THE CONCEPT OF MONEY

MONEY

Money is a legal tender that is in the form of coins or notes and is accepted in a society as a payment for goods and services and the repayment of debt.

ORIGIN OF MONEY

The origin of money is dated as far back as 100,000 years, when barter was the way of doing business.

Then, man did not have what we call money now; trade by barter was done in order that people could get what they needed or could not produce. This gradually led to the use of pebbles, shells, and cowries, which were counted and stored as a value for goods and services.

TIMELINE IN THE EVALUATION OF MONEY

9000–6000 BC
Livestock such as cows, sheep, and camels are considered the first and oldest form of currency; grains and other plant products also stand as a standard form of barter in many countries.

Sources of cowries

1200 BC
The first use of cowries was in China. The Costal region along the Pacific and Indian Oceans widely embraces cowrie shells as currency.

Source

1000 BC
The first coins were developed out of precious metals such as silver, bronze, and gold. Gold and silver coins were first used in ancient Lydia (modern Turkey). These coins were stamped with symbols of gold and emperors to mark their authenticity.

Source

118 BC
This year, leather currency came into existence. It could be said that leather currency was the first documented type of banknote. Leather money consisted of pieces of white deer skin about one foot square.

Source

806
Paper banknotes first appeared in China during the Tang Dynasty. Over this period, paper notes grew in production. The expenditure of Marco Polo in China introduced the idea of paper money to Europeans.

1816
In this year, Gold was made the Standard value in England in 1816 to help govern inflation. In the United States, the Gold Standard Act was officially enacted in 1990, which led to the establishment of a central bank.

Source

1950
The credit card we use today originates from a Dinner club founded by Frank X. McNamara. The club issues these cards to members to pay only their restaurant bills. Eight years after the Dinner Club credit card, the first versions of American Express and Visa Cards were issued.

1971
This year, the US Dollar came into existence, and that same year, the United States officially abandoned the gold standard. After expanding social programs and paying for the Vietnam War, inflation was on the rise, and the gold standard became severely outdated.

1999
European banks started to offer mobile banking to their customers through the introduction of Smart phones, enabling the use of mobile web.

Source

2009
This year, cryptocurrency is alive. This is actually a digital currency that uses encryption to generate and transfer funds. Cryptocurrency operates on a decentralized ecosystem, free from government control.

Because it operates on a decentralized ecosystem, many countries have not made it legal tender, warning people of the risk involved in trading in cryptocurrency.

THE FUTURE (ELECTRONIC MONEY)

In this digital age, economic transactions regularly take place electronically, without the exchange of any physical currency. Digital cash will likely continue to be the currency of the future.

TYPES OF MONEY

Although today's monetary system is based on fiat money,history has shown that almost all money was commodity money, such as gold and silver.

Ever since the beginning of man, there have been different types of money, including

1. COMMODITY MONEY

This form of money is based on the value of the material it is made from, like gold, diamonds, silver, etc. Many items have been used as commodity money, such as naturally scarce precious metals.

2. REPRESENTATIVE MONEY

This is money that consists of token coins, paper money, or other physical tokens such as certificates that can be reliably exchanged for a fixed quality of a commodity such as gold or silver. The value of representative money is equal to the commodity that backs it.

3. FIAT MONEY

A fiat is an order given by a person in authority. Fiat money is based on the value that the government has given it by order. For example, the government has declared that 1000 naira is not legal tender and that it will be unlawful to not accept it as a means of payment of goods or repayment of debt. Paper money is an example of fiat MONEY.

4. PAPER MONEY

In modern times, the need to have a medium that was less of a burden to carry around led to the introduction of paper money.

FUNCTION OF MONEY

Money actually has four primary functions.

• It serves as a means of exchange.
• It is a unit of account.
• It is a store of value.
• It is a unit of deferred payment.

CONCLUSION

From day one, man has always had a means of transacting goods and services, right from the use of Animals, grains, pebbles, shells, and cowries to the use of Fiat money and cryptocurrency. The world is truly changing.