History of Money - Business Studies

The history of money

Money, in and of itself, is nothing. It can be a shell, a metal coin, or a piece of paper with a
historic image on it, but the value that people place on it has nothing to do with the physical
value of the money. Money derives its value by being a medium of exchange, a unit of
measurement and a storehouse for wealth. Money allows people to trade goods and services
indirectly, understand the price of goods (prices written in dollars and cents correspond with an
amount in your wallet), and gives us a way to save for larger purchases in the future.Money is
valuable merely because everyone knows everyone else will accept it as a form of payment—
so let's take a look at where it has been, how it evolved and how it is used today.

Asian Currency:

Sometimes around 770 B.C…, the Chinese moved from using actual tools and weapons as a medium of exchange to using miniature replicas of the same tools cast in bronze. Nobody wants to reach into their pocket and impale their hand on a sharp arrow do, over time, these tiny daggers, spades, and hoes were abandoned for the less prickly shape of a circle, which became some of the first coins. Although China was the first country to use recognisable coins, the first minted coins were created no too far away in Lydia (non western turkey). 

Coins and Currency:

In 600B.C…, Lydia’s King Alyattes minted the first official currency. The coins were made from electrum, a mixture of silver and gold that occurs naturally, and stamped with pictures that acted as denominations. In the streets of Sardis, circa 600B.C…, a clay jar might cost you two owls and a snake. Lydia’s currency helped the country increase in both its internal and external trade, making it one of the richest empires in Asia Minor. It is interesting that when someone says “as rich as Croesus”, they are referring to the last Lydia King who minted the first gold coin.

Not just a piece of paper:

Just when it looked like Lydia was taking the lead in currency developments, around 700 B.C., the Chinese moved from coins to paper money. Europeans were still using coins all the way up to the 16th century, helped along by acquisitions of precious metals from colonies to keep minting more and more cash. Eventually, the banks started using bank notes for depositors and borrowers to carry around instead of coins. These notes could be taken to the bank at any time and exchanged for their face values in silver or gold coins. This paper money could be used to buy goods and operated much like currency today, but it was issued by banks and private institutions, not the government, which is now responsible for issuing currency in most countries.The first paper currency issued by European governments was actually issued by colonial governments in North America. Because shipments between Europe and the colonies took so long, the colonists often ran out of cash as operations expanded. Instead of going back to a barter system, the colonial governments used IOUs that traded as a currency. The first instance was in Canada, then a French colony. In 1685, soldiers were issued playing cards denominated and signed by the governor to use as cash instead of coins from France.

Mobile Payments:

The 21st century gave rise to two disruptive forms of currency: Mobile payments and virtual
currency. Mobile payments are money rendered for a product or service through a portable
electronic device such as a cell phone, smartphone or tablet. Mobile payment technology can
also be used to send money to friends or family members. Increasingly, services like Apple Pay
and Samsung Pay are vying for retailers to accept their platforms for point-of-sale payments.