Table of Contents
Early History
The early money transactions provided a foundation for our current economy, in which we use money as the medium of exchange. Money has no intrinsic value, but it is a valuable tool. Metal coins are more valuable than paper money in terms of material. The types of currency people used throughout history have taken various forms. The first type of money, the shekel, appeared about 5,000 years ago, invented by the Mesopotamian people.
Before that, people had exchanged goods and services via barter. Barter appears to have a rich history, Colonial Americans even traded crops, pelts, and muskets. People used gold and silver coins from around 650 to 600 B.C., to pay armies by stamped coins. Metal coins could be roughly 1250 B.C. Before using currency, people traded goods and services for whatever they needed, such as livestock for groceries, labor, tea, salt, weapons.
First Coins and Paper Money
The first metal money reportedly dates back to 1000 B.C., China. The coins were made from stamped pieces of valuable metal, including bronze and copper. Early coins were also used by ancient Greeks, from around 650 B.C. Over time, the coins were produced from silver and gold. Coins meant a stepping stone in the history of money because they were among the first currencies that enabled people to pay by the amount or count of coins rather than weight.
Throughout history, a number of various coins have been used in different regions. In about 500 B.C. the first round of coins was created, stamped with gods and emperors to appear authentic. In 800 AD, Charlemagne issued the silver penny, the coin that was used in Western Europe from 794 to 1200 A.D. By the mid-13th century, the shilling and pound became widely used instead of larger amounts of pennies. Larger forms of currency creation have been important.
Even though the first paper money was created in China in 700 to 800 A.D., paper currency wasn’t commonly used for a long time. China was the first country to use paper money, but it was only used until circa 1455. The lighter weight of paper money opened larger doors by allowing international trade. It created both opportunities, such as trading in new places for new goods, and problems, including currency years, distrust, and greed.
The Beginnings of Banks and Gold
Around 1800 B.C. the Roman Empire started the very first banks, which offered loans and accepted deposits from people, but with the collapse of the empire, they disappeared. In the 19th century, banks became trusted institutions, together with fractional reserve banking. Because not all bank clients withdrew all their money at once, banks quickly learned they could loan more money than they actually had, a crucial step in the history of money.
In 1816, gold became the standard of value in England. Banknotes represented a certain amount of gold, therefore, only a limited number of banknotes could be printed. This ensured previously unbacked currency some value and stability. By 1900, the United States initiated the Gold Standard Act. The U.S. established the central bank after, which has a major role in our current economy. In the 1930s, the Gold Standard ended after the Depression and the devaluation of gold. Many people in contemporary times compare this event to a black cat crossing your path, an omen of potential bad luck in the future.
Online Payment Today
In our modern era, money is used in several forms, including the various countries’ currencies, and cryptocurrencies (Bitcoin, Ethereum, Tether). Even though money was exchanged physically by paying with coins or paper money, it has changed with the Internet and the use of debit and credit cards. It led to the growth of eCommerce. Online payments have become more convenient thanks to their simplicity, by only using a bank account number and routing number.
Credit and Debit Cards
Debit and credit cards were invented to simplify our money transactions, and they come very handy in our current times, when we don’t always have the time to deal with exchanging money. Most people use a debit card today, and some people also enjoy the benefits of credit cards. Debit card transactions are managed by your bank through your bank account for a small percentage, with basic options like savings account, foreign currency account, etc.
Credit cards work differently, you don’t need a balance to put in money. Instead, you can choose a credit limit to set on your card, allowing you to spend up to a certain amount before you have to pay it back so that you can continue using your card. Credit cards were first issued in the 1920s, and have been favored by many ever since. In 2020, the most frequently used payment method was using credit cards in the U.S.
Digital Currency
Statistics report that half a percent of the world’s population is currently using blockchain technology, about 40 million people. Even though there were trials to start digital currency in the 90s, it started gaining popularity in the 2000s. Digital money like crypto and virtual currency has the same value as any other form of money with an important role in our economy. Besides Bitcoin, the first digital currency, virtual currencies, and other crypto options are used.
How to Manage Your Money
The history of money may be interesting, but understanding how to manage your money well is important! Saving, investing, and spending money smartly is pivotal to financial advancement. If you are in debt, you should get out of it the soonest, and stay out of it! Today, several apps can help you manage your finances better, pay off your debt, and you could invest in crypto and other digital currencies for more income. The Mint app can help to track your finances.
You should create a spending plan and budget in each case, especially if you tend to spend more than you earn! This can indicate that you are headed for trouble since it is a lot easier to spend your money than to earn it! Start by tracking your expenses for one or two months, and then create a simple budget. It can pay off long-term. Start saving early, if you haven’t yet started, the latest it should be in your 40s! Saving is important not to rely on credit later!
The Powerful Influence of Money
Money has a powerful impact on human history, crucial decisions have been made because of it. We can also thank our international trade for paper currency due to its lightweight. The invention of money allowed us to switch from barter to a more simple payment method, so we don’t have to think about the appropriate exchange. Digital currency allows us to invest in potentially growing currencies and spend money more conveniently.
Since money was first invented, it has affected how we live, connect, pay, and trade. Everyone needs it, wants more of it, and fights for it. Not only have we fought wars over money, but some of the most important advancements happened because of money. Today, with the big changes in our society, and becoming more conscious of the way we live and spend money, you should minimize your expenses on things that truly matter by asking Do I truly need this thing?