "

Even in those times, there were economic thinkers pointing out the rising prices were caused by inflation. [[Wikipedia:Ye Shi|Yeh Shih]] (A.D. 1150-1223), for instance, anticipated by several centuries the principle known as [[Gresham's Law]]: "The men who do not inquire into the fundamental cause," he wrote, "simply think that paper should be used when money is scarce. But as soon as paper is employed, money becomes still less. Therefore, it is not only that the sufficiency of goods cannot be seen, but also that the sufficiency of money cannot be seen."<ref name="Schuettinger_Price_controls" />

==Middle Ages==
The Middle Ages saw widespread use and standardization of coins, and their extensive debasement, in almost every country in Europe.<ref name="Rothbard_livre">[[Murray N. Rothbard]]. [http://mises.org/books/mysteryofbanking.pdf "The Mystery of Banking"] (pdf), online version, Chapter I. Money: its Importance and Origins, p.12, referenced 2009-08-20.</ref> But there were also clear ideas about what constitutes good money. [[Charlemagne]] made his son Louis swear to never make the coinage worse. [[Louis the Pious]] kept his word and the following kings of this line kept the same coin. But the later Frankish emperors began to devalue their coins, and did so frequently. The dean of the church of Prague, [[Cosmas of Prague|Cosmas]] (~1045-1125), reports of changes in coinage 3 to 4 times a year, their effect worse than pestilence, looting armies and arson.<ref name="Kosmas_Letopis">Kosmas. [http://www.archive.org/details/kosmwletopisesk00tomegoog "Kosmůw Letopis český s pokračowáními kanowníka Wyšehradského a mnicha Sázawského (1882)"] (in ''Czech''), p.37-38; [http://ia700302.us.archive.org/16/items/kosmwletopisesk00tomegoog/kosmwletopisesk00tomegoog.pdf pdf], on ''The Internet Archive''. [http://daten.digitale-sammlungen.de/~db/bsb00000683/images/index.html?seite=2 "Cosmas <Pragensis> / Bretholz, Berthold: Die Chronik der Böhmen des Cosmas von Prag, Berlin, 1923"] ''(in Latin)'', on ''Monumenta Germaniae Historic'', p.59. Referenced 2010-12-02.</ref> Thomas Aquinas, the great sage of the 13th century. stressed the importance of an unchanging coin and demanded from the rulers to hold to the true inner worth of things. [[Nicholas Oresme]], one of the first economic theoreticians, demonstrated the effects of currency depreciation. And according to the philosopher [[Gabriel Biel]], to withdraw a good coin and issue a less worthy one with the same nominal value is clearly fraud.<ref name="Gaettens_Closing">Richard Gaettens. ''Geschichte der Inflationen Von Altertum bis zum Gegenwart'' (German: History of Inflations from Old Ages to the Present), ''Schlusswort'' (Closing words) p. 302. ISBN: ISBN 3-87045-211-0. Referenced 2010-11-01.</ref>

The devaluations were certainly not rare. For example, in 1200, the French ''[[Wikipedia:Livre tournois|livre tournois]]'' was defined as 98 grams of fine silver; by 1600 it equaled only 11 grams. When the [[Wikipedia:Gold Dinar|dinar]], the coin of the [[Wikipedia:Saracen|Saracens]] in [[Wikipedia:Al-Andalus|Spain]] was first coined at the end of the seventh century, it consisted of 65 gold [[Wikipedia:Grain (mass)|grains]]. The Saracens kept the dinar’s weight relatively constant, and as late as the middle of the twelfth century, it still equaled 60 grains. At that point, the Christian kings [[Wikipedia:Reconquista|conquered]] Spain, and by the early thirteenth century, the dinar, called [[Wikipedia:Spanish maravedí|maravedi]], had been reduced to 14 grains of gold. The [[gold]] coin was soon too lightweight to circulate, and was converted into a [[silver]] coin weighing 26 grains of silver. But by the mid-fifteenth century, the maravedi consisted of only 1½ silver grains, and was again too small to circulate.<ref name="Rothbard_livre" />

The modern banking industry was born and discovered the profits and bankruptcies associated with [[fractional reserve banking]].
{{See also|Inflations}}

===China===
[[Wikipedia:History of China|China]] was a pioneer of banking practices. Deposit banking ''per se'' began in the eighth century A.D., when shops would accept valuables, in return for warehouse receipts, and receive a fee for keeping them safe. After a while, the deposit receipts of these shops began to circulate as money. Finally, after two centuries, the shops began to issue and lend out more receipts than they had on deposit; they had caught on to fractional reserve banking.<ref name="Rothbard_History" />

Printing was first invented in ancient China and paper money began there as well. The government sought a way to avoid physically transporting gold collected in taxes from the provinces to the capital at Peking. In the mid-eighth century, provincial governments began to set up offices in the capital selling paper drafts which could be collected in gold in the provincial capitals. In 811–812, the central government outlawed private firms involved in this business and established its own system of drafts on provincial governments (called "[[Wikipedia:Chinese currency#Imperial China|flying money]]").<ref name="Rothbard_paper">[[Murray N. Rothbard]]. [http://mises.org/books/mysteryofbanking.pdf "The Mystery of Banking"] (pdf), online version, Chapter IV. The Supply of Money, p.56-57, referenced 2009-08-20.</ref>

The governments have tried to keep their issues constant at first, and to redeem them at predefined times. But they soon turned to solving their fiscal troubles with printing money. In the province of [[Wikipedia:Sichuan|Szechuan]], the first 'extra issues' were made in 1072. The expansion continued until around 1200 was the currency started to be abandoned. In [[Wikipedia:Song Dynasty|Southern Sung]], from the beginning of inflation in 1176 it took to the thirteenth century for a serious decline in value. In northern [[Wikipedia:Jin Dynasty (1115–1234)|Chin]] was the amount of paper money held stable from 1153 until 1190. Following various experiments, attempts to pay for military expenditures have completely destroyed its value by the second decade of 13th century.

After the [[Wikipedia:Mongol Empire|Mongols]] entered China, in 1260 were the various regional currencies replaced with a national currency fixed to silver. The issues started to multiply and even the growth of the area, where they were legal tender, didn't prevent their fall in value. Several reforms later, by 1356 was the paper money practically worthless and the dynasty ended in 1368. The [[Wikipedia:Ming Dynasty|Ming]] were similarly reckless in their monetary policy and by 1500 were the notes becoming collector's items. After some 500 years experience, the Chinese abandoned the use of state-sponsored paper money and returned to a combination of hard currency and private bank notes.<ref name="Tullock_paper">Gordon Tullock. [http://www.terry.uga.edu/~last/classes/4100/readings/tullock_ehr.pdf "Paper money - a cycle in Cathay"] (pdf), The Economic History Review, Second series, Vol. IX, No. 3, 1957, referenced 2009-09-14.</ref> The government superseded the paper money by a metallic currency, and for ever abolished paper money issued by the State.<ref name="Vissering_Chinese">Vissering, Willem. [http://www.archive.org/details/cu31924023306875 "On Chinese currency. Coin and paper money"], Chapter VI, p.218. Publisher: Leiden, E. J. Brill 1877, digitized book at the Internet Archive. Referenced 2010-08-09.</ref>

===Banking in Europe===
The fall of the Roman Empire meant the feudalization of economic and social relationships. The reduction in trade and division of labor dealt a heavy blow to financial activities, especially banking, the effects lasting for centuries, the revival started by the end of 11th century and beginning of 12th (from this period stems also the practice of [[Wikipedia:Double-entry bookkeeping system|double-entry bookkeeping]].) Only monasteries were secure enough to guard economic resources. Particularly important were the [[Wikipedia:Knights Templar|Templars]], an internationally active military and religious order, they kept deposits in safe custody, transferred funds and made loans of their own resources. Their growing prosperity aroused the fear and envy of many, until [[Wikipedia:Philip IV of France|Philip the Fair]], the King of France, disbanded the order to get their riches.

The bankers preserved their deposits fully at first, but later began to use them for their own purposes, creating deposits and granting credits out of nowhere. Since the canonical law banned the charging of [[interest]] on loans, bankers would instead pay "penalties" for "delays" in payment and in effect pay interest on a disguised loan, and justified any misappropriations on this basis. [[Fractional reserve banking]] has created periods of growth, followed by an economical crisis and failure of banks.

The authorities failed to enforce sound banking practices, and often granted banks a government license to operate with a fractional reserve, while taking advantage of easy loans to finance governments and public officials. Some rulers created government banks to reap the profits. But banks were still required to guarantee deposits.<ref name="De_Soto_Medieval">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 3. Bankers in the Late Middle Ages, p. 59-69, referenced 2009-11-05.</ref>

===Medieval Italy===
In western Europe, the use of private bank notes and deposits, redeemable in specie, had begun in fourteenth century [[Wikipedia:History of the Republic of Venice|Venice]]. Firms granting credit to consumers and businesses existed in the ancient world and in medieval Europe, but these were "money lenders" who loaned out their own savings. "Banking" in the sense of lending out the savings of others only began in England with the "scriveners" of the early seventeenth century. (The scriveners were clerks who wrote contracts and bonds and so were in a position to learn of mercantile transactions and engage in money lending and borrowing.)<ref name="Rothbard_History">Murray N. Rothbard. [http://mises.org/books/historyofmoney.pdf "History of Money"] (pdf), Private Bank Notes, p. 56-57, referenced 2009-08-18.</ref> The term banker originated in Florence, where bankers were called either ''banchieri'' or ''tavolieri'', because they worked sitting behind a bench (''banco'') or table (''tavola'').<ref name="De_Soto_Banking" />

And it was in [[Wikipedia:History of Florence|Florence]], where the growing banking industry gained great importance by the fourteenth century. From that time have the bankers begun to misuse a portion of their deposits, inevitably causing a boom and a recession. This recession was triggered not only by Neapolitan princes’ massive withdrawal of funds, but also by England’s inability to repay its loans and the drastic fall in the price of Florentine government bond. The public debt was financed by these speculative new loans created. A general crisis of confidence occurred, causing the most important banks to fail between 1341 and 1346. The recovery did not come until after the [[Wikipedia:Black Death|plague]].

