Money is a medium of exchange that is used when we buy goods or services from another person.
Money itself is nothing. It can be a shell, a metal coin, or a piece of paper with a historic image on it, but the importance of money is which people place on them.
What is Barter?
Money, in some form, has been part of human history for around 3,000 years ago. Before the time, it is known that bartering system was used.
The following are the examples of bartering:
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| Trading of soybean with wheat. |
Commodities: Two different tribe exchange 400 tons of wheat for 300 tons of soybeans.
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| Trading of chariot with two horses. |
Products: Neighbours agree to exchange a chariot for two horses.
The invention of money:
The issues with commodities led people to create coins. Commodities weren’t always easy to transport and often they were perishable (rotten rapidly) or difficult to store.
No one knows for sure who first invented such money, but historians believe metal objects were first used as money early as 5,000 B.C.
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Around 700 B.C., the Lydian’s were the first Western culture to make coins. Other countries and civilizations soon began to mint their own coins with specific values. Using coins with set values made it easier to compare values and trade money for goods and services.
Today, most modern currency is not backed by silver or gold. Instead, today’s money is known as fiat money. Money has a certain value today because it was given that value by government fiat or decree.
(By Syed Hamza Shahnawaz)
Class,VII,
Middle Cambridge,
St. Patrick's High School, Karachi, Pakistan.
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