The Brief History of Money

What did people use for trading before money was invented? Find out how the first coins were created, why paper money was first introduced and all the discoveries and social changes that led to our current monetary system.

Before money people used bartered goods as payment; for example, animal hides and teeth. Livestock was the most valuable commodity. Shells were also used; snail shells were very popular in China. Other goods used for payment were tools, beads salt, crops, weapons and tobacco.

The first standardized coins were created in what is now western Turkey by King Alyattes around 7th century B.C. They were made of electrum, a naturally occurring amalgam of gold and silver. In Rome, coins were minted near the temple of the goddess Juno Moneta, which gave us the words “mint” and “money”. Offa, an Anglo-Saxon king, introduced the first English coin known as the penny around 790 A.D. Because of a copper shortage, China was introduced the world’s first paper money in the 9th century — 700 years before Europe did so. In the 1500s the St. Joachimsthal mine in what is now the Czech Republic introduced large silver coins called thaler. The Spanish version of the thaler became the first worldwide currency. The English called it the dollar, and the U.S. dollar was based on it.

Modern Money. The first U.S. government-backed paper bills were introduced during the Civil War. The term “greenback” comes from the intricate designs on these bills, meant to prevent counterfeiting. The largest bill in history was the 1946 Hungarian 100 million Pengo; the name was spelled out on the bills since so many zeroes couldn’t fit on the banknote, but it was only worth $0.25! The $100,000 1934 Gold Certificate was the largest bill ever made in the U.S. It was used for Federal Reserve transactions and not released to the public. The largest coin ever minted was in Australia in 2011 weighs about a ton. A U.S. nickel weighs just 5 grams — roughly as much as a hummingbird. As of 2018, there are 180 different currencies used around the world.

Bitcoin​, invented in 2009 by the pseudonymous Satoshi Nakamoto, became the gold standard — so to speak — for virtual currencies. Virtual currencies have no physical coinage. The appeal of virtual currency is it offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government issued currencies.

Despite many advances, money still has a very real and permanent effect on how we do business today.

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