The powerful [[Wikipedia:Medici bank|Medici bank]] initially didn't accept demand deposits. Later on, their reserve ratio gradually worsened, and by its end dropped even below 10 percent. The bank was ruined by the end of the 14th century like its competitors, and all of its assets fell into the hands of creditors.<ref name="De_Soto_Italy">Jesús Huerta de Soto. [http://mises.org/books/desoto.pdf "Money, Bank Credit, and Economic Cycles"] (pdf). 2. Historical Violations of the Legal Principles Governing the Monetary Irregular-Deposit Contract, p. 70-75, referenced 2009-11-07.</ref>

==Modern History==
The modern times were witness to the rise of central banks. Experiments with using multiple metals for coinage and bimetallism have led to the domination of the Gold Standard. Fractional reserve banknotes have been widespread by the end of 18th century and the trend continued. They have turned into paper money in most countries by the beginning of World War I.<ref name="Hulsmann_Modern_Banking">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 15. Fiat Monetary Systems in the Realm of the Nation-State p.199-203, referenced 2009-08-20.</ref>

But coins still freely circulated for a long time. For example, the [[Wikipedia:Spanish dollar|Spanish silver dollar]] was from the sixteenth to the nineteenth century the relatively most stable and least debased coin in the Western world, and thus the world's outstanding coin.<ref name="Rothbard_Spanish">[[Murray N. Rothbard]]. [http://mises.org/books/historyofmoney.pdf "History of Money and Banking in the United States: The Colonial Era to World War II"] (pdf), A history of money and banking in the United States before the twentieth century, p. 49, referenced 2009-09-14.</ref>

Europe was also impacted by the inflow of precious metals from the [[Wikipedia:New World|New World]], but it was not a dramatic [[Wikipedia:Price revolution|price revolution]]. The money stock (gold and silver) increased depending on various estimates by 50 to 500% from the year 1500 over a period of 150 years (an average growth rate of the money supply somewhere between 0.3 and 3.3 percent per annum).<ref name="Hulsmann_New_World">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 4. Utilitarian Considerations on the Production of Money, p.73-74, referenced 2010-03-04.</ref> Where many complained about rising prices, some have recognized (often ascribed to [[Wikipedia:Jean Bodin|J. Bodin]] in 1568, but first recognized by Azpilcueta Navarro from the [[Wikipedia:School of Salamanca|School of Salamanca]] in 1556<ref name="Hutchinson_Navarro">Marjorie Grice-Hutchinson. [http://mises.org/books/salamanca_grice-hutchinson.pdf "The School of Salamanca"] (pdf), p.52, referenced 2010-03-11.</ref>), that the goods have not risen in value, but silver has fallen; from 1500 to 1700 it was estimated to be 1/20 of its former value.<ref name="Gaettens_Law_France">Richard Gaettens. ''Geschichte der Inflationen Von Altertum bis zum Gegenwart'' (German: History of Inflations from Old Ages to the Present), ''John Law und die französischen Finanzprobleme nach dem Tode Ludwigs XIV.'' (John Law and the French financial troubles after the death of Louis XIV.) p. 100-126. ISBN: ISBN 3-87045-211-0. Referenced 2010-02-27.</ref>

The [[Wikipedia:Industrial Revolution|Industrial Revolution]], that accelerated in the second half of the 18th century, opened an age of mass production for the needs of the masses.<ref name="Mises_Industrial">Ludwig von Mises. [http://mises.org/daily/4604 The Popular Interpretation of the "Industrial Revolution"], Mises Daily, August 2010, excerpted from chapter 21 of [[Human Action]]. Referenced 2010-08-09.</ref>

===Netherlands===
{{See also|Inflations#Vellon inflation in Spain}}
At the beginning of the 16th century, the currency reforms of [[Wikipedia:Charles V, Holy Roman Emperor|Charles V]] proved unpopular, although he was able to suppress any upheaval. Under his son [[Wikipedia:Philip II of Spain|Philip II.]] and his lack of religious tolerance, the revolution broke out in full. One of the first measures of the revolutionary government was "free" or "individual" coinage, where the state would coin any metal delivered to it at no or very small cost. Free coinage was an immediate success. As the seventeenth century began, the Dutch were the driving force behind European commerce. The coins, that had legal tender status were often worn and damaged, so it was not easy to exchange them. To do so, the [[Wikipedia:Bank of Amsterdam|Bank of Amsterdam]] was founded in 1609. Coins were taken in as deposits based not on the face value, but on the real value of their metal weight, with credits, known as bank money, issued against them. And so was created a perfectly uniform currency. This, along with the convenience and security of the new money - and the guarantee of the city of [[Wikipedia:Amsterdam|Amsterdam]], caused the bank money to trade at an [[Wikipedia:Agio (commerce)|agio]], or premium over coins.

The Bank was at first a strictly deposit bank with 100 percent backing, but secretly allowed some depositors to overdraw their accounts as early as 1657 and later provided large loans to the [[Wikipedia:Dutch East India Company|Dutch East India Company]] and the Municipality of Amsterdam. By 1790 these loans became public and the premium on the bank money disappeared, by the end of that year the Bank virtually admitted insolvency by issuing a notice that silver would be sold to holders of bank money at a 10 percent discount. The City of Amsterdam took the Bank over, and eventually closed it for good in 1819.

But throughout 17th century, precious metals from the New World, Japan and other locales have been channeled into Europe, with corresponding price increases. Thanks to the free coinage, the Bank of Amsterdam, and the heightened trade and commerce, Netherlands attracted even more coin and bullion. One of the results of the boom was the [[Wikipedia:Tulip mania|Tulip mania]] (1634-37). The popular flower became a status symbol, the rare bulbs were hard to reproduce and in great demand. A large futures market formed for the seasonal flower and the speculation escalated. At its peak, the prices rose twenty-six times in January 1637, only to fall to one-twentieth of its peak price a week later. Finally, the Court of Holland judged the tulip sales to be bets under Roman law and basically cancelled all contracts. The growers of the bulbs absorbed the most of the damage and the number of bankruptcies increased.

Ironically, as kings throughout Europe debased their currencies, the Dutch provided a sound money policy with money backed one hundred per cent by specie. Free coinage laws (later limited) created more money from the increased supply of coin and bullion, than what the market demanded. The acute increase in the supply of money fostered an atmosphere, that was ripe for speculation and malinvestment, and led to one of the first recorded panics or speculative bubbles.<ref name="French_Tulip_mania">Doug French. [http://mises.org/journals/qjae/pdf/qjae9_1_1.pdf "The Dutch Monetary Environment During Tulipmania"] (pdf), Quarterly Journal of Austrian Economics, Vol. 9 Num. 1. 2006, referenced 2009-10-18.</ref>

===England===
In England there were no banks of deposit until the [[Wikipedia:English Civil War|civil war]] in the mid-seventeenth century. Merchants used to store their surplus gold in the king’s mint for safekeeping. But when [[Wikipedia:Charles I of England|Charles I]] needed money in 1638, shortly before the outbreak of the civil war, he confiscated a huge sum of £200,000 of gold, calling it a "loan" from the owners. Although the merchants later got their gold back, instead of the mint they chose to deposit their gold in the coffers of private goldsmiths. The warehouse receipts of the goldsmiths were soon used as a substitute for the gold itself. By the end of the civil war, in the 1660s, the goldsmiths fell prey to the temptation to print pseudo-warehouse receipts not covered by gold and lend them out; in this way [[fractional reserve banking]] came to England.<ref name="Rothbard_History" /> When they refused to grant the king even more loans, he has stopped paying interest, to resume it later at a lowered rate. The new government of William and Mary, ushered in by the "[[Wikipedia:Glorious Revolution|Glorious Revolution]]" after 1688, has simply refused to pay the debt. Finally, the [[Wikipedia:House of Commons of England|House of Commons]] settled the affair in 1701. Half of the capital sum of the debt should be simply wiped out; and the interest on the other half be paid at the remarkable rate of 3 per cent. Even that low rate was later cut to two-and-a-half. Most of the leading goldsmith-creditors went bankrupt by the 1680s, and many ended their lives in debtors' prison.<ref name="Rothbard_goldmiths">Murray N. Rothbard. [http://mises.org/books/histofthought1.pdf "Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Volume I"] (pdf), 7.6 Mercantilism and inflation, p. 228-229. Referenced 2010-06-04.</ref>

Paper money, as we know it today, originates from the European fractional reserve banks of the 17th century, while the search for more money by governments was the main driving force.

The drive for more money for the crown led to the creation and special privileges of the Bank of England. It and the English banking system has become a model for many other countries.

{{See also|Bank of England}}

In 1720s has the Prime Minister [[Wikipedia:Robert Walpole|Sir Robert Walpole]] introduced the [[Wikipedia:Sinking fund|sinking fund]], a funding system designed to pay down England's [[public debt]]. Taxes, which had before been laid on for limited periods, were rendered perpetual, and the fund should not be used for any other purpose. The government obtained a reduction on the interest of the public debt. The savings were added to the fund and it was for some time regularly applied to the discharge of debt. But soon, the principle of an inviolable sinking fund was abandoned. During the wars which were waged while it subsisted, the whole of its produce was applied to the expense of the war; and even in time of peace, large sums were abstracted from it for current services. The sinking fund has greatly increased debt instead of diminishing it.<ref name="Ricardo_debt">David Ricardo. [http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=205&chapter=38605&layout=html&Itemid=27 "Funding System An Article in the Supplement to the Fourth, Fifth and Sixth Edition of the Encyclopaedia Britannica 1820], Part of: The Works and Correspondence of David Ricardo, Vol. 4 Pamphlets and Papers 1815-1823; 11 vols (Sraffa ed.). Referenced 2010-06-24.</ref>

From then on, government debt never needed be repaid. It was enough to create a regular and dependable source of revenue and use it to pay the annual interest and the principal of maturing bonds. Then for every retired bond would be sold a new one. In this way, a national debt could be made perpetual. Walpole's system proved its worth in financing British overseas expansion and imperial wars in the eighteenth and nineteenth centuries. The government could now maintain a huge peacetime naval and military establishment, readily fund new wars, and need not retrench afterward. The British Empire was built on more than the blood of its soldiers and sailors; it was built on debt. The ever-growing debt had the ancillary benefit of attaching the interests of wealthy creditors to the government. This example was not lost on some leaders of the infant American Republic, [[Wikipedia:Alexander Hamilton|Alexander Hamilton]] for one.<ref name="Trask_debt">H.A. Scott Trask. [http://mises.org/article.aspx?control=1419 "Perpetual Debt: From the British Empire to the American Hegemon"], Mises Daily, January 2004. Referenced 2010-06-24.</ref>

In the first decades of the Industrial Revolution, Great Britain was confronted by a very serious small change shortage. The bimetallic legislation then in effect undervalued silver, so that few if any silver coins were minted, while those already in circulation tended either to be melted into bullion or to be very badly impaired. The [[Wikipedia:Royal Mint|Royal Mint]] suspended copper coinage altogether for a generation beginning in 1775, leaving British factory owners and retailers more desperate than ever for small change.

