The history of Money

Money is anything that is commonly accepted by a group of people for the exchange of goods, services, or resources. Every country has its own system of coins and paper money.

Bartering and Commodity Money

In the beginning, people bartered. Barter is the exchange of a good or service for another good or service, a bag of rice for a bag of beans. However, what if you couldn't agree what something was worth in exchange or you didn't want what the other person had. To solve that problem humans developed what is called commodity money. 

A commodity is a basic item used by almost everyone. In the past, salt, tea, tobacco, cattle and seeds were commodities and therefore were once used as money. However, using commodities as money had other problems. Carrying bags of salt and other commodities was hard, and commodities were difficult to store or were perishable. 

Coins and Paper Money

Metals objects were introduced as money around 5000 B.C. By 700 BC, the Lydians became the first in the Western world to make coins. Countries were soon minting their own series of coins with specific values. Metal was used because it was readily available, easy to work with and could be recycled. Since coins were given a certain value, it became easier to compare the cost of items people wanted. 

In 118 B.C., banknotes in the form of leather money were used in China. One-foot square pieces of white deerskin edged in vivid colors were exchanged for goods. This is believed to be the beginning of a kind of paper money.

Representative Money

With the introduction of paper currency and non-precious coinage, commodity money evolved into representative money. This meant that what money itself was made of no longer had to be very valuable. 

Representative money was backed by a government or bank's promise to exchange it for a certain amount of silver or gold. For example, the old British Pound bill or Pound Sterling was once guaranteed to be redeemable for a pound of sterling silver. 

For most of the nineteenth and twentieth centuries, the majority of currencies were based on representative money through the use of the gold standard. 
 
 

Fiat Money

Representative money has now been replaced by fiat money. Fiat is the Latin word for "let it be done". Money is now given value by a government fiat or decree, in other words enforceable legal tender laws were made. By law the refusal of "legal tender" money in favor of some other form of payment is illegal.

Electronic money system

ERMA began as a project for the Bank of America in an effort to computerize the banking industry. MICR (magnetic ink character recognition) was part of ERMA. MICR allowed computers to read special numbers at the bottom of checks that allowed computerized tracking and accounting of check transactions.

$$$

The origin of the "$" money sign is not certain. Many historians trace the $ money sign to either the Mexican or Spanish "P's" for pesos, or piastres, or pieces of eight. The study of old manuscripts shows that the "S," gradually came to be written over the "P," looking very much like the "$" mark.

Euro

Inspiration for the € symbol itself came from the Greek epsilon (Є)[note 1] – a reference to the cradle of European civilization – and the first letter of the word Europe, crossed by two parallel lines to ‘certify’ the stability of the euro. ”

—European Commission 

The official story of the design history of the euro sign is disputed by Arthur Eisenmenger, a former chief graphic designer for the European Economic Community, who claims he had the idea prior to the European Commission.[2] 

The European Commission specified a euro logo with exact proportions and colours (PMS Yellow foreground, PMS Reflex Blue background [1]), for use in public-relations material related to the euro introduction. While the Commission intended the logo to be a prescribed glyph shape, font designers made it clear that they intended to design their own variants instead.[3]