What Is Money

Category: Finance.

What is Money? Money is anything widely used for paying debts owed by a person to someone else and also for receiving the payments of debts owing to a person from someone else.

The answer to the question is simple. A country produces coins and banknotes, (accepted by everyone) for the payment of bills and for the receipt of money owing. In the" old days" people traded the goods and services they owned( and probably produced) for goods and services owned by others( probably produced by them) . Money is what is known as a" medium of exchange" . The scenario went something like this- "you give me two sacks of your potatoes and I will trade you ten of my fish" . As society developed, business became more cumbersome and inefficient with this method of trade.

This method of trading was fine for a while. Business dealings became stilted and slow and lagged behind the new pace of commerce. Some bright spark then came up with the idea of a common" medium of exchange" easier to carry around and better to use. There had to be a better way. Money was born. Forms of Money.

It wasn t that simple, because while all sorts of things were used as a medium of exchange, these were all basically called" money" and it wasn t until coins and paper notes were developed that money as we know it today became the standard accepted as a medium of exchange. There are various forms of money- cheques, IOU s, credit cards, bank drafts or gold. Gold is resistant to corrosion or damage. Gold was the standard used in the past because of its scarcity and its qualities. These unique properties, as well as the scarcity of gold means that even today, wealthy people around the world would rather keep their wealth in gold holdings than in the currencies of countries which are subject to inflation. Some include: beads, salt, eggs, pigs, yarn, leather, axes, ivory and jade.

In fact, all sorts of things have been used as money throughout the ages. Today we have another form of money, which cannot be touched, and yet it as real as the tangible coins we are able to touch. The Name" Money" The word money comes from the Roman goddess- Moneta. This form of money is electronic money. Apparently coins were minted in her temples and issued to the world, as the Romans knew it at the time. Origins of Money. The Latin word" Moneta" , (meaning mint or coins) came from the old English word" mynet" (meaning coins or money) and from this came the English word" mint" .

To understand the origins of money we have to go back to a time well before money came on the scene. As civilization grew and expanded beyond local societies, the need to exchange the products provided by various groups became evident. Money did not suddenly appear- it was introduced gradually in response to the requirements of human needs. The hunter needed to exchange with the farmer, the shepherd needed to exchange with the medicine man etc. It was originally a physical substance like gold or silver. The medium of exchange that was necessary to enable the various groups to barter and swap their products was money.

Sometimes it was a substance that was alive such as cattle, which was one of the oldest forms of money. Today money exists in the form of digital cash and such things as coins and bank notes will soon become obsolete. Today, although much of the money used by individuals in their everyday life is still in the form of notes and coins, its quantity is relatively small compared to the intangible types of money existing as entries in bank records. When this happens, the change in the nature of money will have a significant effect on our society.

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