What is currency? When was the first coin made? Who made money? Money has a rich history that dates back thousands of years. Money has always played a significant role in how our society functions, from the early days of bartering to the invention of the first metal coins and eventually the first paper money. The history of money and how humans transitioned from a barter economy to a sophisticated financial system with multiple forms of currency will be covered in length in this guide.
It's interesting to note that money frequently has no inherent value. Instead, money is a thing with a value attached to it that permits the exchange of commodities and services. Metal coins are one type of money that actually has worth due to the elements they are made of. Although it is increasingly prevalent today and often has little actual value, paper money. Currency has evolved into many distinct forms over the course of history. People traded products and services before money was created. The Mesopotamian people did not invent the shekel, which is regarded as the first known form of money, until roughly 5,000 years ago. Coins made of gold and silver have been around from about 650–600 B.C. when armies were paid with imprinted coins. According to some evidence, metal coins date back to 1250 B.C.
When there was no currency, people traded goods and services for what they needed. While one farmer could swap labor or lumber for animals, another might exchange livestock for vegetables. These exchanges served as the foundation for our current economy and helped pave the way for the development of modern money. Bartering has a long history that goes back to 6000 B.C. when Phoenicians were first taught to the idea by tribes from Mesopotamia. In the absence of money, goods like tea, salt, weapons, and food were exchanged for one another. Bartering developed over time as Colonial Americans traded muskets, crops, and animal pelts.
The earliest metal coins appeared around 1000 B.C. China. Stamped pieces of expensive metal, like bronze and copper, were used to create these coins. Ancient Greeks also employed early versions of coins beginning around 650 B.C. Over time, these coins would evolve to be made from the silver and gold we associate with money today. Coins were one of the earliest forms of currency that allowed individuals to pay by count (number of coins) rather than weight, which was a significant turning point in the history of money.
There have been many different types of coins used throughout history in various countries. The earliest round coins were made around 500 B.C. and were authenticated by stamps of gods and emperors. The silver penny, introduced by Charlemagne in 800 AD, served as the common coin in Western Europe from 794 to 1200 AD. By the middle of the 13th century, larger amounts of pennies were commonly denoted by the terms shilling and pound. The development of greater kinds of currency has been a significant element of the history of money as the value of cash has altered over time.
Even though the first paper money was invented in China in 700–800 A.D., it would be many centuries before paper money became widely accepted. China was the first nation to employ paper money, although it wasn't used extensively until around 1455, according to Britannica.com. International trade was made possible by the reduced weight of paper money, which led to both challenges (distrust and currency wars) and opportunities (the capacity to trade in new places for novel items). Coins reclaimed its position as the most widely used form of money in China and the rest of the globe when the country stopped utilizing paper money in the middle of the 15th century.
Paper money would eventually result in currency wars, which happen when the rulers of other countries try to devalue their own currencies. This raises demand and assists in boosting their economy. Even if this still happens on the foreign exchange market today, a currency war is identifiable by the involvement of multiple countries in the devaluation of the currencies of other countries. Currency volatility is one of the detrimental effects of currency wars for the participating nations.
England adopted gold as its national standard of value in 1816. This meant that only a particular number of banknotes could be created because each one represented a specific quantity of gold. By doing this, formerly unbacked currency gained an appearance of stability and worth. The Gold Standard Act was adopted by the United States in 1900. The Gold Standard ended in the 1930s as a result of the Great Depression and the devaluation of gold, although this would eventually lead to the United States creating the central bank that is crucial to the economy today.