At first glance, a coin seems like a simple concept, it’s money, right? It’s our salaries that we get from our employers, and use to pay taxes, buy food and goods, and pay for the services we need. We can put some money in a savings bank account, or use it to invest in finance or in other words, in the real estate market; The concept of money seems obvious to most people. But in fact, the development of currency contributed to the formation of human civilization. The currency stopped wars and started more wars. In fact, entire cities and countries would not exist without money.
As literary critic Lionel Trilling said: “We make money and use it, but we cannot yet understand the laws or forces that govern its work…Money has a life of its own.” Learn about the history of money, from early coins to the life of coins to online banking. We will discuss monetary developments in the United States and the role of the economy in determining exchange rates and controlling inflation. For the purposes of discussion, the terms “currency” and “currency” are used interchangeably.
Use of money in exchange:
Money or money can be defined as a unit of purchasing power, a medium of exchange, or a substitute for goods and services, not necessarily in the form of coins or paper money that we all know. Exchange, from big wheels, knives, and a basin of salt, to people, anything that members of a community agree is highly valued can be used as currency in circulation. For example: Suppose you have a bucket of wheat and you want to buy a cow, you not only have to find someone who owns a cow, but they want to take the bucket of wheat instead, otherwise no exchange will happen. Well, let’s say your neighbor qualifies, he owns a cow and wants a bucket of wheat, but what if a bucket of wheat isn’t worth replacing the cow? ! Your neighbor obviously can’t make modifications to his cow or just give you parts of it, so you have to find a way around that, right? If you live where round and stamped coins have a certain known value and can be exchanged for other goods, you just need to find someone who needs wheat and exchange them for an agreed amount of coins that you can later use to buy cattle elsewhere. There is no denying that it is easier to carry coins with you than buckets or cows wherever you go, hoping for a deal.
Currency, a storehouse of wealth around the world:
Besides being a substitute for physical items in trade and exchange, currency has another important use because it is a store of wealth. Goods traded in barter systems are often perishable, for example you can collect tons of wheat after several smart barter transactions, but if you try to preserve the wheat, it will inevitably spoil eventually. The use of money has an important impact on civilization, because it allows people to create and increase wealth, so influence and power are not limited to the family framework, but people excluded from political activities. Providing services can create wealth, which can then be used to buy political influence and military power, so It can be said that money makes civilization more democratic, and its influence is not limited to noble families who have kept money for themselves for hundreds of years.
Forms of money:
The form and function of money has changed over the past three thousand years and is limited to four specific forms: 1- Commodities, 2- Coins, 3- Paper money, 4- Electronic money.
- Commodities: The development of the monetary system in the form of commodities clearly illustrates the difference between the barter system and the monetary system, the latter appearing in what can later be considered a real revolutionary change. A well-known example of the Aztec adoption of this system made cocoa beans so valuable, because they were so small and easy to carry, that they were often used to complete exchange transactions or settle differences in value; That is, what is called today is false.” Commodity coins have value in themselves and can be consumed in any market conditions, but commodity coins also have some drawbacks, they are usually bulky and perishable, and even livestock are used a lot in farming communities and are a good medium. Trade is highly respected by all members of these societies, but the obstacle was the difficulty of transportation, a situation that made it difficult to use commodity currencies outside the local cultural boundaries that appeared within their borders, and this is what European explorers would do. Fill with cocoa.. what he did when His cargo ship was thrown into the sea, because cocoa was not important to Europeans, the Aztecs gave him!
- Coins: Coins were originally minted in Lydia; It is an ancient empire in the area known today as Turkey, made by the Lydian king “Corsius” around 640 BC that bears the imperial emblem of small metal alloys, and this system gradually passed to the Greeks and Romans, and coins at that time were made of gold or silver, which was imposed its value by the authority of the government that minted it, if the Athenian authorities declare the currency, no matter how different the countries in which on the other hand, the development of the currency in China has seen its development and spread in the West; That is, in the 5th century BC, the Chinese began to use knives or other commodity coins in tools, which continued to develop and became smaller until eventually becoming circular with unique holes, but these Chinese coins remained without real value until the 17th century. Probably one of the most important things about coins is the government’s control over the issuance and payment of money to the market, as it can manipulate the money supply in the market, which the Roman emperors did before when they lowered the money ratio. The precious metals in Roman coins were due to the increased demand for money and the desire to hoard it. They concluded that one ton of gold could make 10,000 coins, and if they halved the amount of gold, they could make double that amount. Currency. But this decision did not bring good results, the reduction in the amount of gold in the Roman currency did not lead to an increase in the wealth of the Roman emperor, but rather caused its value to continue to decline, which led to the instability of the Roman economy, which was a factor in the fall of the Roman Empire. He played an important role in the fall of Rome, as most European nations returned to a more primitive economic system; That is, by the time of feudalism, people lost faith in coins during the dark ages of Europe, until the form was withdrawn from circulation, which was not reused until the Renaissance.
- Paper money: Paper money was originally invented by the Chinese who used camel skins and / or paper with seals as a means of payment, and the penalty for counterfeiting money was death. However, banknotes faced an acceptance problem in Europe, where leather banknotes were in use around 1100, but only as an emergency replacement when silver’s access fell below usual limits. In 1661, a bank in Sweden issued paper money, but it lost its value after the market filled up. The actual use of paper money in Europe did not begin until the 16th century, when official French government banks issued paper money. Later in the gold receipts is the fact that paper money has already developed, the money has become a real value of gold or silver, and paper money has become a real promise from the party that issued it, whether it is a government or a bank, that the institution will pay that paper money a specified amount of gold or silver. Store at any time. Under this system, the currency is described as “backed by gold,” which leaves room for some mandatory exceptions in wars and other emergencies. Until 1971, every currency in the world was backed by precious metals.
- Electronic money: Money is the true representation of value, and people quickly realize that it can be through the telegraph or any other electronic means, as it is as real as the transfer of money itself. After World War II, banks recorded all information about their daily financial transactions on magnetic spools, which were passed on to the local Federal Reserve rather than printing long bills to facilitate large transactions as they had done before the war. The $500, $1,000, $5,000, and $10,000 banknotes printed at that time were already very rare, but some of them are still in circulation.Later, an interbank network was established to send transfer information directly without the need for the magnetic reels used in the early 1990s, so all transfers between different banks and the Federal Reserve were electronic. Three important sites in the history of electronic money; The first was in the 1950’s when Diners Club introduced the first credit card, and it went from being “rich and arrogant” that only wealthy businessmen could use to a vehicle for others.