Definition of Money
Money is anything that is widely accepted as a medium of exchange for goods and services. It serves three main purposes:
1. Medium of exchange – replaces bartering, making trade easier.
2. Unit of account – provides a standard measure of value (like prices in dollars or taka).
3. Store of value – keeps its value over time, allowing saving and deferred payments.
History of Money
1. Barter System (Prehistoric times)
People exchanged goods directly (e.g., rice for fish).
Problem: "double coincidence of wants" – you needed someone who wanted what you had and had what you wanted.
2. Commodity Money (Ancient civilizations)
Objects with intrinsic value (like gold, silver, salt, or even cattle) were used.
Example: Ancient Mesopotamians used silver; Romans used salt (“salary” comes from this word).
3. Metallic Money (around 600 BCE)
The first coins were minted in Lydia (modern Turkey).
Gold and silver coins spread across Greece, Rome, India, and China.
4. Paper Money (7th century CE)
First appeared in China during the Tang Dynasty, then expanded under the Song Dynasty.
Marco Polo wrote about Chinese paper money in the 13th century.
5. Banknotes and Credit (Medieval to Modern Europe)
Banks issued notes backed by gold or silver (the gold standard).
Promissory notes and checks appeared.
6. Fiat Money (20th century)
Money no longer tied to gold or silver; it has value because governments declare it legal tender.
Example: US dollar, Bangladeshi taka, euro.
7. Digital Money (21st century)
Debit cards, mobile banking, PayPal, and e-wallets.
Cryptocurrencies like Bitcoin (2009) emerged as decentralized money without government backing.
👉 In short: Money evolved from barter → commodities → coins → paper → bank credit → fiat → digital/crypto.
