When we talk about money the first thing that comes in our mind is banknote!!

Then after that, we start thinking about restaurants, exotic places, tours and don't know what all things, to buy from it.

But what is the money in actually? Why we need money only, for buying anything? Why can’t we rely on the barter system like older times?

Money is nothing more than a metal coin or a piece of paper with some historic image on it or a plastic card that derives its value by being a medium of exchange.

The concept of Money has been around since the time of human civilization. It allows the individual to trade their belongings for things they needed or want. From time to time its appearance has changed.

In today’s time, there are a total of 180 currencies that are being used around the world. But when currencies were not there people used to deal in a barter system.

Let’s see how money has evolved.
<h2>Life Without Physical Money</h2>
Around 9000 BC ago, the first trade took place around the world without the involvement of any physical currency and that was called bartering. It involved the direct trade of goods and services among the people, but that arrangement was a time-consuming process. Let’s understand this with an example:

Suppose a person wants to sell his wheat to another individual and in return that individual will pay him back with the thing the person needs the most whether it could be a food-related item or anything. But by chance, the individual is not able to pay back then the first person will not sell-off his wheat to the other one, instead he would start searching for another option which could provide him with the required services.

As people started evolving, the system of trading also evolved with them.

In around 770 BC China started using miniature replicas of their actual tools and weapons in bronze. But those replicas were bit edgy and sharp, therefore, by the time their shape changed into a circle, which you can say was the first recognizable coin but not the minted. So first minted coin was created in Lydia (present-day Western Turkey) in 600 BC.
<h2>Evolution Of Currency From Coins To Banknotes</h2>
King Alyattes of Lydia was the first-ever kind that started the trading of goods through the minted coin. It was the official currency of that country during that time. The was minted out of gold and featured roaring lion’s head on it. The currency helped the country to improve its internal as well as its external trade. The newly introduced coin helped Lydia in becoming one of the richest empires in Asia Minor.

Just when Lydia started taking lead in developing the currency, China started issuing the paper money. Although the currency was introduced in the 7th century, people started using it widely after that.

Later, one of the European explorers named Marco Polo visited China and found that people there have been using paper currency instead of a coin or any other way.

He was amazed! And when he wrote a book on his visit, he discussed this idea of using paper notes for trading.

It is believed that Polo was the person who introduced Europeans with paper money. But till 16th century Europe uses to deal in coins only.

Ultimately, the Banks of Europe started using notes. Any of the depositor or the borrower came in the bank was advised to deal in notes only rather than using coins. The banks used to exchange the notes for their face value in silver or gold.

Today the respective government decides the future of their currency but it was not issued by them, instead, it was banks and private institutions that took the initiative for paper notes.
<h2>Introduction Of Paper Currency</h2>
Although the people started using paper notes for trading, the European Government decided to step into this business and issue its own paper currency. However, the paper currency it issued officially was actually introduced by the colonial government in North America.

Most of the time it happened, the shipment between Europe and colonies did not reach on time to their destination, and to expand that operation the colonists required money. But by that time, they ran out of money, therefore, later the colonial government decided to use IOUs which were used as a currency among Europe and colonies.

As time passed the currency market has also been created which decides the value of currencies around the world.

The world started entering into a modern era, a new monetary system was introduced called gold-backed currency, in which the paper currency could easily get converted into a fixed amount of gold. The US Congress, after getting approval from the US Constitution, coined the national currency along with its value.
<h2>FIAT System</h2>
FIAT Monetary System was like a gold-backed currency, issued by the government, is being controlled by the government, the government decides its value but the difference was like gold-backed currency the FIAT money was not supported by any of the commodity.

This monetary system is totally dependable on the value of FIAT currency which is only decided by the government. Like the gold-backed currencies, its value does not fluctuate along with the commodity.

Since the barter system age till today the mode of trading has changed. As of now, we are in the 21st century, and we mostly depend on the digital payment system, whether it is online, mobile or any other medium. We find it easy.

In this era, the monetary system is slowly heading towards the cryptocurrencies, although it was introduced long back in 2009, it is gaining popularity slowly.

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History of Money: How the form of Currency changed Over Centuries

Since the barter system age till today the money has changed, be it the appearance, the value or anything and in futher it will develop further.

Jyoti is a graduate from GGSIPU and has done her PG Diploma in English Journalism from IIMC. Presently, she is working as a content writer with Agio Support Solution Pvt. Ltd. Her aim is to provide informative content about cryptocurrency and blockchain, to the tech-enthusiasts.

History of Money: How the form of Currency changed Over Centuries

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