British businessmen, starting in 1787 with [[Wikipedia:Thomas Williams of Llanidan|Thomas Williams]] (who owned what was then the world’s biggest copper mine, in Wales), took to minting and issuing their own token coins. Between 1787 and 1797, when the government finally attempted to reform its own token coinage, a score of private mints had supplied several hundred private coin issuers with some 600 tons of custom made copper pennies and halfpennies, which was more copper coin than the Royal Mint had issued over the course of the previous half century. By 1811 change was again in very short supply, the government’s reform efforts having proven inadequate. Consequently, another round of private coinage took place, this time involving silver as well as copper tokens. That round ended several years later, when the government decided to outlaw private coins.<ref name="Selgin_English coins">George Selgin. [http://mises.org/journals/qjae/pdf/qjae12_1_1.pdf "100 Percent Reserve Money: The Small Change Challenge] (pdf), The Quarterly Journal of Austrian Economics 12, No. 1 (2009): 3–16. See also the book [http://blog.mises.org/8464/good-money-reviewed-by-tabarrok/ Good Money]. Referenced 2010-08-02.</ref>

===France===
{{see also|John Law inflation in France}}

===United States===
In the British colonies of North America, the local governments pushed for paper notes with [[legal tender]] privileges. The first to do so was the province of [[Wikipedia:Massachusetts|Massachusetts]] in 1690, after a failed raid against [[Wikipedia:Quebec|French Quebec]]. It paid off its soldiers with paper notes and pledged to redeem them out of taxes soon and that no more notes would be ever printed. Both promises were quickly broken.<ref name="Rothbard_paper" />

This practice was replicated in five other colonies before 1711, and eventually spread to all British colonies. The merchants forced to accept the rapidly depreciating paper notes complained to the [[Wikipedia:Parliament of the United Kingdom|British Parliament]], which first limited and in 1764 prohibited the issue of any legal-tender paper in all colonies. To some, this might have been one of the roots of the American revolution.<ref name="Hulsmann_Modern_Banking" />

After winning independence, the opponents of inflation have been for long successful. The "founding fathers" strove to avoid paper money, and using anything but gold and silver as legal tender was even [[Wikipedia:Article One of the United States Constitution#Section 10: Limits on the States|forbidden]] in the constitution. The power to [[Wikipedia:Article One of the United States Constitution#Section 8: Powers of Congress|coin money]] was given to the federal government, not the states.

The [[Wikipedia:First Bank of the United States|first central bank]] lasted from 1792 to 1812. To finance the war of [[Wikipedia:War of 1812|1812–14]], the federal government issued legal-tender treasury notes and a second bank was founded. In the 1830s, President [[Wikipedia:Andrew Jackson|Jackson]] refused to extend the charter of the [[Wikipedia:Second Bank of the United States|Second Bank of the United States]] (1816-1836<ref name="Lilburne_Second_bank">Lilburne. [http://mises.org/story/3632 "The 19th-Century Bernanke"], Mises Daily posted on 2009-09-01, referenced 2009-09-01.</ref>), withdrew all public funds from private or state (fractional-reserve) banks, and cut down the public debt from some $60 million at the beginning of his administration to a mere $33,733.05<ref name="Treasury_Debt">Treasury Direct. [http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo1.htm "Historical Debt Outstanding - Annual 1791 - 1849"], Public Debt Reports, referenced 2009-08-21</ref> on January 1, 1835. His successors neutralized these reforms to some extent, especially by bringing the public debt back to more than $60 million within fifteen years of the end of the second Jackson administration.

For a long time, foreign coins of gold and silver circulated freely, in general use were Spanish, English, and Austrian gold and silver pieces. Finally, Congress outlawed the use of foreign coins within the U.S. by the [[Wikipedia:Coinage Act of 1857|Coinage Act of 1857]], forcing all foreign coinholders to go to the U.S. Mint and obtain American gold coins.<ref name="Rothbard_foreign_coins">[[Murray N. Rothbard]]. [http://mises.org/books/mysteryofbanking.pdf "The Mystery of Banking"] (pdf), p.10, referenced 2009-08-24.</ref>

The breakthrough for the inflation party came with [[Wikipedia:Abraham Lincoln|Abraham Lincoln]] and the [[Wikipedia:American Civil War|War Between the States]]. To finance it, the federal government issued a legal tender paper money in 1862, the so-called [[Wikipedia:United States Note|greenbacks]]. This experiment ended in [[Wikipedia:Specie Payment Resumption Act|1875]], when the government turned the greenbacks into credit money, by announcing that as from 1879 they would be redeemed into gold. Meanwhile, in [[Wikipedia:National Banking Act|1863–65]], the Lincoln administration had created a new system of privileged "national banks" that were authorized to issue notes backed by federal government debt, while the notes of all other banks were penalized by a 10 percent federal tax. As a consequence was American banking centralized around the privileged national banks.

In 1913, the American banking system received a [[Federal Reserve System|central bank]] on the European model. The U.S. was the last great nation to introduce central banking.<ref name="Hulsmann_US">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 15. Fiat Monetary Systems in the Realm of the Nation-State p.203-206, referenced 2009-08-20.</ref>

{{Main|History of money and banking in the US}}

===Gold Standard===
In the "classical" '''gold standard''' was a [[central bank]] of each country expected to hold enough gold in its reserves, while the commercial [[bank]]s would rely mainly on its banknotes. The advantage were greater possibilities of inflation for the banks and more power for the central bank.

Gold was legal tender in Great Britain since 1821 (when the [[Bank of England]] resumed redemption of its notes<ref name="Bank_Gold">Bank of England. [http://www.bankofengland.co.uk/education/museum/walkthrough/1821.htm "1821: End of the Restriction Period"], Bank of England Museum, referenced 2009-08-27.</ref>) and the ''de facto'' currency in the US since the [[Wikipedia:Coinage Act of 1834|1834]]. Australia and Canada followed 20 years later. The breakthrough for gold and the era of the classic gold standard began after the war between [[Wikipedia:Franco-Prussian War|France and Germany]] (1870-1871). The German government received war damages of 5 billion francs in gold and made it fiat currency instead of silver, that was losing popularity at the time. The Prussian Bank ('Preusische Bank') was turned into a central bank ('[[Wikipedia:Reichsbank|Reichsbank]]'). Its notes became legal tender in 1909, following the example of the British system.

There were several reasons for using gold. Great Britain, with the largest capital market in the world, was using it. Several major lands using silver (Russia, Austria) have suspended payments by the time. Finally, silver has less purchasing power than gold, making its weight for large transfers rather problematic. Practically all western lands and many of their colonies have followed suit.

The gold standard has eliminated the fluctuations between gold and silver (though they were less than between today's paper currencies{{Fact|would be nice to have it somewhere}}). It also caused a significant forced [[deflation]]. But the gold standard was still coupled with the practice of [[fractional reserve banking]], and hence unstable. The coming of World War I. ended it before it could collapse.

The '''Gold Exchange Standard''' enhanced the already existing international cooperation between banks. The American [[Fed]] and the [[Bank of England]] would be the central banks for the whole world (with a few exceptions, notably France). Inflating slowly, others would rely on the pound and the dollar for backing, and could inflate much more. This unstable system lasted only from 1925 to 1931, the '''[[Great Depression]]''' of 1929 caused a rise of protectionist policies and foreign exchange controls, that choked the international currency trade. The Bank of England could not renew its gold reserves and suspended its payments, followed by other banks. From then on currencies fluctuated freely, which lasted until the end of [[Wikipedia:World War II|World War II.]]<ref name="Hulsmann_Gold_Standard">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 16. International Banking Systems, 1871–1971, p.209-222, referenced 2009-08-27.</ref> But the actual gold standard was abandoned, instead of coins could be notes converted only to gold bullion, suitable only for large international transactions. The people were ''de facto'' prohibited from using gold as their medium of exchange.<ref name="Rothbard_exchange_standard">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America's Great Depression"] (pdf), Chapter 5: The Development of Inflation, p.148-149, referenced 2009-10-03.</ref>

{{Main|Gold standard}}

==Recent history==
The history from the gold standard into the present.

===Bretton Woods system===
A new system was designed in 1944 in [[Wikipedia:Bretton Woods, New Hampshire|Bretton Woods]] (New Hampshire US), to make the production of banknotes even more 'flexible'. The gold reserves of the whole world should be concentrated in a single pool, the [[Fed]] would redeem its notes while all others would keep the US dollar as reserve. It was a logical choice, as the United States have attracted much gold and after WWII [[Wikipedia:United States Bullion Depository|Fort Knox]] became the largest gold storage in the world. (England, represented by [[Wikipedia:John Maynard Keynes|Lord Keynes]], tried to push for a pure paper money, but it didn't come to be.)

To reduce the resulting dependency on the Fed, and to make it politically acceptable, two organizations were created: the [[Wikipedia:International Monetary Fund|International Monetary Fund]] (IMF) and the [[Wikipedia:World Bank Group|World Bank]], both to influence the distribution of new banknotes. They would supply short-term (IMF) and long-term (WB) credit to member states in trouble, primarily the board members. They survived the collapse of Bretton Woods.

The growth of inflation, the main purpose of the Bretton Woods, was so successful, that the Fed eventually ran out of gold and had to suspend its payments in [[Wikipedia:Nixon Shock|1971]]. That was the end of the so-called gold standard and its variants.<ref name="Hulsmann_Gold_Standard" />

The system was criticized from the outset by [[Henry Hazlitt]] and he predicted its eventual fall.<ref name="Rockwell_Hazlitt">Llewellyn H. Rockwell Jr. [http://mises.org/daily/4511 "Hazlitt's Battle with Bretton Woods"], Mises Daily, June 2010, referenced 2010-06-19.</ref>

===The Paper Standard===
After the last link to gold was broken, a large number of paper currencies was created. Every country could set its monetary policies as it desired and their exchange rates fluctuated wildly. But attracting foreign investment is much easier in stable conditions. Many states float bonds in other currencies than their own, like in the Euro or the U.S. dollar. Some give public or implicit guarantees that the exchange rate to important currencies will be maintained. It is claimed, that the [[Fed]] gave such guarantees to several countries in the 90s, and after they were ended, financial crises in these countries followed (Mexico 1994, Asia 1997). Some states have created [[Wikipedia:Currency board|currency boards]], issuing notes, that backed by and mere substitutes for foreign paper money. It is used by e.g. Hong Kong, Bulgaria, Estonia, Lithuania, Bosnia and Brunei. Lastly, some abandon their national currency completely and use the currency of their lenders. This is called "dollarization" (does not have to be U.S. dollars). Recent examples include Ecuador, El Salvador, Kosovo and Montenegro.

