The History of Money

The History of Money
From bartering to banknotes to Bitcoin

By ANDREW BEATTIE
Updated September 17, 2022
Reviewed by CAITLIN CLARKE
Money, whether it's represented by a seashell, a metal coin, a piece of paper, or a string of code
electronically mined by computer, doesn't always have value. Its total global value—currently
estimated to be around $418 trillion—depends on the importance that people place on it as a
medium of exchange, a unit of measurement, and a storehouse for wealth.
Money allows people to trade goods and services indirectly. It helps communicate the price of
goods, and it provides individuals with a way to store their wealth.
KEY TAKEAWAYS
 The history of money crisscrosses the world as various cultures recognized the need to
simplify trade among a number of parties by introducing a single, portable token of value
into the process.
 Money is a medium of exchange with a recognized value that was adopted in order to make it
easier for people to trade products and services with each other.
 The world’s oldest known, securely dated coin minting site was located in Guanzhuang in
Henan Province, China, which began striking spade coins sometime around 640 BCE.
 All of the money in the world is estimated to total around $418 trillion.
1
Concept of money
Money is a system of value that facilitates the exchange of goods in an economy. Using
money allows buyers and sellers to pay less in transaction costs, compared to barter trading.
The first types of money were commodities. Their physical properties made them desirable
as a medium of exchange.
The 3 concept of money
To summarize, money has taken many forms through the ages, but money consistently has
three functions: store of value, unit of account, and medium of exchange.
Types of money
 Commodity Money.
 Fiat Money.
 Fiduciary Money.
 Commercial Bank Money.
 Metallic Money.
 Paper Money.
 Reserve Money.
1. Commodity money
Commodity money is money whose value comes from a commodity of which it is made.
Commodity money consists of objects having value or use in themselves (intrinsic value) as
well as their value in buying goods.
2. Fiat money
A fiat money is a type of currency is declared legal tender by a government but has no
intrinsic or fixed value and is not backed by any tangible asset.
3.Fiduciary Money
Fiduciary cash, currency or money, alludes to banknotes and coins available for use in the
economy. This is the liquidity accessible to financial actors to do exchanges. It is a method
for payment. Cash is a substantial or tangible property, not at all like scriptural cash which is
insignificant
2
4.Commercial bank
Commercial bank money consists mainly of deposit balances that can be transferred either by
means of paper orders (e.g., checks) or electronically (e.g., debit cards, wire transfers, and
Internet payments). Some electronic-payment systems are equipped to handle transactions in
a number of currencies.
5. Metallic money
Metallic money refers to coins made of various metals such as gold, silver, bronze, nickel,
and so on. Its worth is guaranteed by the state's exclusive monopoly. The state owns the
mining rights to the coins.
6. Paper Money
Paper money is a country's official, paper currency that is circulated for the transactions
involved in acquiring goods and services. The printing of paper ...
7. Reserve Money
A monetary reserve is the holdings of currencies, precious metals, and other highly liquid
assets used to redeem national currencies and bank deposits and to meet current and near-
term financial obligations by a country's central bank, government treasury, or other
monetary authority.
3
Important of money
Money is a medium of exchange; it allows people and businesses to obtain what they need to
live and thrive. Bartering was one way that people exchanged goods for other goods before
money was created. Like gold and other precious metals, money has worth because for most
people it represents something valuable.
The most important function of money is its use as a way of buying things, in other words, as
a medium of exchange.

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The History of Money

From bartering to banknotes to Bitcoin

The 3 concept of money

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