Money is a medium of exchange used for goods and services, with cash being an improvement over barter due to its systematic organization, lack of time limit, and manageable size. Early forms of money included items of recognized value, while paper money was popularized in China and Europe.
Money is a medium of exchange agreed upon by a company, it can be used in exchange for goods and services, and it is a measure of value. Cash is considered an improvement over barter, in several practical ways:
The money is organized systematically, with divisions that work (you can’t trade half a cow without killing it).
Goods can be purchased even if the products of one’s individual labor are of no interest to the seller.
Money does not have a predefined time limit, as some bartered goods can, after which they lose value (for example, bread that grows stale).
Cash is a manageable size and shape, unlike some barter standards, such as livestock.
Money met these criteria in the early days by being small, light objects of generally recognized value. Items such as arrowheads, animal skins, salt, butter, cocoa beans and tobacco leaves. These goods closely related to food, heat and housing, had a similar intrinsic value to almost all in the societies in which they were used. Sometimes objects made of precious metal were also used, the weight being the deciding factor in assessing the value.
As the use of money developed, it was to have no value in itself and symbolic objects began to be used, rather than objects of essential and immediate necessity. Cowrie shells were used as currency in a number of countries, mainly in Asia and West Africa, as were shell beads called wampum in the United States.
Paper money came into use in 10th century China and its use was popularized by ruler Genghis Khan in the 13th century. The use of paper money, and other types of money with no intrinsic value, depends on the widespread acceptance of their symbolic value.
In early Europe, paper money was something like a voucher, a written guarantee of an amount of value from the person holding the coin backing it. But in the eleventh century, governments started printing money and paper money began to become regular, with pre-established values, sizes and shapes. Today credit card companies try to convince us that we don’t need the money and that even checks are obsolete.
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