And so have the international paper currencies - the [[Wikipedia:Yen|Yen]], [[Wikipedia:United States dollar|Dollar]] and newly the [[Wikipedia:Euro|Euro]] - dominated the scene.<ref name="Hulsmann_Paper_Money">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, Chapter 17. International Paper-Money Systems, 1971-?, p.223-236, referenced 2009-08-29.</ref>

===The Eurozone===
After the fall of the Bretton Woods system began the governments of Wester Europe to amass public debt to grow their welfare states. But it was soon recognized their wildly fluctuating currencies hindered international trade and could so undermine their income.

The first attempt was the European Monetary System ([[Wikipedia:European Monetary System|EMS]], founded 1978). It was a [[cartel]] of paper money producers, who agreed to stabilize the exchange rates between their currencies at certain levels, or parities. In practice, those inflating the least would determine the inflation rates of all others. If someone were to inflate more, they would have to persuade others to do the same, or risk a change of parity. The [[Wikipedia:Deutsche Bundesbank|German Bundesbank]] was the most conservative of the central banks. A few years after the rejoining of East and West Germany were the paper money producers united in the [[European Central Bank]] (ECB, started operation in 1999 and issued Euro notes and coins by 2002.<ref name="Hulsmann_Paper_Money" />

{{Main|Eurozone}}

===The Great Recession===
The [[Wikipedia:Late-2000s recession|economical crisis]], that began in 2007, has been named the '''Great Recession''' due to its impact on the American and worldwide economy.<ref name="Zuckerman_recession">Zuckerman, Mortimer. [http://online.wsj.com/article/SB10001424052748703837004575013592466508822.html "Mortimer Zuckerman: The Great Recession Continues - WSJ.com"], ''The Wall Street Journal'', referenced 2010-07-23.</ref><ref name="Evans-Pritchard_recession">Evans-Pritchard, Ambrose. [http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html "With the US trapped in depression, this really is starting to feel like 1932"]. ''The Daily Telegraph'' (London). Referenced 2010-07-27.</ref>

{{Main|The Great Recession}}

==References==
{{Reflist}}

==External links==
* Wikipedia on [[Wikipedia:Trade|trade]], history of [[Wikipedia:History of money|money]] and [[Wikipedia:History of banking|banking]].

[[Category:Banking|*]]
[[Category:History|Money and Banking, History of]]
[[Category:Money|*]]

Money

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213.84.251.91: /* Electronic money */

{{RightTOC}}{{Stub}}
People wishing to achieve their ends often have to [[trade]]. They can exchange their [[good]]s ''directly'', if they have matching preferences and suitable goods, or ''indirectly'', with the help of another good, the ''medium of exchange''.

A commonly used medium of exchange is called '''money'''.<ref name="Goods">Ludwig von Mises. [http://mises.org/humanaction/chap17sec1.asp "1. Media of Exchange and Money"], ''Chapter XVII. Indirect exchange'', [[Wikipedia:Human Action|Human Action]], online edition, referenced 2009-04-27.</ref>

==Medium of exchange and money==
Jones can trade an apple against two eggs from Brown. But this direct exchange or [[Trade#Direct Exchange|barter]] limits the number of exchanges and the extent of social cooperation. Both must have a direct personal need for the goods of the other person (this problem is called the "[[Wikipedia:Coincidence of wants|double coincidence of wants]]") and the goods must be easily divided. Using another, marketable good between the traded and desired goods and services helps to reduce some of the problems.

: Indirect exchange means, "''if, between the commodities and services, that are the ultimate end of exchanging, are one or several media of exchange.''"<ref name="Goods" />

Another grave problem with a world of barter is that it is impossible for any business [[firm]] to '''calculate''' how it's doing, whether it is making profits or incurring losses, beyond a very primitive estimate. Suppose that you are a business firm, and you are trying to calculate your income, and your expenses, for the previous month. And you list your income: "let's see, last month we took in 20 yards of string, 3 codfish, 4 cords of lumber, 3 bushels of wheat. . . etc.," and "we paid out: 5 empty barrels, 8 pounds of cotton, 30 bricks, 5 pounds of beef." How in the world could you figure out how well you are doing? Once a money is established in an economy, however, business calculation becomes easy: "Last month, we took in 500, and paid out 450. Net profit, 50." The development of a general medium of exchange, then, is a crucial requisite to the development of any sort of flourishing market economy.<ref name="Rothbard_money">[[Murray N. Rothbard]]. [http://mises.org/books/fed.pdf The Case Against the Fed] (pdf), The Genesis of Money, p.12-15, referenced 2010-03-18.</ref>

A [[commodity]] that comes into general use as a medium of exchange is money. The concept of a "medium of exchange" is precise. But when exactly comes a medium of exchange into "common" or "general" use is not strictly definable. Whether or not is a medium money can be decided only by the judgment of the historian. Since there is a great tendency on the market for a medium of exchange to become money, it is called money for simplification.<ref name="Rothbard_medium">Murray N. Rothbard [http://mises.org/rothbard/mes/chap3a.asp#2._Emergence_of_Indirect "2. The Emergence of Indirect Exchange"] Chapter 3-The Pattern of indirect exchange, ''[[Man, Economy and State]]'', online edition, referenced 2009-05-05.</ref>

Note that money is still a [[good]] - the most marketable good. Money is valuable to the extent that others are willing to accept it in exchange. But, money itself must first have originated as a directly serviceable good before it could become an indirectly serviceable good.<ref name="Mahoney_money">Dan Mahoney. [http://mises.org/story/672 "Austrian Business Cycle Theory: A Brief Explanation"], ''[[Mises Institute]]'', referenced 2009-06-17.</ref>

==Origin and properties==
In the history of mankind, a great variety of commodities — cattle, shells, nails, tobacco, cotton, copper, silver, gold, stone wheels<ref name="Friedman_Yap">Milton Friedman. [http://hoohila.stanford.edu/workingpapers/getWorkingPaper.php?filename=E-91-3.pdf "The Island of Stone Money"] (pdf), The Hoover Institution, Stanford University, February 1991, referenced 2009-08-14.</ref>, and so on, have been used as media of exchange. In the most developed societies, the precious metals have eventually been preferred to all other goods because of their physical characteristics ([[scarcity]], durability, divisibility, distinct look and sound, homogeneity through space and time, malleability, and beauty).<ref name="Hulsmann_money">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), online version, 2. The Origin and Nature of Money, p.22-24, referenced 2009-05-08.</ref>

For a good to become money, it must have the physical properties and be considered valuable by itself. The [[price]] of a good, when employed only for nonmonetary purposes, is a good starting point to estimate its price for use as a money. Should the good stop being money, it will still have [[value]] due its other uses.<ref name="Hulsmann_money" />

Historically, there were often several types of money used concurrently and for different purposes. For example, [[silver]] tended to be widespread in daily use, while [[gold]] served for larger and international transactions. Livestock<ref name="Davies">Davies, Glyn. [http://projects.exeter.ac.uk/RDavies/arian/origins.html "A history of money from ancient times to the present day"], Origins of Money and of Banking, referenced 2009-05-09.</ref> was for ages associated with wealth (and while it is bulky, it can be easily transported). The role of cigarettes<ref>R. A. Radford. [http://www.albany.edu/~mirer/eco110/pow.html "The Economic Organisation of a P.O.W. Camp"], ''[[Wikipedia:Economica|Economica]]'', vol. 12, 1945, referenced 2009-05-09.</ref> in prisons is also well documented.

In the present, money is mostly in the form of [[coin]]s and [[banknote]]s.

{{See also|History of Money and Banking}}

===Commodity money===
The emergence of money happens through a gradual process, in the course of which more and more market participants, each for himself, decide to use one [[commodity]] rather than others in their indirect exchanges. Thus the historical selection of gold, silver, and copper was not made through some sort of a social contract or convention. Rather, it resulted from the spontaneous convergence of many individual choices, a convergence that was prompted through the objective physical characteristics of the precious metals. Money selected in the free market. i.e. money that comes into use by the voluntary cooperation of acting persons, is also called ''natural money''.<ref name="Hulsmann_money" />

By adding a new component to the pre-existing (barter) demand for these goods, their marketability is still further enhanced. Based on their perception of this fact, other market participants increasingly choose the same goods for their inventory of exchange media, as it is in their own interest to select media of exchange that are already employed by others for the same purpose. Initially, a variety of goods may be in demand as common media of exchange. However, since a good is demanded as a medium of exchange to facilitate future purchases of directly serviceable goods (i.e., to help one buy more cheaply) and simultaneously widen one's market as a seller of directly useful goods and services (i.e., help one sell more dearly), the more widely a commodity is used as a medium of exchange, the better it will perform its function.<ref name="Hoppe_money">Hans-Hermann Hoppe. [http://mises.org/journals/rae/pdf/RAE7_2_3.pdf "How is Fiat Money Possible? - or, The Devolution of Money and Credit"] (pdf), The Review of Austrian Economics Vol.7, No. 2 (1994). Referenced 2010-04-28.</ref>

Because each market participant naturally prefers the acquisition of a more marketable and, in the end, universally marketable medium of exchange to that of a less or non-universally marketable one, "there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money."<ref name="Mises_origin">Ludwig von Mises. [http://mises.org/books/tmc.pdf "Theory of Money and Credit"] (pdf), p.32-33, referenced 2010-04-28.</ref>

===Fiat money===
Money did not and never could begin by some arbitrary social contract, or by some government agency decreeing that everyone has to accept the tickets it issues. Even coercion could not force people and institutions to accept meaningless tickets that they had not heard of or that bore no relation to any other pre-existing money.<ref name="Rothbard_money" />

If anyone could produce [[paper money]] on their own, without backing by an underlying commodity, a [[hyperinflation]] would soon follow. Free entry into the note-production business must be restricted, and a money [[monopoly]] must be established. Fiat money can be only established via the development of money substitutes (paper titles to commodity money) - but only fraudulently and only at the price of economic inefficiencies. [[Wikipedia:Hans-Hermann Hoppe|Hoppe]] speaks of the "devolution" of money.<ref name="Hoppe_money" />
{{Main|Fiat Money}}

==Types==

===Commodity money===
As the more marketable [[Commodity|commodities]] in any society begin to be picked by individuals as media of exchange, their choices will quickly focus on the few most marketable commodities available. The demand for these commodities has now an additional component - not only for their direct use, but also for their use as a medium of exchange. This increase in the demand greatly increases their marketability. If e.g. butter begins as one of the most marketable commodities and is therefore more and more chosen as a medium, this increase in the demand for butter greatly increases the very marketability that makes it useful as a medium in the first place. The process is cumulative, with the most marketable commodities becoming enormously more marketable and with this increase spurring their use as media of exchange. The process continues, with an ever-widening gap between the marketability of the medium and the other commodities, until finally one or two commodities are far more marketable than any others and are in general use as media of exchange.<ref name="Rothbard_medium" />

===Money substitutes===
Or ''money certificates'', are placeholders for actual money, that is stored in a [[bank]] and can be redeemed at any time by the present owner of the note. Instead of trading e.g. silver, people would trade with notes representing the silver. Apart from paper notes, the main types of such substitutes are token coins, certificates of deposit, checking accounts, credit cards, and electronic bank accounts on the Internet. The advantage are lower transaction costs, the downside is a greater potential for abuse (and historically, this lure appeared to be irresistible).<ref name="Hulsmann_certificates">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), Chapter 2. Money certificates p.35-41, referenced 2009-05-10</ref>

===Credit money===
Credit money is created when financial instruments are used in indirect exchange. It is only a derived kind of money: it receives its [[value]] from an expected future redemption. For example, an [[Wikipedia:IOU (debt)|IOU]] can be accepted by others, if they trust the reputation of the issuer of [[debt]]. This risk of default also limits its application.

