According to various individuals: Money is said to be the root of all evil. Yet it is money which controls the world. But what exactly is money? Money is a term that refers to two concepts: the abstract unit of account in terms of which the value of goods, services, and obligations can be compared; and anything that is widely established as a means of payment. Frequently the standard of value also serves as a medium of exchange, but that is not always the case. Nowadays we have digital currencies such as Bitcoin alongside our modern-day dollars and pounds. But how exactly did we reach to these currencies in the 21st century?
The Beginning: The Barter System
Barter is the exchange of resources or services for mutual advantage. Tribes in Mesopotamia were likely the starting point of the bartering system back in 6000 BC. Phoenicians (in the eastern Mediterranean; a part of modern-day Lebanon) saw the process, and they adopted it in their society. The barter system was frequently used by ancient people to get the food, weapons, and spices they needed. Because of salt’s great value, Roman soldiers bartered their services for the empire in exchange for it. In Colonial America, the colonists used bartering to get the goods and services they needed. Today, individuals, organizations, and governments still use, and often prefer, barter as a form of exchange of goods and services.
9000 – 6000 B.C.: Cattle and Grains
Cattle, which includes not only cows but also sheep, camels, and other livestock, are the first and oldest form of money. The livestock was also frequently bartered in exchange for various commodities. With the advent of agriculture also came the use of grains and other plant products as a standard form of barter in many cultures
1200 B.C.: Cowrie Shells
The first use of cowries, the shells of a mollusc available in the shallow waters of the Pacific and Indian Oceans, was in China. Historically, many societies have used cowries as money, and even as recently as the middle of this century, cowries have been used in some parts of Africa. The cowrie is the most widely and longest used currency in history.
1000 B.C.: First Metal Money
Bronze and Copper cowrie imitations were manufactured by China at the end of the Stone Age and are considered some of the earliest forms of metal coins. Metal tool money, such as knife and spade monies, was also first used in China. These early metal monies developed into primitive versions of round coins. These coins were made out of base metals, often containing holes so they could be put together like a chain.
500 B.C.: Coins
Outside China, the first coins developed out of lumps of silver. They soon took the familiar round form and were stamped with various Gods and emperors to mark their authenticity. These coins first appeared in Lydia (a part of present-day Turkey) but the techniques were quickly copied and further refined by the Greek, Persian and later the Roman empires. Unlike Chinese coins these new coins were made from precious metals such as silver, bronze, and gold, which had more inherent value.
118 B.C.: Leather Money
Leather money was used in China in the form of small pieces of white deerskin with colourful borders. This could be considered the first documented type of banknote.
806: Paper Currency
The first known paper banknotes appeared in China. China experienced over 500 years of early paper money, spanning from the ninth through the fifteenth century. Over this period, paper notes grew in production to the point that their value rapidly depreciated and inflation soared. Then beginning in 1455, the use of paper money in China disappeared for several hundred years. This was still many years before paper currency would reappear in Europe, and three centuries before it was considered common.
1816: The Gold Standard
Gold was officially made the standard of value in England in 1816. At this time, guidelines were made to allow for a non-inflationary production of standard banknotes which represented a certain amount of gold. Banknotes had been used in England and Europe for several hundred years before this time, but their worth had never been tied directly to gold. In the United States, the Gold Standard Act was officially enacted in 1900, which helped lead to the establishment of a central bank.
1930: End of the Gold Standard
The massive Depression of the 1930s, felt worldwide, marked the beginning of the end of the gold standard. In the United States, the gold standard was revised and the price of gold was devalued. This was the first step in ending the relationship altogether. The British and international gold standards soon ended as well, and the complexities of international monetary regulation began.
The Present:
Modern Day money is now longer restricted to simply coins or banknotes but has also advanced to the virtual world with new digital currencies outside the jurisdiction of governments such as cryptocurrency and various electronic wallets which are done through a portable electronic device, such as a smartphone, or a tablet now called mobile payment.
The evolution of money has truly seen various forms including physical ones such as livestock and coins made out of precious metals and has now even included virtual ones which now fit in the palm of your hand. Money makes the world round and its unknown what its new form will be.
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