How long has currency been around

A few centuries after that, a merchant in the capital of Sichuan set out to solve another problem: the money his customers were using was terrible. It was mostly iron coins, and it took a pound and a half of iron to buy a pound of salt.

It would be the modern equivalent of going grocery shopping with nothing but pennies. So the merchant told his customers that they could leave their coins with him. In exchange, he gave them a claim check—a piece of paper that could be used to retrieve the coins.

People started using the claim checks themselves to buy stuff, and paper money was born. It was a huge hit. Pretty soon, the government took over the business of printing paper money , and it spread throughout China. In an era when there was no mechanized transport, the ability to move value around on a few pieces of paper—rather than a wagon full of metal coins—was a breakthrough. Read More: The U. Paper money relied on paper and printing, which were a kind of technology.

But paper money itself also was a new technology—a tool that made trade easier. This led to an increased exchange of ideas and more economic specialization, which in turn meant people could grow more food and make more stuff.

Paper money helped China get richer. At the same time, that new technology came with risks—it meant rulers could print lots of money, which sometimes led to ruinous inflation. Today, new technologies allow us to move money using the supercomputers in our pockets. In the coming years, technology will drive even more dramatic changes in money, as the full impact of crypto-currencies becomes clear.

Like paper money, these new technologies will continue to bring new opportunities, efficiencies and risks. One key dynamic to watch as digital currency evolves is the tension between the government and private firms, a theme that runs like a golden thread through the history of money. Consider the case of America in the mid—19th century, when almost any bank could print its own paper money. At one point, private banks were printing more than 8, different kinds of money. This was still the era when paper money was a claim check for gold or silver.

If a bank went bust, the valuable claim check was suddenly just a piece of paper with a picture of Santa Claus on it. This presented a problem for merchants who faced customers using thousands of kinds of money. How could they know which banks were sound? For that matter, how could they tell real money from counterfeit? Publications called banknote reporters sprang up to solve both problems. They were little magazines that listed bills from all around the country, with brief physical descriptions and recommendations for whether to accept the money at full value or, in the case of shaky banks, at a discount.

That world disappeared around the time of the Civil War, when a new federal tax on paper money drove most of the old banknotes out of existence.

The history of money is fascinating and goes back thousands of years. From the early days of bartering to the first metal coins and eventually the first paper money, money has always had an important impact on the way we function as a society.

Keep reading for a comprehensive overview or use the links below to go to a specific section. Interestingly enough, money often has no intrinsic value. Instead, money is an object that has a value placed on it, which allows for the trade of goods and services. Some money, such as metal coins, has actual value in terms of the materials used.

However, paper money is more common in the modern world and typically has no real value. Throughout the evolution of money, currency has taken several different forms. Before money was invented, people bartered for goods and services. Gold and silver coins date back to around to B. Some evidence suggests that metal coins may be as old as B. When there was no currency, people traded goods and services for what they needed.

One farmer might trade livestock for vegetables, while another may trade labor or lumber for livestock. These transactions were the early building blocks of our modern economy and would go on to create the future of money the world knows today.

The history of bartering dates all the way back to B. Goods were exchanged for each other in the absence of money, including things like tea, salt, weapons and food. As time went on, bartering continued to evolve, with Colonial Americans trading pelts, crops and muskets. The first metal money dates back to B. These coins were made from stamped pieces of valuable metal, such as bronze and copper.

Early iterations of coins were also used by ancient Greeks, starting around B. Over time, these coins would evolve to be made from the silver and gold we associate with money today. Coins were a huge milestone in the history of money because they were one of the first currencies that allowed people to pay by count number of coins rather than weight.

Throughout history, there have been lots of different coins used in different regions. In about B. By the midth century, the shilling and pound became widely used to describe larger amounts of pennies. As the value of currency has changed over the years, the creation of larger forms of currency has been an important part of the history of money. While the first paper money was created in China in to A. According to Brittanica.

The lighter weight of paper money allowed for international trade, which created both problems—distrust and currency wars—and opportunities—the ability to trade in new places for new goods. After China stopped using its paper money during the midth century, coins once again became the most popular form of money in the country and in the world.

Today, this type of facility is called a mint, and the process of creating currency in this way is referred to as minting. In B. The coins were made from electrum, a mixture of silver and gold that occurs naturally, and the coins were stamped with pictures that acted as denominations.

In the streets of Sardis, in approximately B. Lydia's currency helped the country increase both its internal and external trading systems, making it one of the richest empires in Asia Minor. Today, when someone says, "as rich as Croesus", they are referring to the last Lydian king who minted the first gold coin.

Around B. In fact, in the place where modern American bills say, "In God We Trust," the Chinese inscription at that time warned: "Those who are counterfeiting will be decapitated. Parts of Europe were still using metal coins as their sole form of currency all the way up to the 16th century.

This was helped by their colonial efforts; the acquisition of new territories via European conquest provided them with new sources of precious metals and enabled them to keep minting a greater quantity of coins. However, banks eventually started using paper banknotes for depositors and borrowers to carry around in place of metal coins.

These notes could be taken to the bank at any time and exchanged for their face value in metal—usually silver or gold—coins. This paper money could be used to buy goods and services. In this way, it operated much like currency does today in the modern world.

However, it was issued by banks and private institutions, not the government, which is now responsible for issuing currency in most countries. The first paper currency issued by European governments was actually issued by colonial governments in North America. Because shipments between Europe and the North American colonies took so long, the colonists often ran out of cash as operations expanded. Instead of going back to a barter system, the colonial governments issued IOUs that traded as a currency.

The first instance was in Canada then a French colony. In , soldiers were issued playing cards denominated and signed by the governor to use as cash instead of coins from France. The shift to paper money in Europe increased the amount of international trade that could occur. Banks and the ruling classes started buying currencies from other nations and created the first currency market.

The stability of a particular monarchy or government affected the value of the country's currency, and thus, the ability for that country to trade on an increasingly international market. The competition between countries often led to currency wars , where competing countries would try to change the value of the competitor's currency by driving it up and making the enemy's goods too expensive, by driving it down and reducing the enemy's buying power and ability to pay for a war , or by eliminating the currency completely.

The 21st century has given rise to two novel forms of currency: mobile payments and virtual currency. Mobile payments are money rendered for a product or service through a portable electronic device, such as a cell phone, smartphone, or a tablet device.

Mobile payment technology can also be used to send money to friends or family members. Increasingly, services like Apple Pay and Google Pay are vying for retailers to accept their platforms for point-of-sale payments.

The appeal of virtual currency is it offers the promise of lower transaction fees than traditional online payment mechanisms, and virtual currencies are 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.

Liuliang Yu and Hong Yu. Long River Press. Hans Ulrich Vogel. Bank of Canada. Accessed Oct. Monetary Policy. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.