The Mystery Behind the Invention of Money

The Mystery Behind the Invention of Money

Money is considered to be a medium of exchange, a mean of carrying out transactions which has its value. Money in modern understanding in the form of coins and banknotes has no value by themselves. It is just paper and iron with numbers and images. However, in this system there is one “but”. Money’s value is measured accordingly to the price which is established by us, precisely by a National Bank. Every piece of paper and a metal released by a National Bank of each country has to be affirmed by gold mined from the earth and saved in the country treasury. So, money cost as much as we decided, that is as much gold we have.

Money allow people to buy and sell goods and services directly being a simple form of payment.

Every country has its own established system of paper money and coins.

The history of inventing money concerns the development of means of conducting transactions in the market. To get or provide others with goods or services, to pay debts people used things they had which were useful in themselves. This way we call bartering.

1. Barter

Barter

Many useful things have been used as a medium of exchange in markets. First it was occasional items, for example, milk was exchanged for bread, fur for meat. Than, some products such as raw materials and primary agricultural products (grain, beans) became more convenient mean for barter. The seller of grain or other material had to find the buyer who would like to buy grain and who will offer something useful for the seller. The problem consisted in lack of standards of measuring. Prices were established relatively.

To solve the problem of inequalities people invented commodity money, some basic items used and needed by almost everyone. So, at first such commodities as tea, tobacco, salt, cattle and seeds were used as money.

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