How humans first started using money

They say the world turns because of money. They also say that money is the root of all evil. Whichever theory you follow, both of these opposing points of view highlight the ubiquity of currency in modern society.

We often take it for granted that we have to spend money on food at the grocery store, save regular amounts for a mortgage or rent, or spend a few extra dollars on a new shirt or pair of shoes. These are the hallmarks of modern life, but this has not always been the case. Humans have existed for approximately 300,000 years, began forming settlements around 12,000 years ago, and laid the foundations of major civilizations around 5,500 years ago. So, when did the all-encompassing presence of money enter the equation?

Bartering and Neolithic cattle

Historians agree that before the advent of money, there was barter—the exchange of goods or services for others in a manner that suited both parties. This process began thousands of years ago, during the Upper Paleolithic era (approximately 50,000-10,000 years ago). However, experts’ opinions on further steps in economic history differ depending on their specialization. Some economists, based on Adam Smith’s The Wealth of Nations, argue that money originated as a result of the barter system.

However, scientists in the fields of anthropology and archaeology are more likely to argue that governments created money as a means of exercising control over their populations. Part of the uncertainty, of course, is due to the difficulty of tracking the system’s development in different parts of the world, mainly because of the lack of accurate written evidence. Generally, ancient money adhered to several fundamental principles: it served as a unit of exchange, represented a measure of value, facilitated the payment of debts, and could accumulate as a reserve of wealth.

Before the advent of metal coins and (much later) paper money, this meant using a wide range of objects that performed a specific combination of practical and decorative functions. The oldest form of money, dating back to the Neolithic era, is the use of cattle as a form of currency. Although they are much less portable than modern money, they meet other requirements: they provide a standard measure of value and are easy to calculate. Other non-metallic forms of currency used by various cultures over the centuries include amber, beads, cocoa beans, ivory, leather, quartz, rice, salt, and whale teeth.

Silver and the shekel in Mesopotamia

The rise of civilizations in Mesopotamia around 3500 BC caused changes in the scale of economic activity. Along with the development of extensive trade networks, this period was marked by an increase in the well—being of the wealthiest citizens and the appearance of the first registered banks. Visit. A F I N I K . C O M .For the full article. While many people used grain as a form of currency, more affluent individuals flaunted their wealth in silver, and with silver came the first monetary unit based on weight, the shekel.

A shekel weighing about a third of an ounce helped define a silver-based standard for the value of goods, taxes, and penalties. Wealthier citizens also found people willing to purchase their gold, while most people exchanged more common metals such as copper, tin, or lead. The popularity of metal money has led to a narrowing of the range of funds accepted for payment in this part of the world, paving the way for the introduction of coins. However, silver shekels did not fully meet the standards of modern money, as they lacked an official guarantee of value.

Cowrie shells and early coins in China

Regardless of the developments on the shores of the Mediterranean Sea, standard forms of currency began to appear in China. During the Shang Dynasty, which existed from approximately the 17th to the 11th centuries BC, cowry shells (small, oval-shaped shells) from the Pacific and Indian Oceans were used. Sometime after the beginning of the spring and autumn period in China in the eighth century BC, bronze and copper coins began to appear in regular circulation.

Initially, these early coins were also modeled after the popular cowrie shells. They soon began to take the form of other everyday objects, including knives, shovels, and musical instruments. Regardless of their shape, all these coins were provided with holes for easy stringing together, as they were composed of base metals, which led to a low cost and necessitated a large number of coins to purchase more valuable items.

The modern coin emerges in Lydia

What is traditionally considered the final stage in the emergence of modern money occurred in the Kingdom of Lydia, located in contemporary Turkey. In the seventh century BC, the kingdom began to produce coins from electrum, a natural alloy of gold and silver. The electrum currency, originally shaped like irregularly shaped beans, soon began to take on a rounded shape with standardized weights and inscriptions, such as a lion and a bull facing each other, which became the official mark of authenticity.

By the middle of the 6th century BC, the prosperous king Croesus divided metals into gold and silver coins to create the first bimetallic currency. By this point, the use of government coins had spread to Ionia and other Greek city-states and had also become more widespread in China and India. Although traditional currencies, such as shells and beads, continued to prevail in other regions, in many cases, working in tandem with the tried-and-tested method of barter, modern money was ready to transform the world.