"Not surprisingly, therefore, credit money has reached wider circulation only when the credit was denominated in terms of some commodity money, when the reputation of the issuer was beyond doubt, and when it was the only way to quickly provide the government with the funds needed to
conduct large-scale war."<ref name="Hulsmann_credit_money">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "The Ethics of Money Production"] (pdf), 2. The origin and nature of Money, p.28-29, referenced 2009-05-10</ref>

===Fiat money===
{{Main|Fiat Money}}
Often called '''paper money''', fiat money is in a wider sense any money declared to be [[Legal tender|legal tender]] by government ''fiat''. In the narrower sense used here, fiat money is an [[Wikipedia:intrinsic|intrinsically]] useless good used as a means of payment and a storable object.<ref>Walsh, Carl E. Monetary Theory and Policy, The MIT Press 2003, ISBN 978-0-262-23231-9, [http://www.google.com/url?sa=U&start=4&q=http://books.google.com/books%3Fid%3DeX3n3LSZVrIC%26dq%3DWalsh,%2BCarl%2BE.%2BMonetary%2BTheory%2Band%2BPolicy%26printsec%3Dfrontcover%26source%3Dbn%26hl%3Den&ei=kCwHSuypIoGH_Qb99sXcBg&usg=AFQjCNFILyic0qj63G7aiTnMpix5BJaRDQ&ei=kCwHSuypIoGH_Qb99sXcBg&oi=book_result&ct=result&resnum=4 online version], referenced 2009-05-10.</ref> All modern paper currencies are fiat money.

There are many reported advantages to fiat money as opposed to commodity-based money, among them:
* much lower costs of production
* the quantity can be easily modified to suit the needs of trade
* the quantity can be easily modified to stabilize the value of the money unit.

The main risk of this money is the possibility of a complete loss of value.

{{See also|For and against paper money}}

===Electronic money===
The information technologies have been able to develop very efficient and beneficial new instruments to access and transfer. But no purely electronic money has been produced so far, except for government money, which is free from competition.<ref name="Hülsmann_fiat">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "Ethics of Money Production"] (pdf), Chapter 1., 5. Paper Money and the Free Market, p. 29-33, referenced 2009-05-10.</ref> A possible candidate for a purely electronic money, which is currently in the experimental stage, is [[bitcoin]].

==Production of money==
The [[production]] of additional units of money will decrease the value of already existing units. Those owning these additional units will tend to pay more money for goods and services or demand additional goods and services, and demand in turn more money when selling their own goods and services. Thusly, the production of money has a tendency to raise money [[price]]s, starting from the producers of money and spreading to other economical actors.

In the free market, the amount of money produced depends in the free market on the consumers. They decide not only the amount of goods (or money) to be produced, but also the the types of money widely used. Historically, coins of several metals and alloys were used concurrently, this appears to be the natural state of things.

It is often asserted, that higher money prices benefit debtors, as it lowers the relative value of their debts. This may not always be the case: if the lender's estimate of the rising prices is too high, the debtor may end up paying more on account of the expected [[inflation]].

The final and possibly most important effect of a rising [[money supply]] is in its timing - the positive effect of "having more money" benefits the producer of money and those getting it first; while the negative effects impact the latecomers. This redistribution of of wealth and rising prices may be limited to some degree, but cannot be avoided.<ref name="Hulsmann_production">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "Ethics of Money Production"] (pdf), Chapter 3 Money within the Market Process, referenced 2009-05-10.</ref>

===The optimal quantity of money===
For all products except money, an increase is socially beneficial, since it means that production and living standards have increased in response to consumer demand. If steel or bread or houses are more plentiful and cheaper than before, everyone‘s standard of living benefits. But an increase in the [[Money supply|supply of money]] cannot relieve the natural scarcity of consumer or capital goods; all it does is to make the money cheaper, that is, lower its purchasing power in terms of all other goods and services. Once a good has been established as money on the market, then, it exerts its full power as a mechanism of exchange or an instrument of calculation. All that an increase in the quantity of dollars can do is to dilute the effectiveness, the purchasing-power, of each money. Hence, the great truth of monetary theory emerges: once a commodity is in sufficient supply to be adopted as a money, no further increase in the supply of money is needed. Any quantity of money in society is "optimal." Once a money is established, an increase in its supply confers no social benefit.<ref name="Rothbard_money" />

This is not the situation with '''commodity money'''. Money originally emerged from an ordinary commodity that people demanded because it contributed tangible benefits to their life and well being - one of them the service of a medium of exchange. Therefore, an increase of the production of commodity means more useful goods.<ref name="Shostak">Frank Shostak. [http://mises.org/daily/1596 "The Subsistence Fund"], Mises Daily, August 2004, referenced 2010-05-10.</ref>

==Using money==
Money can be employed in several ways:<ref name="Mahoney_money" />

* Money can be held. Holding it "buys" alleviation from a currently felt uneasiness about an [[Uncertainty|uncertain]] future. If the future seems more uncertain, people will increase their cash holdings.
* Money can be used to buy consumer [[good]]s. People increase their consumption if their time preference rises.
* Finally, it can be [[Saving|saved]], to buy producer goods and so form [[capital]]. People save because their [[Time preference|time preference]] falls.

==References==
{{Reflist}}

==External links==
* Murray N. Rothbard, [http://mises.org/rothbard/mes.asp Man, Economy and State], esp. Chapters 2 and 3
* Ludwig von Mises, [http://mises.org/resources/3250 Human Action], esp. Chapter XVII
* [[Wikipedia:Money|Wikipedia page]] on money and [[Wikipedia:History of money|history of money]]
* Frank A. Fetter, Economics In Two Volumes: [http://chestofbooks.com/finance/economics/Economics2-Modern-Economic-Problems/index.html Volume II. Modern Economic Problems]
* [http://mises.org/books/desoto.pdf Money, Bank Credit, and Economic Cycles] (pdf) by Jesus Huerta de Soto
[[Category:Economic concepts]]

Bitcoin

2010-11-14T12:28:01Z

213.84.251.91:

{{Infobox
| Box title = Software
| Row 1 title= name
| Row 1 info= Bitcoin
| Row 2 title=title
| Row 2 info= Bitcoin
| Row 3 title=developer
| Row 3 info= Satoshi Nakamoto
| Row 4 title=latest release version
| Row 4 info = 0.3.12
| Row 5 title=latest release date
| Row 5 info= "2010/09/07"
| Row 6 title=programming language
| Row 6 info = [[Wikipedia:C++]]
| Row 7 title=operating system
| Row 7 info = Windows, Linux, Mac OS X
| Row 8 title=status
| Row 8 info = Beta
| Row 9 title=genre
| Row 9 info= [[Wikipedia:Electronic money|Electronic money]]
| Row 10 title=license
| Row 10 info = [[Wikipedia:MIT License|MIT License]]
| Row 11 title=website
| Row 11 info = [http://www.bitcoin.org/ "www.bitcoin.org"]
}}

{{Infobox
|Box title=Currency
| Row 1 title = currency name
| Row 1 info = Bitcoin
| Row 2 title = using countries
|Row 2 info = ''Internet-based (global)''
| Row 3 title=symbol
| Row 3 info = BTC
| Row 4 title=issuing authority
| Row 4 info= Bitcoin network
| Row 5 title =issuing authority website
| Row 5 info www.bitcoin.org
}}

'''Bitcoin''' is an open source [[Wikipedia:peer-to-peer|peer-to-peer]] [[Wikipedia:electronic cash|electronic cash]] system developed by Satoshi Nakamoto. The system is decentralized with no central server or trusted parties.<ref name="hartford">
{{cite news
|title=Is It Time For Digital-Only Dollars?
|first=Phil
|last=Maymin
|date=2010-07-08
|newspaper=Hartford Advocate
|url=http://www.hartfordadvocate.com/commentary/is-it-time-for-digital-only-dollars-2
|accessdate=2010-07-23
}}</ref> Bitcoin relies on [[Wikipedia:cryptographic|cryptographic]] principles to create unique, unreproducible, and divisible tokens of value. Users hold the [[Wikipedia:Key (cryptography)|cryptographic keys]] to their own money and transact directly with each other, with the help of the network to check for [[Wikipedia:double-spending|double-spending]].<ref name="infoworld_2010">
{{cite news
|date=2010-05-24
|title=Open source innovation on the cutting edge
|first=Neil
|last=McAllister
|newspaper=InfoWorld
|url=http://www.infoworld.com/d/open-source/open-source-innovation-the-cutting-edge-582?page=0,2
|accessdate=2010-07-23
}}</ref>

==Technical basis==
[[File:Hash tree.png|thumb|300px|right|Bitcoin uses an ever-growing [[Wikipedia:hash tree]] to store, linearize, and verify transactions.{{Citation needed|date=August 2010}}]]

Bitcoin is an implementation of Wei Dai's b-money proposal on [[Wikipedia:Cypherpunks|Cypherpunks]] in 1998 and Nick Szabo's Bitgold proposal.<ref>[http://www.bitcoin.org/smf/index.php?topic=342.msg4508#msg4508 Bitcoin author on external references]</ref> The principles of the system are described in the Bitcoin White Paper.<ref name=Whitepaper>[http://www.bitcoin.org/sites/default/files/bitcoin.pdf Bitcoin White Paper]</ref>

A user on the network has one or several cryptographic identifiers ([[Wikipedia:ECDSA|ECDSA]] keypairs), which represent their [[Wikipedia:wallet|wallet]]. The public key counterpart of this wallet is called an ''address''. The private key, stored only on the user's computer, is used to authorize payments from the user. The wallet or address contain no information about their owner, so they are effectively anonymous.<ref>{{cite news |author=Nathan Willis |date=2010-11-10 |title=Bitcoin: Virtual money created by CPU cycles |publisher=[[Wikipedia:LWN.net]] |url=http://lwn.net/SubscriberLink/414452/ef58a58a62148050/ }}</ref>

Each coin of the Bitcoin system has its owner's [[Wikipedia:public key|public key]] on it. The owner can transfer it further by adding the recipient's public key on it, signing it with his private key and broadcasting the transaction to the network. This way, each coin contains its cryptographic ownership history from the creator of the coin to its current owner.

