Money is the generally recognized medium of exchange and payment in a society. Not everyone has the same amount. Some swim in it and some don't have enough to buy something to eat. But how did the money come about? Let's look at that today!
The history of money begins several thousand years ago. Although currencies were introduced with good intentions and their use made sense in the vast majority of cases and is still today, money is certainly not all positive. To this day, it not only simplifies trade (the original purpose), but also helps to widen the gap between poor and rich people, primarily due to the compound interest principle.
Barter in kind
Long before the first coins came into circulation, trading took place as an exchange. As early as around 6,000 years before Christ, when people lived together in small village communities, they exchanged everyday items with one another. Items of clothing and food to spearheads, salt and tea were exchanged and thus traded without the use of money.
Natural money from 2,000 BC
Natural money was introduced for the first time from around 2,000 years before Christ. In China, Southeast Asia and North Africa, people mainly used cowrie shells to trade with one another. In Latin America the Majas used cocoa beans, other peoples used selected stones. What these first pre-forms of money all had in common was that they were only available in limited quantities. In addition, the "currencies" were relatively small and therefore easy to transport. For the first time in human history, goods were converted into a currency that could then be used to purchase other goods.
Weight money in several epochs
Materials such as copper, silver or gold were often used as natural money. Some of the metals were cast in the form of bars or bars. If necessary, a piece could then be cut off again and weighed appropriately to correspond to the desired value. This so-called "weight money" (ie exchanging metals based on their weight and not according to their number) already existed several centuries before Christ. But also in the Middle Ages the Europeans used bars or rings made of precious metals, which were divided and weighed. However, there were also coins in Europe in the Middle Ages that were made of silver, for example. But even these were mostly weighed and not counted at that time in order to determine their value.
Coin from 500 BC
From around 600 BC, people in Asia Minor paid with the first coins. The Indo-European Lydians are considered to be the inventors of money coins. For the first time, the Lydians made pieces of metal in one size. These coins were given the coat of arms of King Croesus, who ruled Lydia at the time. Later the Romans and Greeks also used coins to pay for their goods. In the course of time, coins of different values were developed, so that trading became even easier. Depending on the time and place, the right to mint, for example, had the Senate for brass and copper coins and the emperor for silver and gold coins.
However, many scientists are of the opinion that the first coins were produced in parallel and independently of one another in different places. Between about 700 and 500 BC this happened, for example, in China, India and in numerous larger places around the Aegean Sea. Although the coins developed over the same period, some of them were made differently and looked slightly different. Chinese coins, for example, usually had a hole in the middle and were made of bronze. Coins from the Aegean Sea were hammered into shape under great heat and stamped. Coins from India mostly consisted of punched metal plates. In the 8th century an attempt was made in Europe to introduce a uniform currency: the denarius. However, this “forerunner of the euro” was abolished again very quickly. As early as the 9th century, pennies, denarii and other coins had different values in different countries.
Paper money from the 10th century
Especially those who wanted to purchase higher quality and more expensive goods quickly had the problem of having to carry around a lot of heavy coins. Even if, for example, coins with a hole in the middle could be threaded on and hung on chains, at some point the weight was still too high and it was too difficult to carry. The solution was very simple: Paper money was invented.
In the 10th century, the Chinese were the first to no longer want to pay with heavy iron coins and therefore invented paper money. Instead of having to carry the iron around, people now paid with pieces of paper on which their respective value (in iron coins) was written. The Italians did a similar thing in the 14th century. They deposited the money in banks. In return, the customers received “payment entitlements” that could be passed on and thus also represent a kind of paper money. The first banknotes appeared in other parts of Europe in the Middle Ages. Just like in Italy, they developed out of bankers' payment claims. The first "official" paper money was probably in Sweden from 1661. There the merchant Johan Palmstruch received permission from the Swedish king to set up his own bank. The "Stockholm Banco" issued its customers receipts for copper coins, which can be seen as the first banknotes. The Amsterdam exchange bank could also have been the first financial institution to invent banknotes as currency around 1609. However, the Dutch bank was particularly careful with paper money and - in contrast to Johan Palmstruch - always made sure to always have enough coins in the house to be able to exchange the issued notes.
Cashless payment transactions from the 20th century
In order to be able to conduct global trade quickly and easily nowadays, cashless payment transactions are primarily used. Debit or credit cards make it superfluous to even have to touch the money during the transaction. Thanks to online banking, it is no longer necessary to leave the house to transfer money or shop on the Internet. If necessary, enormous sums of money can be transferred from one account to another within milliseconds.
What we take for granted was not used in this way in the past. Perhaps there is still another development of money. I hope you learned something new again.See you next time!