Back to Basics: The Evolution of Money
Do you know the history of money and how it has evolved into how we use it today? Money has come a long way, from bartering to virtual accounts. Check out this history of money to learn more.
Why Do We Have Money?
Did you know that a long time ago people didn’t even use money? Instead they would barter by trading goods or services with each other for something they needed. For example chicken eggs were traded for cows milk or fabric to make clothing.
It sounds like a great idea right? However as good as it sounds it doesn’t always work out as well. It can be time consuming to trade items around until everyone has what they need, and it’s not always physically easy. Some items are easier to carry, store and trade than others.
Eventually, people discovered that it would be easier to trade something in place of the actual “stuff”. This is when they invented money, which was made of something easy to carry. The money had a certain agreed-upon value and could be traded for items of worth such as food, clothes or tools.
When Was Money Invented?
The concept of money dates back to many centuries ago. Across many cultures in the the world money has been made of whatever was readily available. For example, the Mayans and Aztecs used the cocoa bean as currency.
Coins
History shows that the first official coins were made around 600 B.C. in Ancient Greece. Before that items such as grains, beads or shells were used as currency.
Within time coins became associated with nations and governments. For example, the Romans made coins with images of its emperors on them.
Paper Money
It is believed that the Chinese were the first to create paper money. In the 7th century A.D., merchants in China started to use money to represent how much copper coin money they had. They would deposit the coins with other merchants, and those merchants would give them a paper certificate for the amount of coin.
For obvious reasons the paper was easier to carry when people were traveling or making large payments to others. People with the paper could then collect the coin if desired. This system lasted around 200 years. A copper shortage and other issues caused the Chinese people to switch to paper money that was based on gold at that time.
Paper money hasn’t always been made of paper. It’s been made of a variety of materials, including different types of cloth and leather.
America’s History of Money
The history of money in America goes back the beginning of the history of America itself. Prior to the Declaration of Independence, the American colonists used various forms of money, typically British in nature. But in 1776, the Continental Congress of the United States approved the issue of $2 notes.
Those $2 notes were called Continentals and were the first official paper money of the United States. Ironically, they’re actually older than the country! The Continental Congress approved them days before it declared independence and more than a month before the Declaration of Independence was signed by all the members.
Loose Change and Banknotes
Today, we still use banknotes- as known as our paper money-and coins. Common denominations include:
- Pennies, coins worth 1 cent
- Nickels, coins worth 5 cents
- Dimes, coins worth 10 cents
- Quarters, coins worth 25 cents
- $1 bills
- $5 bills
- $10 bills
- $20 bills
- $50 bills
- $100 bills
Less common banknotes are coins that are worth 50 cents and $1 (though they’re still in circulation). The United States used to make paper bills worth $500, $1,000, $5,000 and even $10,000, however these large-value bills are no longer printed.
Money that was legitimately printed after 1861 in the nation is still considered valid. If you find a legitimate $1,000 bill printed years ago, it’s still worth $1,000 and highly desirable. It may be worth a lot more given its age and condition.
U.S. Department of the Treasury
The U.S. Department of the Treasury is a financial management agency of the country. This department handles a variety of tasks, including collecting taxes, paying the nation’s bills and managing currency.
There are a number of agencies under the U.S. Department of Treasury, including the Mint. The United States Mint is the organization responsible for printing paper money and making coins. In addition to making the money supply for the country, the Mint also makes collector’s editions of coins.
Present Day
Money has come a long way from bartering… Now money can exist electronically in various accounts. Isn’t it ironic that you never actually end up holding the money in your hands? Instead you see a number on an account you login into online or from your phone.
Mobile Payments
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.
Virtual Currency
Bitcoin , released in 2009 by the pseudonymous Satoshi Nakamoto, quickly became the standard for virtual currencies. There are 6 virtual currencies that have no physical coinage. 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.
What is Credit and Why was it Invented?
Credit is a way people can pay for items or services when they don’t have the cash to do so. Instead of using their own money to make the purchase, they borrow the money from a bank.
Anytime you use credit to pay for something, you have to pay it back. When someone borrows money from a business like a bank. The bank agrees to let the person use that money for a period of time. The person agrees to pay the money back with interest-that’s the amount you pay for the privilege of using the money. If the person doesn’t pay the money back as agreed, they then are penalized and have to pay a late fee.
Banks and other lenders might stop letting people borrow money if they don’t pay their loans back correctly. Lenders check to see if someone is likely to pay money back by checking the person’s credit score. A credit score is like a grade you get on how trustworthy you are when it comes to borrowing money.
It’s never too early to start showing you’re trustworthy with money and learning about credit and finances. Our website has various resources for you to use to learn about credit and how to build or rebuild it. Whether you are just starting out or have fallen on tough times and need help with building your credit, we at Lifeguard Credit Solutions can help! Reach out to us today for your free credit analysis to help get you on the road to financial responsibility.
Originally published at https://lifeguardcreditsolutions.com on September 14, 2020.