History of Money

When was the money first used? Who invented money?

Who created and used money first

Money is such an integral part of our everyday life that it is impossible to imagine us  without money.  However, in the very old days, people did not have the kind of paper money we use today. The  earlier communities were trading through a system consisting of barter stores. They where exchanging raw materials for other goods. Then people had problems with these materials because most of them were easily perishable or too heavy to move. These problems gave rise to researches for alternatives that were easy to transport, could be standardized and used as a representative of the value of a product. Those efforts ended up with the first coins introduced.

Who created money

The first coins in the history

The Chinese bronze coins, used for trade around 1500 BC, are believed to be the first coins in  the history. Bronze was a good choice as a metal to produce coins. Because, it was very easy to produce bronze coins. They could be reproduced and reshaped as they were being worned out in course of time.

 

Bronze becomes standard coin-metal

In other civilizations, precious metals such as gold and silver were used for coins. But only high society and royal family members could use it because gold and silver were rare and expensive metals. However, bronze was a better option for  the community including poor people. Thus, bronze quickly became the most common metal used for coins.

The leaders of the countries also had coins printed for their names. Kings and rulers purpose was to increase their popularity among their people. Furthermore, they were leaving their foot-prints in the history. Many old coins were marked with pictures of the royal weapons of various rulers who were in power at the time the coin was produced.

History of money and currency

The first paper money

Paper money is also believed to have come from China in 960 AD.  At the times people couldn’t evaluate the power of money correctly. They produced money more than its value and that led to high inflation. When the high inflation began to crash the economy, Chinese rulers Ming Dynasty banned the use of paper money.

But the falling metal reserves made the use of paper money inevitable again. The concept of representative money came into practice. When they started to produce money only in amount of the precious metals value, the paper money re-gained its functionality same as todays money system.

Gold Representative Money

The first representative money was backed by gold and silver reserves of governments. This meant that people could exchange their golds  to an equivalent amount of money by presenting it to the bank. Using representative paper money was similar to using coins for its actual metal value. This gold representative paper money usage was good for a while. But the growing economy and population made it unsustainable. It was impossible to maintain strong growth in the economy as the currency was limited to the amount of gold in the country’s treasure.