The History of Money – Who Invented Money
In the world of luxury and business, money is what matters the most. The person who has the most amount of money is the richest and powerful of all. Simply, money refers to any identifiable object that is commonly accepted by people for the exchange of goods, and services and repayment of debts within a market. Every country has its own system of coins and paper money.
The history of money is concerned with how goods and services were transacted by involving a medium of exchange. Although there is no any evidence of who invented money, the history of money can be generally sketched as follows:
In the beginning, bartering system existed. In this, people exchanged good or service for another good or service. For example, livestock for other goods and services you needed. The problem in this system was that people simply might not want to trade for what you had available.
In order to solve this problem, commodity money was developed. Commodities are basic items used by almost everyone like salt, tea, cattle, and seeds. Using these items of money alleviated some of the problems of bartering. However, commodities were perishable, or difficult to store and hard to transport. This was replaced by the use and transformation of precious metals.
Metals such as gold, silver, copper etc. were introduced as money around 5000 B.C. because they were readily available, recyclable and easily transformable. By 700 BC, the Lydians became the first in the western world to make coins. Using coins with set values made it easier to compare values and trade money for goods and services.
Paper money became common around 960 A. D onwards from ancient China. They include paper bills and coins made of non-precious metals, known as Representative Money. Governments or banks valued exchange of representative money with specific amount of silver or gold.
The value given by government turned into fiat money. The Latin word Fiat means ‘let it be done’. In other words, enforceable legal tender laws were made where it was illegal to refuse legal currency in favor of some other form of payment.
The first paper money was issued in the United States on March 10, 1862. The $5, $10, and $20 bills were issued by an act of Congress on March 17, 1862.
In contemporary times, the term Money includes bank accounts and credit cards.