One party funded a journey, while the counterparty took on the responsibility of bringing back a precious commodity from faraway lands. Different types of derivatives continued to evolve throughout the Middle Ages, particularly for commercial trades through sea and land.
Timeframes were imprinted on the tokens, while the vessel denoted a specific amount of commodity promised to the counterparty.
The earliest derivative contract can be traced back to 8000 BCE in Sumer, where clay tokens were baked into spherical envelopes. Ancient history shows that derivatives were actually created to solve real-world issues. These underlying assets could be a commodity, an index, cash, currencies or interest rates.ĭerivatives are important financial instruments that can be hugely beneficial, if used properly. In the financial markets, derivatives are contracts, the value of which is derived from an underlying asset. There are three main categories of financial instruments: stocks (equities and shares), debt (mortgages and bonds) and derivatives.
