ndax logo

Beads to Bitcoin: A History of Money - Chapter III: The Middle Ages

May 28, 2023
byNDAX Labs

The collapse of the Roman Empire marked a major turning point in world history: With the fall of Rome, Europe entered a period of instability and economic decline that would last centuries. Yet, during this time, the concepts of modern currency and banking as we know them today would slowly begin to take shape. Following the collapse of Rome, Europe broke up into smaller territories and kingdoms known as feudalities. As a result, there was a lack of a unified currency system, and trade became increasingly challenging. Bartering replaced the Roman Denarius as the most common form of exchange (goods were traded for other goods rather than currency). In rare cases, Roman coins were still used as currency, but their value was largely based on the weight and purity of the metal. Over the centuries that followed, various forms of currency (re)emerged, including paper money, new coins minted by Feudal lords, and several centuries later still, bills of exchange. The first paper bank notes backed by precious metal were issued in the 7th century of Tang Dynasty China. Meanwhile, in England, new silver coins–stamped with the king's image to ensure their authenticity–were minted during the reign of King Offa (late 8th century). These currencies spread throughout Europe in the centuries that followed, but there remained no centralized system for managing currency…

Middle Dark Medieval?

  • A new Kathryn Bigelow film starring Jessica Chastain!?!
  • No…

Why does it sound so ominous when a villain says they’re about to “get medieval” on someone? Perhaps because this was a darkest of periods in the unfolding of human civilization, colloquially referred to as “The Dark Ages”. A period rife with castle dungeons and well-equipped torture chambers? Indeed. But why is this millennia-long time-vacuum that followed Rome called the Middle Ages? Because it later gave rise to the Renaissance (“rebirth”) and then the Enlightenment (a radical “turning up” of intellectual and artistic life). If Antiquity was a period of advancement and light–as were the Renaissance and Enlightenment–then it stands to reason that the period separating them should be called “the Middle Ages”. But the night is indeed darkest before the dawn, and this is the period of history we’re diving into… So get comfy, for we are about to get medieval… (on money.)

At its culmination, the early Roman Empire’s discipline and ingenuity (‘adopted’ of course, from their Etruscan as well as Egyptian and Greek predecessors–among other civilizations) created  abundance and wealth the likes of which the world had never seen… But after this unparalleled expansion in art, science and technology (known loosely as the Antiquity) which spread from North Western Europe to Asia and Africa, the world fell back into a listless morass of small barbarian fiefdoms and feudal lords jockeying for power.

After the tremendous initial period of progress and ‘unification’ brought by the Romans, for them to have–pardon the pun–rested on their laurels; our ancestors truly witnessed the joy of taking one giant step forward… Before realizing they stepped in quicksand. Though the world saw massive progress under Roman rule, their inability to leave well enough alone–or, perhaps more succinctly: to resist the temptation to rob their currency holders blind through centuries of systematic and deliberate Denarius debasement measures–ostensibly left the world in a far worse position than if the empire had never brought everyone up to their living standards in the first place. (Leaving alone the fact that this ‘civilizing of the world’ happened through brutal ruthless conquest… Sort of like the ‘economic’ version of what the IMF does to developing countries today..!)

As a direct result of these rulers‘ greed, monetary mismanagement, lack of fiscal discipline–or any integrity at all for that matter–a handful of corrupt Roman rulers can be said to have inadvertently plunged the Western world into almost a full millennia of pestilence, war, famine, *insert your chosen Act of God or Natural Disaster here*, feudal slavery, plagues, crusades–you name it. From the world-famous blockbuster hit producer who brought us our favourite Antiquity classics such as “Burning Down Your City Because It Looks Pretty Ablaze!” and “Roman Fratricide”, we present… Emperor Nero’s newest cinematic masterpiece–“The Medieval Experience: 900 years of Darkness!” Coming soon to a theatre near you.

(900 years–albeit a blip in the grand scheme–is still 10 saecula or 40 generations. As a quick aside; a saeculum–saecula pl.–is a length of time roughly equal to a long human lifetime, 4 generations or, equivalently, the complete renewal of a human population. The term was first used by the Etruscans; the civilization that flourished in central Italy between the 8th and 3rd century BCE, just prior to the Roman Empire. The culture was renowned in Antiquity for its rich mineral resources and as a major Mediterranean trading power. Much of its culture and even history was either obliterated or assimilated into that of its conqueror, Rome. According to legend, the Gods had allotted a certain number of saecula to every people or civilization: The Etruscans, for example, had been given ten saecula. By the 2nd century BCE, Roman historians were using the saeculum to periodize their chronicles and track wars. At the time of the reign of Emperor Augustus, the Romans decided that a saeculum was 110 years. In 17 BCE, Caesar organized Ludi Saeculares (“saecular games”) for the first time to celebrate the "fifth saeculum of Rome".... Today a saeculum is largely believed to be around 80 years.)

