We all use money every day. It is essential because if we want to buy some food, clothes, etc. we have to pay money for these goods. Money is recognized as banknotes and coins. However, many years ago people couldn’t go to the shop and buy what they wanted. They had to exchange some merchandise or services to other goods or services and this process is called barter trade. It was a really difficult procedure the barter often depends on a coincidence of wants. Giving an illustration, the seller of grain has to find a buyer who wants to buy grain and who also could offer something the seller wants to buy. And one more example, if a wheat farmer needs what a fruit farmer produces, a direct swap is impossible because seasonal fruit would spoil before the grain harvest. The solution is to trade fruit for wheat indirectly through a third, intermediate, commodity. Intermediate commodity or in other words commodity money has to be imperishable, attractive in demand, etc. For example, it can be cattle, salt, shells, wine and so on. These commodity money had disencumbered (palengvino) barter trade from difficulties. However, commodity money had their disadvantages, for example cattle, fur, precious stones couldn’t be cut into smaller pieces and it was uncomfortable to keep and transport .
Because of the minuses of commodity money, people had to invent simpler way to continue the trade. And they invented specie or monetary money. It was very similar to commodity money. At first, specie was a shape of metal bars, wire, rings or powder(milteliai). This money was uncomfortable because it was necessary to weigh and to hallmark it(nustatyti praba). Soon, weight and hallmark of specie were embossed on the money. And the coin was invented then the ingot (metalo lydinys) was shaped up. The earliest known coins in the western world came from Lydia in about 650 B.C. They were made of electrum, a natural alloy of gold and silver found locally. Greek cities, The Great Persian Empire and Roman Empire quickly adopted the new useful technique of metal currency. And by the end of the 6th century, coinage were common throughout the region. However, coins as well as commodity money had many disadvantages. For instance, coins quickly show wear and they usually have small value, so it’s difficult to count lavish sums of coins. Because of these reasons, people invented paper money.
So let’s move on to the paper money. At first, paper money was used In China in about 650 A.C. After then, paper money was used in Persia and Japan. In Europe paper money firstly was produced in the Netherlands in 16 century and in the USA in 17 century. Paper money doesn’t have any value in itself. It is worthless, symbolic. In other words, paper money is just a note. It has a purchasing power because the government announces it as money and citizens accept it universally. Nowadays, we often don’t see real money (banknotes and coins) because we use credit cards and money is like an abstraction. Our money is placed into electronic space and it circulates just because of our imagination, but this electronic banking lightens the trade, purchasing, etc.
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