It would be difficult to imagine life without money. It is an essential part of everyday living. Without money you cannot eat, own a house or do things that you enjoy. Money is generally anything that is accepted as payment for goods and services. It is the agreed upon medium of exchange and functions as legal tender. Its value is derived from the understanding within a society that a particularly object it is worth something. For example shells could be used as money as long as it is agreed by the society that shells are an acceptable form of payment for goods or services rendered.
When was Money Invented?
The idea of money was conceived long before the use of gold and silver coins or what we now know as money. Many cultures before the conception of money would barter goods, trading what they did have for what they needed. After this many societies began to use commodity money which is using commodities such as salt, rice, sugar etc to pay for other goods. This became difficult as often commodities were difficult to store and were perishable. Societies also had difficulty agreeing on the worth of something. This led to societies developing the idea of representative money. This is using an object that has no intrinsic value as payment for goods and services. The object was understood to have value and be legal tender amongst that society. Around 3000BC Societies in the Americas, Asia, Africa and Australia used shell money to obtain good and services. The country of Lydia is said to be the first to develop the use of gold and silver coins in 650- 600 BC. China was the first to develop paper money in around 960AD. In the 17th and 18th centuries many countries made a move towards gold-standard money in which a coin or note was said to have a certain value in pure gold. After WWII money became fiat meaning that the money itself no longer needed to be made of anything valuable. The agreed upon currency was backed by a government that declared it legal tender.