When Iran began demanding payment in exchange for safe transit through the Strait of Hormuz, it offered the option to pay in cryptocurrency. Likewise, the shadowy network of tankers that have smuggled Russian oil to world markets since the full-scale invasion of Ukraine in 2022 have often been paid this way.
Illicit actors the world over have increasingly turned to cryptocurrency as a way to conduct business while avoiding the risk of US sanctions. In so doing, countries like Russia and Iran are drawing on a characteristic of money that has been around since at least the bronze age: its ability to facilitate trade between strangers and across political boundaries.
In my book Shell Money (2024), which investigates some of the world’s earliest forms of money, I show how similar dynamics have been at play throughout history.
Somkanae Sawatdinak/Shutterstock
Modern currencies like the US dollar and euro are backed by confidence in the financial institutions of nation states – in a similar way to the first metal coins of antiquity, which were issued by Greek city states in order to collect taxes and pay soldiers.
In prehistory, however, there are many examples of monetary systems that developed without state support, such as bronze ingots.
The bronze age (roughly 3300BC to 1200BC) was a time of long-distance voyaging and interregional connectivity. Against this backdrop, having a shared medium of exchange was critical for maintaining trade connections.
Bronze tools were made from copper and tin, which were only available in a few locations in the ancient world. In northern Europe, copper came from sources such as Wales, the Alps, Austria, Sardinia and Iberia, while tin largely came from Cornwall and Devon. This meant that all the copper used in Scandinavia, for example, had to be acquired through long-distance trade.
Much of this trade was dominated by bronze ingots – rings, bars or axe-heads – that were highly standardised in weight and form across regions. This meant that each ingot was interchangeable – a critical characteristic of money. Bronze objects were also broken down into sizes consistent with market-based trade.
The bronze age need for money
Travel during the bronze age would not have been easy. Long-distance journeys would have been dangerous and could take months to complete.
A travelling merchant would have no way to know if the traders they dealt with on one journey would still be around on the return trip. The reciprocity you could depend on in your home community would no longer hold – exchanges needed to be transactional.
Against this backdrop, bronze became standardised into a medium of exchange. By carrying bronze ingots, a traveller could conduct business across the world, confident that wherever they went their money would be accepted.
In other parts of the ancient world, shells and shell beads were accepted as money. The Chinese symbol 貝 (bèi) originated as a pictograph of the cowrie shell and is now used in hundreds of finance-related Chinese characters, including those for buy, sell, wealth and profit. Cowrie shells were traded to China from the Indian Ocean and used as money during the Zhou dynasty.
In North America, small shell beads were used as money and circulated throughout the interior of the continent, thousands of miles from the oceans where they were collected and produced. These examples show that trade money was not restricted to metals but could develop from anything that was desirable and scarce.
The US dollar diminished
The dominance of government-issued “fiat currencies” (meaning they are not backed by physical commodities such as gold) depends on the trust, liquidity and institutional backing they provide.
International trade is currently dominated by the US dollar. However, as we move into an increasingly multipolar world – with competing centres of gravity in North America, Europe and China – we can expect to see the dollar’s role diminish.
Indeed, there is some evidence that this has already happened. The dollar’s role as the world’s reserve currency (meaning it is held in large quantities by other governments and central banks to stabilise their economies) has declined from around 70% in the late 1990s to less than 60% today. This trend is likely to continue amid signs of increased US isolationism, strains in North Atlantic cooperation, and the rising economic position of China.
Political fragmentation, however, hardly means the end for international trade. History is rife with periods, from the bronze age on, when political fragmentation coexisted with bustling trade economies. And for those seeking to avoid state control in future, this may mean a growing shift in the type of money that is used.
New forms of money
There are many differences between cryptocurrency in the modern world and the commodity money of prehistory. Cryptocurrency is still rarely used or accepted in daily transactions, is highly volatile and, as with modern fiat currencies, does not have “use value” in the same way as bronze ingots or even shell beads.
Nonetheless, both are forms of “bottom-up” (non-state controlled) money that exist outside of the oversight of any single government or large financial actor.
This lack of state control is exactly what drives sanctioned states such as Iran and Russia to request payments in crypto. As US financial leverage weakens, crypto payments become harder to block and sanction, potentially reshaping how future conflicts are financed.
Cryptocurrency may be well positioned for this environment, continuing to provide one of money’s oldest functions: the ability to conduct business with strangers.
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Mikael Fauvelle receives funding from the Bank of Sweden Tercentenary Foundation and the Marcus and Amalia Wallenberg Foundation. He is the author of Shell Money: A Comparative Study (Cambridge University Press).