To prevent users from double-spending their coins (signing the same coin for many recipients), transactions are [[Wikipedia:timestamp|timestamped]] by the network with a [[Wikipedia:proof-of-work system|proof-of-work system]]. The network collects and records new transactions into a chain of blocks. Nodes of the network are constantly racing to complete these blocks by finding a value, that summed up with the block and the hash of the previous block, produces an [[Wikipedia:SHA-256|SHA-256]] hash containing a certain amount of leading zero bits. The average work required by this operation can be calculated and used to timestamp the block's transactions, so that they cannot be invalidated by later double-spending.

The incentive to use CPU time for running the system is that new coins are created and assigned to the node that manages to complete the new block first. This method of coin creation "was designed to be a digital analogue to gold and silver mining"<ref>[http://www.lewrockwell.com/orig6/luongo7.1.1.html LewRockwell.com article: The FED’s Real Monetary Problem]</ref>. Once a node successfully creates a block, it broadcasts the block to the network. Other nodes receive the block, perform a proof-of-work check, and add it to their chain if it is valid. As more transactions occur, blocks are created and added ad infinitum. The longest proof-of-work block chain is acknowledged to be the oldest and most reliable account of the transaction history.

This mechanism is claimed<ref name=Whitepaper /> to be virtually tamper-proof. For an attacker to manipulate the record, he must outpace all of the other nodes on the network to produce the longest proof-of-work. This becomes exponentially more difficult as time passes, because such "tampered" chains would continuously be rejected by nodes attempting to build a valid chain.

Bitcoin is a completely peer-to-peer network, and every node is able to enter or leave the network at will. When a node joins the network, the longest proof-of-work is automatically accepted as the most reliable one.

==Economic aspects==
The average rate of Bitcoin production is tapered such that over time the total number of Bitcoins will approach 21,000,000. After this point, no further Bitcoin production is possible. In this [[Wikipedia:deflation|deflationary]] environment and in situations where large numbers of Bitcoins are either lost or destroyed, the electronic divisibility of Bitcoins is argued to be conducive to downward price adjustments with no practical limitations in the actual storage or transport of Bitcoin value.<ref name=Divisiblity>[http://www.bitcoin.org/smf/index.php?topic=44.0 Divisibility of Bitcoins]</ref> Rather than relying on the incentive of newly created Bitcoins to package transactions, nodes in this period will likely depend more heavily on their ability to competitively collect transaction fees to process Bitcoin transactions into blocks.<ref>[http://www.bitcoin.org/smf/index.php?topic=165.0 Incentive to Collect Transactions]</ref>

==Monetary and financial benefits==
Given the decentralized nature of Bitcoin and the hard coding of monetary rules within the software, various monetary and financial benefits to potential users exist<ref name=FAQ>[http://www.bitcoin.org/faq Bitcoin FAQ]</ref>:

* Direct transfer of monetary value via the internet without a trusted middleman or financial processor.
* Third parties cannot prevent or control transactions.
* Transactions are practically free.
* Bitcoin value is unconnected to possible instability caused by fractional reserve banking and poor central bank policy (see [[Austrian business cycle theory]]).
* Corrupted transactions created by hacked or modified clients are rejected by honest clients.
* The limited inflation of the Bitcoin system’s money supply is distributed evenly by CPU power throughout the network and programmatically created at a rate known to all parties in advance. Inflation cannot therefore be centrally manipulated to effect redistribution of Bitcoin value from general users.
* Given the predetermined rate of Bitcoin creation, the system is further protected against wild swings in supply due to externalities sometimes seen with traditional commodity currencies (see [[Wikipedia:History_of_the_rupee#The_fall_of_the_Rupee|Fall of the Rupee]] due to large discoveries of silver reserves in the New World).
* Bitcoins are potentially divisible to eight decimal points.<ref name=Divisiblity /> There are therefore no practical limitations to downward price adjustments in a deflationary environment.

According to the author, the design also supports a variety of possible transaction types that have yet to be implemented within the currently available client. These include [[Wikipedia:escrow|escrow]] transactions, [[Wikipedia:surety bond|surety bond]] contracts, third party [[Wikipedia:arbitration|arbitration]], and multi-party signatures.<ref>[http://www.bitcoin.org/smf/index.php?topic=195.msg1611#msg1611 Predicate Transactions]</ref>

==Acceptance==

As of august 2010 there are roughly 30 sites accepting payment via Bitcoin<ref name=AcceptingSites>[http://www.bitcoin.org/trade List of sites accepting Bitcoin]</ref>, spanning areas such as [[Wikipedia:VOIP|digital telephony]] services<ref>[http://forum.link2voip.com/viewtopic.php?f=1&t=1088 Link2VoIP (www.link2voip.com) accepts Bitcoin as payment.]</ref>, [[Wikipedia:currency trading]] systems<ref>[http://www.bitcoin.org/smf/index.php?topic=20.msg747#msg747 Bitcoin Trading System.]</ref><ref>{{cite web|url=http://www.bitcointo.com/|title=Bitcointo, a Bitcoin to physical goods conversion service}}</ref>, online games<ref>{{cite web|url=http://www.atitd.com/|title=A Tale in the Desert IV accepts Bitcoin as payment}}</ref><ref>{{cite web|url=http://www.sirarthur.net/bitcasino|title=BitCoin Casino}}</ref><ref>{{cite web|url=http://www.thefarwilds.com/|title=The Far Wilds, online game accepting Bitcoin as payment}}</ref>, physical goods<ref>{{cite web|url=http://qextracts.ecrater.com/|title=Quiggle extracts, online apothecary accepting bitcoins as payment}}</ref><ref>{{cite web|url=http://www.theoddshot.com.au/|title=The Odd Shot, a print photography business accepting bitcoins as payment}}</ref>, advertising services<ref>{{cite web|url=http://www.bitads.tk/|title=Bitads, advertising system accepting Bitcoins as payment}}</ref><ref>{{cite web|url=http://www.bitlist.tk/|title=Bitlist, advertising system accepting Bitcoins as payment}}</ref>, auction systems<ref>{{cite web|title=BiddingPond.com, a Bitcoin-powered auction system|url=http://www.biddingpond.com/}}</ref>, web hosting<ref>{{cite web|url=http://www.privacyshark.com/|title=Privacy Shark, anonymous Bitcoin-based domain name and DNS hosting services}}</ref>, computer security auditing<ref>{{cite web|url=http://binarysecurity.webs.com/|title=Binary Security, Bitcoin only web application security auditing services}}</ref> and other online services. Also [EFF] accepts donation in bitcoins yay

==See also==
*[[Wikipedia:Anonymous internet banking|Anonymous internet banking]]
*[[Wikipedia:Crypto-anarchy|Crypto-anarchy]]
*[[Wikipedia:eCache|eCache]]
*[[Wikipedia:HashCash|HashCash]]
*[[Wikipedia:Pecunix|Pecunix]]
*[[Wikipedia:Ripple monetary system|Ripple monetary system]]
*[[Wikipedia:Yodelbank|Yodelbank]]

==References==
{{Reflist|1}}

==External links==
*[http://www.bitcoin.org/ Official website]
*{{SourceForge|bitcoin}}
*[http://news.slashdot.org/story/10/07/11/1747245/Bitcoin-Releases-Version-03 news.slashdot.org]
*[http://p2pfoundation.ning.com/profiles/blogs/bitcoin-open-source-p2p-ecash p2pfoundation.net]
*''[http://modeledbehavior.com/2010/06/30/bitcoin-and-the-wild-west/ Bitcoin and the Wild West]'', Modeled Behaviour blog.
*[http://dailypaul.com/node/139776 dailypaul.com]
*[http://www.reddit.com/domain/bitcoin.org/ reddit.com]
*[http://habrahabr.ru/blogs/crypto/99100/ Russian blog]
*[http://www.linux.org.ru/news/opensource/5113340 linux.org.ru]

[[Category:Currency]]
[[Category:Electronic currencies]] -->

Bitcoin

2010-11-14T12:19:42Z

213.84.251.91:

{{Infobox
| Box title = Software
| Row 1 title= name
| Row 1 info= Bitcoin
| Row 2 title=title
| Row 2 info= Bitcoin
| Row 3 title=developer
| Row 3 info= Satoshi Nakamoto
| Row 4 title=latest release version
| Row 4 info = 0.3.12
| Row 5 title=latest release date
| Row 5 info= "2010/09/07"
| Row 6 title=programming language
| Row 6 info = [[Wikipedia:C++]]
| Row 7 title=operating system
| Row 7 info = Windows, Linux, Mac OS X
| Row 8 title=status
| Row 8 info = Beta
| Row 9 title=genre
| Row 9 info= [[Wikipedia:Electronic money]]
| Row 10 title=license
| Row 10 info = [[Wikipedia:MIT License]]
| Row 11 title=website
| Row 11 info = [http://www.bitcoin.org/ "www.bitcoin.org"]
}}

{{Infobox
|Box title=Currency
| Row 1 title = currency name
| Row 1 info = Bitcoin
| Row 2 title = using countries
|Row 2 info = ''Internet-based (global)''
| Row 3 title=symbol
| Row 3 info = BTC
| Row 4 title=issuing authority
| Row 4 info= Bitcoin network
| Row 5 title =issuing authority website
| Row 5 info www.bitcoin.org
}}

'''Bitcoin''' is an open source [[Wikipedia:peer-to-peer]] [[Wikipedia:electronic cash]] system developed by Satoshi Nakamoto. The system is decentralized with no central server or trusted parties.<ref name="hartford">
{{cite news
|title=Is It Time For Digital-Only Dollars?
|first=Phil
|last=Maymin
|date=2010-07-08
|newspaper=Hartford Advocate
|url=http://www.hartfordadvocate.com/commentary/is-it-time-for-digital-only-dollars-2
|accessdate=2010-07-23
}}</ref> Bitcoin relies on [[Wikipedia:cryptographic]] principles to create unique, unreproducible, and divisible tokens of value. Users hold the [[Wikipedia:Key (cryptography)|cryptographic keys]] to their own money and transact directly with each other, with the help of the network to check for [[Wikipedia:double-spending]].<ref name="infoworld_2010">
{{cite news
|date=2010-05-24
|title=Open source innovation on the cutting edge
|first=Neil
|last=McAllister
|newspaper=InfoWorld
|url=http://www.infoworld.com/d/open-source/open-source-innovation-the-cutting-edge-582?page=0,2
|accessdate=2010-07-23
}}</ref>