When it was first introduced in the 3rd century BCE, the Roman Denarius boasted a Silver content of roughly 98%: A couple hundred years later, under Ceasar, the Denarius was still 95-98% pure silver and had become one of the most trusted and widely accepted currencies in the world… Later, starting largely under Emperor Nero (who debased the coin to 93.5%--hefty tax, sir!), Roman Emperors could no longer resist the urge, and by 235 ACE, purity was at 83.5%... Six years later it was down to 48%, and by the year 274, Denarii in circulation contained no more than 5% silver. Slowly at first… Then all at once. So ‘suddenly’, without a reliable currency, the Roman Empire’s days were counted.


…Within 2 centuries, the Empire was a husk of its former self. Is it any surprise that its collapse led Europe straight into an economic black hole known as the Dark Ages? (Early Middle Ages) During this time when the Roman monetary system collapsed, trade networks that had connected Europe, Africa, and Asia also disintegrated. But over this 900-year period, new economic systems and networks emerged, which led to the development of a new world economy during the High Middle Ages (11th-13th centuries), thanks to some very resourceful homies in Florence, known as the De Medici. But we digress…

The first significant factor in the development of the world economy during the Middle Ages was the rise of the feudal system. This system was based on a hierarchy of lords and vassals, with each lord providing protection and governance to a group of peasants in exchange for labour and tribute (which is Medievalese for “Death and/or/by Taxes”). The feudal system facilitated the growth of agriculture and the development of new technologies, such as the heavy plow, which increased agricultural productivity, and indirectly, the raising of armies and their ability to travel longer distances.

Another significant development during the Middle Ages was the rise of new international trade networks. The Mediterranean remained a key trading center, with Italian city-states such as Venice, Genoa and Florence playing a significant role in trade between Europe, Asia, and Africa. But the development of the Hanseatic League, a confederation of northern German cities, also facilitated trade in Northern Europe.

The Crusades, which began in the 11th century, also played a role in the development of the world economy during the Middle Ages. These military expeditions led to increased trade and cultural exchange between Europe and the Middle East and also facilitated the spread of new technologies, such as papermaking, astronomy, medicine, and algebra… This brings us to a few of the key monetary innovations borrowed from the Arabs during these Crusades: Innovations that not only revolutionized money, commerce and banking, but became the foundational basis on which the world still operates today: Arabic numerals (the number zero!), and double-entry bookkeeping, to name a few.


Here are a few examples of some of the wildest monetary technologies to emerge during the Middle Ages:

Tally sticks were popularized as a form of currency in medieval England by King Henry I: These sticks were like wood receipts, notched and split in half, with one half given to the debtor and the other half kept by the creditor. (The notches were used to record the amount of debt owed, and the sticks could be used to settle debts or traded as a form of currency.)

Guilds were associations of merchants and artisans that emerged in medieval Europe, which helped to regulate trade and commerce, and provided a framework for resolving disputes and enforcing contracts.

Double-entry Bookkeeping is a system of accounting that allowed merchants to more accurately track their finances, and is responsible for the notion of “balancing one’s books”. It helped reduce the risk of fraud and other financial problems by clearly delineating assets from liabilities.

The collapse of the Roman economy meant that there was a shortage of coins… everywhere. As a result, many feudal lords began minting their own (made of commodities like precious metals) to stimulate trade and commerce in their regions.

Once new commerce and trade routes began to take root again after a couple centuries of dormancy–longest crypto winter ever– we got:

Bills of Exchange were financial innovations that emerged in medieval Italy. These bills allowed merchants to transfer funds across long distances without having to physically transport large amounts of cash or goods. These, like Promissory Notes, and other forms of Deferred Settlement, like Bills of Exchange and Bearer Notes–as with the Money Markets that popped up where goldsmiths, bankers and merchants could trade them, allowed international commerce to truly flourish without the fear of one’s gold ending up at the bottom of the Atlantic after a rough storm, or worse, in the coffers of a pirate or buccaneer…

Fractional Reserve Banking is the crowning achievement of human ingenuity describing a modern banking practice (which has served the world so well in recent years) in which banks hold only a fraction of the money deposited by their customers and lend out the rest. This system emerged during the height of the Middle Ages as a way to increase the availability of credit.

These are just a few examples of the many monetary technologies that emerged over the course of the Middle Ages as a result of the collapse of Rome. During this time, trade very slowly began to flourish again in Europe. As routes expanded and merchants traveled further afield, the need for a more reliable currency system became increasingly urgent.  To meet this need, banks began to emerge in cities such as Florence and Venice.

Next month on Beads to Bitcoin - A History of Money, we enter the Golden Age of Banking… It’s perhaps not a coincidence that what followed was a period of artistic, intellectual and scientific advancement that made the Roman Empire look like kindergarten: RENAISSANCE & THE RISE OF THE DE MEDICI.

Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.