We will build all this article from a story, the story of Ashley and Bernardo. Ashley is living in the US, close to San Francisco, or what will become San Francisco. Bernado is living in Spain, somewhere next to Madrid and the weather is great.
Bernado needs to send money overseas to Ashley, and he needs her to receive it as fast as possible. If Ashley doesn’t receive the money she might starve.
At this time, Bernardo would have had no choice, trying to cross the ocean himself on a boat with the food or something to give to the indians in return. He might have fallen at the end of the world and we can be sure Ashley would never have received it.
Now we know how to go by boat to Ashley, but Bernardo would not need to get on the boat to transfer the money. He would trust someone and in a hawala like movement, give the money to someone that would give it to Ashley. The money would need to be gold as cross currency between national currency at that time didn’t have great rates at all. You could lose up to 50%. The transfer would still needs 2 months minimum.
A revolution was done, the telegram and Western Union was one of the first one to take advantage of it. Western union could wire an IOU within days !
A bit better than telegram, but no revolution out of it, we are still trading IOU, and it still takes time
Here comes the great revolution, thanks to internet of course, but not only. This revolution has a name : Blockchain. The blockchain actually allows people to transfer money online without trading an IOU and this is the real difference. Within 1 hour, the money from an account belongs to another account. The technology is still in it’s infancy but the promises are huge !