==Technical basis==
[[File:Hash tree.png|thumb|300px|right|Bitcoin uses an ever-growing [[Wikipedia:hash tree]] to store, linearize, and verify transactions.{{Citation needed|date=August 2010}}]]

Bitcoin is an implementation of Wei Dai's b-money proposal on [[Wikipedia:Cypherpunks]] in 1998 and Nick Szabo's Bitgold proposal.<ref>[http://www.bitcoin.org/smf/index.php?topic=342.msg4508#msg4508 Bitcoin author on external references]</ref> The principles of the system are described in the Bitcoin White Paper.<ref name=Whitepaper>[http://www.bitcoin.org/sites/default/files/bitcoin.pdf Bitcoin White Paper]</ref>

A user on the network has one or several cryptographic identifiers ([[Wikipedia:ECDSA]] keypairs), which represent their [[wallet]]. The public key counterpart of this wallet is called an ''address''. The private key, stored only on the user's computer, is used to authorize payments from the user. The wallet or address contain no information about their owner, so they are effectively anonymous.<ref>{{cite news |author=Nathan Willis |date=2010-11-10 |title=Bitcoin: Virtual money created by CPU cycles |publisher=[[Wikipedia:LWN.net]] |url=http://lwn.net/SubscriberLink/414452/ef58a58a62148050/ }}</ref>

Each coin of the Bitcoin system has its owner's [[Wikipedia:public key]] on it. The owner can transfer it further by adding the recipient's public key on it, signing it with his private key and broadcasting the transaction to the network. This way, each coin contains its cryptographic ownership history from the creator of the coin to its current owner.

To prevent users from double-spending their coins (signing the same coin for many recipients), transactions are [[Wikipedia:timestamp|timestamped]] by the network with a [[Wikipedia:proof-of-work system]]. The network collects and records new transactions into a chain of blocks. Nodes of the network are constantly racing to complete these blocks by finding a value, that summed up with the block and the hash of the previous block, produces an [[Wikipedia:SHA-256]] hash containing a certain amount of leading zero bits. The average work required by this operation can be calculated and used to timestamp the block's transactions, so that they cannot be invalidated by later double-spending.

The incentive to use CPU time for running the system is that new coins are created and assigned to the node that manages to complete the new block first. This method of coin creation "was designed to be a digital analogue to gold and silver mining"<ref>[http://www.lewrockwell.com/orig6/luongo7.1.1.html LewRockwell.com article: The FED’s Real Monetary Problem]</ref>. Once a node successfully creates a block, it broadcasts the block to the network. Other nodes receive the block, perform a proof-of-work check, and add it to their chain if it is valid. As more transactions occur, blocks are created and added ad infinitum. The longest proof-of-work block chain is acknowledged to be the oldest and most reliable account of the transaction history.

This mechanism is claimed<ref name=Whitepaper /> to be virtually tamper-proof. For an attacker to manipulate the record, he must outpace all of the other nodes on the network to produce the longest proof-of-work. This becomes exponentially more difficult as time passes, because such "tampered" chains would continuously be rejected by nodes attempting to build a valid chain.

Bitcoin is a completely peer-to-peer network, and every node is able to enter or leave the network at will. When a node joins the network, the longest proof-of-work is automatically accepted as the most reliable one.

==Economic aspects==
The average rate of Bitcoin production is tapered such that over time the total number of Bitcoins will approach 21,000,000. After this point, no further Bitcoin production is possible. In this [[Wikipedia:deflation|deflationary]] environment and in situations where large numbers of Bitcoins are either lost or destroyed, the electronic divisibility of Bitcoins is argued to be conducive to downward price adjustments with no practical limitations in the actual storage or transport of Bitcoin value.<ref name=Divisiblity>[http://www.bitcoin.org/smf/index.php?topic=44.0 Divisibility of Bitcoins]</ref> Rather than relying on the incentive of newly created Bitcoins to package transactions, nodes in this period will likely depend more heavily on their ability to competitively collect transaction fees to process Bitcoin transactions into blocks.<ref>[http://www.bitcoin.org/smf/index.php?topic=165.0 Incentive to Collect Transactions]</ref>

==Monetary and financial benefits==
Given the decentralized nature of Bitcoin and the hard coding of monetary rules within the software, various monetary and financial benefits to potential users exist<ref name=FAQ>[http://www.bitcoin.org/faq Bitcoin FAQ]</ref>:

* Direct transfer of monetary value via the internet without a trusted middleman or financial processor.
* Third parties cannot prevent or control transactions.
* Transactions are practically free.
* Bitcoin value is unconnected to possible instability caused by fractional reserve banking and poor central bank policy (see [[Austrian business cycle theory]]).
* Corrupted transactions created by hacked or modified clients are rejected by honest clients.
* The limited inflation of the Bitcoin system’s money supply is distributed evenly by CPU power throughout the network and programmatically created at a rate known to all parties in advance. Inflation cannot therefore be centrally manipulated to effect redistribution of Bitcoin value from general users.
* Given the predetermined rate of Bitcoin creation, the system is further protected against wild swings in supply due to externalities sometimes seen with traditional commodity currencies (see [[Wikipedia:History_of_the_rupee#The_fall_of_the_Rupee|Fall of the Rupee]] due to large discoveries of silver reserves in the New World).
* Bitcoins are potentially divisible to eight decimal points.<ref name=Divisiblity /> There are therefore no practical limitations to downward price adjustments in a deflationary environment.

According to the author, the design also supports a variety of possible transaction types that have yet to be implemented within the currently available client. These include [[Wikipedia:escrow]] transactions, [[Wikipedia:surety bond]] contracts, third party [[Wikipedia:arbitration]], and multi-party signatures.<ref>[http://www.bitcoin.org/smf/index.php?topic=195.msg1611#msg1611 Predicate Transactions]</ref>

==Acceptance==

As of august 2010 there are roughly 30 sites accepting payment via Bitcoin<ref name=AcceptingSites>[http://www.bitcoin.org/trade List of sites accepting Bitcoin]</ref>, spanning areas such as [[Wikipedia:VOIP|digital telephony]] services<ref>[http://forum.link2voip.com/viewtopic.php?f=1&t=1088 Link2VoIP (www.link2voip.com) accepts Bitcoin as payment.]</ref>, [[Wikipedia:currency trading]] systems<ref>[http://www.bitcoin.org/smf/index.php?topic=20.msg747#msg747 Bitcoin Trading System.]</ref><ref>{{cite web|url=http://www.bitcointo.com/|title=Bitcointo, a Bitcoin to physical goods conversion service}}</ref>, online games<ref>{{cite web|url=http://www.atitd.com/|title=A Tale in the Desert IV accepts Bitcoin as payment}}</ref><ref>{{cite web|url=http://www.sirarthur.net/bitcasino|title=BitCoin Casino}}</ref><ref>{{cite web|url=http://www.thefarwilds.com/|title=The Far Wilds, online game accepting Bitcoin as payment}}</ref>, physical goods<ref>{{cite web|url=http://qextracts.ecrater.com/|title=Quiggle extracts, online apothecary accepting bitcoins as payment}}</ref><ref>{{cite web|url=http://www.theoddshot.com.au/|title=The Odd Shot, a print photography business accepting bitcoins as payment}}</ref>, advertising services<ref>{{cite web|url=http://www.bitads.tk/|title=Bitads, advertising system accepting Bitcoins as payment}}</ref><ref>{{cite web|url=http://www.bitlist.tk/|title=Bitlist, advertising system accepting Bitcoins as payment}}</ref>, auction systems<ref>{{cite web|title=BiddingPond.com, a Bitcoin-powered auction system|url=http://www.biddingpond.com/}}</ref>, web hosting<ref>{{cite web|url=http://www.privacyshark.com/|title=Privacy Shark, anonymous Bitcoin-based domain name and DNS hosting services}}</ref>, computer security auditing<ref>{{cite web|url=http://binarysecurity.webs.com/|title=Binary Security, Bitcoin only web application security auditing services}}</ref> and other online services. Also [EFF] accepts donation in bitcoins yay

==See also==
*[[Wikipedia:Anonymous internet banking]]
*[[Wikipedia:Crypto-anarchy]]
*[[Wikipedia:eCache]]
*[[Wikipedia:HashCash]]
*[[Wikipedia:Pecunix]]
*[[Wikipedia:Ripple monetary system]]
*[[Wikipedia:Yodelbank]]

==References==
{{Reflist|1}}

==External links==
*[http://www.bitcoin.org/ Official website]
*{{SourceForge|bitcoin}}
*[http://news.slashdot.org/story/10/07/11/1747245/Bitcoin-Releases-Version-03 news.slashdot.org]
*[http://p2pfoundation.ning.com/profiles/blogs/bitcoin-open-source-p2p-ecash p2pfoundation.net]
*''[http://modeledbehavior.com/2010/06/30/bitcoin-and-the-wild-west/ Bitcoin and the Wild West]'', Modeled Behaviour blog.
*[http://dailypaul.com/node/139776 dailypaul.com]
*[http://www.reddit.com/domain/bitcoin.org/ reddit.com]
*[http://habrahabr.ru/blogs/crypto/99100/ Russian blog]
*[http://www.linux.org.ru/news/opensource/5113340 linux.org.ru]

[[Category:Currency]]
[[Category:Electronic currencies]] -->

Bitcoin

2010-11-14T12:12:29Z

213.84.251.91: Created page with "{{Infobox | Box title = Software | Row 1 title= name | Row 1 info= Bitcoin | Row 2 title=title | Row 2 info= Bitcoin | Row 3 title=developer | Row 3 info= Satoshi Nakamoto | Row ..."

{{Infobox
| Box title = Software
| Row 1 title= name
| Row 1 info= Bitcoin
| Row 2 title=title
| Row 2 info= Bitcoin
| Row 3 title=developer
| Row 3 info= Satoshi Nakamoto
| Row 4 title=latest release version
| Row 4 info = 0.3.12
| Row 5 title=latest release date
| Row 5 info= "2010/09/07"
| Row 6 title=programming language
| Row 6 info = [[Wikipedia:C++]]
| Row 7 title=operating system
| Row 7 info = Windows, Linux, Mac OS X
| Row 8 title=status
| Row 8 info = Beta
| Row 9 title=genre
| Row 9 info= [[Wikipedia:Electronic money]]
| Row 10 title=license
| Row 10 info = [[Wikipedia:MIT License]]
| Row 11 title=website
| Row 11 info = [http://www.bitcoin.org/ www.bitcoin.org]
}}

{{Infobox
|Box title=Currency
| Row 1 title = currency name
| Row 1 info = Bitcoin
| Row 2 title = using countries
|Row 2 info = ''Internet-based (global)''
| Row 3 title=symbol
| Row 3 info = BTC
| Row 4 title=issuing authority
| Row 4 info= Bitcoin network
| Row 5 title =issuing authority website
| Row 5 info www.bitcoin.org
}}

'''Bitcoin''' is an open source [[Wikipedia:peer-to-peer]] [[Wikipedia:electronic cash]] system developed by Satoshi Nakamoto. The system is decentralized with no central server or trusted parties.<ref name="hartford">
{{cite news
|title=Is It Time For Digital-Only Dollars?
|first=Phil
|last=Maymin
|date=2010-07-08
|newspaper=Hartford Advocate
|url=http://www.hartfordadvocate.com/commentary/is-it-time-for-digital-only-dollars-2
|accessdate=2010-07-23
}}</ref> Bitcoin relies on [[Wikipedia:cryptographic]] principles to create unique, unreproducible, and divisible tokens of value. Users hold the [[Wikipedia:Key (cryptography)|cryptographic keys]] to their own money and transact directly with each other, with the help of the network to check for [[Wikipedia:double-spending]].<ref name="infoworld_2010">
{{cite news
|date=2010-05-24
|title=Open source innovation on the cutting edge
|first=Neil
|last=McAllister
|newspaper=InfoWorld
|url=http://www.infoworld.com/d/open-source/open-source-innovation-the-cutting-edge-582?page=0,2
|accessdate=2010-07-23
}}</ref>

==Technical basis==
[[File:Hash tree.png|thumb|300px|right|Bitcoin uses an ever-growing [[Wikipedia:hash tree]] to store, linearize, and verify transactions.{{Citation needed|date=August 2010}}]]
{{update|date=November 2010}}

Bitcoin is an implementation of Wei Dai's b-money proposal on [[Wikipedia:Cypherpunks]] in 1998 and Nick Szabo's Bitgold proposal.<ref>[http://www.bitcoin.org/smf/index.php?topic=342.msg4508#msg4508 Bitcoin author on external references]</ref> The principles of the system are described in the Bitcoin White Paper.<ref name=Whitepaper>[http://www.bitcoin.org/sites/default/files/bitcoin.pdf Bitcoin White Paper]</ref>

A user on the network has one or several cryptographic identifiers ([[Wikipedia:ECDSA]] keypairs), which represent their [[wallet]]. The public key counterpart of this wallet is called an ''address''. The private key, stored only on the user's computer, is used to authorize payments from the user. The wallet or address contain no information about their owner, so they are effectively anonymous.<ref>{{cite news |author=Nathan Willis |date=2010-11-10 |title=Bitcoin: Virtual money created by CPU cycles |publisher=[[Wikipedia:LWN.net]] |url=http://lwn.net/SubscriberLink/414452/ef58a58a62148050/ }}</ref>

Each coin of the Bitcoin system has its owner's [[Wikipedia:public key]] on it. The owner can transfer it further by adding the recipient's public key on it, signing it with his private key and broadcasting the transaction to the network. This way, each coin contains its cryptographic ownership history from the creator of the coin to its current owner.

To prevent users from double-spending their coins (signing the same coin for many recipients), transactions are [[Wikipedia:timestamp|timestamped]] by the network with a [[proof-of-work system]]. The network collects and records new transactions into a chain of blocks. Nodes of the network are constantly racing to complete these blocks by finding a value, that summed up with the block and the hash of the previous block, produces an [[Wikipedia:SHA-256]] hash containing a certain amount of leading zero bits. The average work required by this operation can be calculated and used to timestamp the block's transactions, so that they cannot be invalidated by later double-spending.

The incentive to use CPU time for running the system is that new coins are created and assigned to the node that manages to complete the new block first. This method of coin creation "was designed to be a digital analogue to gold and silver mining"<ref>[http://www.lewrockwell.com/orig6/luongo7.1.1.html LewRockwell.com article: The FED’s Real Monetary Problem]</ref>. Once a node successfully creates a block, it broadcasts the block to the network. Other nodes receive the block, perform a proof-of-work check, and add it to their chain if it is valid. As more transactions occur, blocks are created and added ad infinitum. The longest proof-of-work block chain is acknowledged to be the oldest and most reliable account of the transaction history.

This mechanism is claimed<ref name=Whitepaper /> to be virtually tamper-proof. For an attacker to manipulate the record, he must outpace all of the other nodes on the network to produce the longest proof-of-work. This becomes exponentially more difficult as time passes, because such "tampered" chains would continuously be rejected by nodes attempting to build a valid chain.

Bitcoin is a completely peer-to-peer network, and every node is able to enter or leave the network at will. When a node joins the network, the longest proof-of-work is automatically accepted as the most reliable one.

==Economic aspects==
The average rate of Bitcoin production is tapered such that over time the total number of Bitcoins will approach 21,000,000. After this point, no further Bitcoin production is possible. In this [[Wikipedia:deflation]]ary environment and in situations where large numbers of Bitcoins are either lost or destroyed, the electronic divisibility of Bitcoins is argued to be conducive to downward price adjustments with no practical limitations in the actual storage or transport of Bitcoin value.<ref name=Divisiblity>[http://www.bitcoin.org/smf/index.php?topic=44.0 Divisibility of Bitcoins]</ref> Rather than relying on the incentive of newly created Bitcoins to package transactions, nodes in this period will likely depend more heavily on their ability to competitively collect transaction fees to process Bitcoin transactions into blocks.<ref>[http://www.bitcoin.org/smf/index.php?topic=165.0 Incentive to Collect Transactions]</ref>

==Monetary and financial benefits==
Given the decentralized nature of Bitcoin and the hard coding of monetary rules within the software, various monetary and financial benefits to potential users exist<ref name=FAQ>[http://www.bitcoin.org/faq Bitcoin FAQ]</ref>:

* Direct transfer of monetary value via the internet without a trusted middleman or financial processor.
* Third parties cannot prevent or control transactions.
* Transactions are practically free.
* Bitcoin value is unconnected to possible instability caused by fractional reserve banking and poor central bank policy (see [[Austrian business cycle theory]]).
* Corrupted transactions created by hacked or modified clients are rejected by honest clients.
* The limited inflation of the Bitcoin system’s money supply is distributed evenly by CPU power throughout the network and programmatically created at a rate known to all parties in advance. Inflation cannot therefore be centrally manipulated to effect redistribution of Bitcoin value from general users.
* Given the predetermined rate of Bitcoin creation, the system is further protected against wild swings in supply due to externalities sometimes seen with traditional commodity currencies (see [[History_of_the_rupee#The_fall_of_the_Rupee|Fall of the Rupee]] due to large discoveries of silver reserves in the New World).
* Bitcoins are potentially divisible to eight decimal points.<ref name=Divisiblity /> There are therefore no practical limitations to downward price adjustments in a deflationary environment.

According to the author, the design also supports a variety of possible transaction types that have yet to be implemented within the currently available client. These include [[Wikipedia:escrow]] transactions, [[Wikipedia:surety bond]] contracts, third party [[Wikipedia:arbitration]], and multi-party signatures.<ref>[http://www.bitcoin.org/smf/index.php?topic=195.msg1611#msg1611 Predicate Transactions]</ref>

==Acceptance==

{{As of|2010|8}} there are roughly 30 sites accepting payment via Bitcoin<ref name=AcceptingSites>[http://www.bitcoin.org/trade List of sites accepting Bitcoin]</ref>, spanning areas such as [[Wikipedia:VOIP|digital telephony]] services<ref>[http://forum.link2voip.com/viewtopic.php?f=1&t=1088 Link2VoIP (www.link2voip.com) accepts Bitcoin as payment.]</ref>, [[currency trading]] systems<ref>[http://www.bitcoin.org/smf/index.php?topic=20.msg747#msg747 Bitcoin Trading System.]</ref><ref>{{cite web|url=http://www.bitcointo.com/|title=Bitcointo, a Bitcoin to physical goods conversion service}}</ref>, online games<ref>{{cite web|url=http://www.atitd.com/|title=A Tale in the Desert IV accepts Bitcoin as payment}}</ref><ref>{{cite web|url=http://www.sirarthur.net/bitcasino|title=BitCoin Casino}}</ref><ref>{{cite web|url=http://www.thefarwilds.com/|title=The Far Wilds, online game accepting Bitcoin as payment}}</ref>, physical goods<ref>{{cite web|url=http://qextracts.ecrater.com/|title=Quiggle extracts, online apothecary accepting bitcoins as payment}}</ref><ref>{{cite web|url=http://www.theoddshot.com.au/|title=The Odd Shot, a print photography business accepting bitcoins as payment}}</ref>, advertising services<ref>{{cite web|url=http://www.bitads.tk/|title=Bitads, advertising system accepting Bitcoins as payment}}</ref><ref>{{cite web|url=http://www.bitlist.tk/|title=Bitlist, advertising system accepting Bitcoins as payment}}</ref>, auction systems<ref>{{cite web|title=BiddingPond.com, a Bitcoin-powered auction system|url=http://www.biddingpond.com/}}</ref>, web hosting<ref>{{cite web|url=http://www.privacyshark.com/|title=Privacy Shark, anonymous Bitcoin-based domain name and DNS hosting services}}</ref>, computer security auditing<ref>{{cite web|url=http://binarysecurity.webs.com/|title=Binary Security, Bitcoin only web application security auditing services}}</ref> and other online services. Also [EFF] accepts donation in bitcoins yay

==See also==
*[[Wikipedia:Anonymous internet banking]]
*[[Wikipedia:Crypto-anarchy]]
*[[Wikipedia:eCache]]
*[[Wikipedia:HashCash]]
*[[Wikipedia:Pecunix]]
*[[Wikipedia:Ripple monetary system]]
*[[Wikipedia:Yodelbank]]

==References==
{{Reflist|1}}

==External links==
*[http://www.bitcoin.org/ Official website]
*{{SourceForge|bitcoin}}
*[http://news.slashdot.org/story/10/07/11/1747245/Bitcoin-Releases-Version-03 news.slashdot.org]
*[http://p2pfoundation.ning.com/profiles/blogs/bitcoin-open-source-p2p-ecash p2pfoundation.net]
*''[http://modeledbehavior.com/2010/06/30/bitcoin-and-the-wild-west/ Bitcoin and the Wild West]'', Modeled Behaviour blog.
*[http://dailypaul.com/node/139776 dailypaul.com]
*[http://www.reddit.com/domain/bitcoin.org/ reddit.com]
*[http://habrahabr.ru/blogs/crypto/99100/ Russian blog]
*[http://www.linux.org.ru/news/opensource/5113340 linux.org.ru]

[[Category:Currency]]
[[Category:Electronic currencies]] -->

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