Money is modern times the most important invention. It has undergone a long historical evolutionary process. People went through a stage where money was not in use and goods were directly traded for each other. Batter exchange is called such an exchange of goods for goods.
The barter’s conveniences and drawbacks led to the gradual use of an exchange medium. When we look at the history of money, we will find that all kinds of commodities such as seashells, precious stones, pearls, leather, cloth, salt, etc, have been used as an exchange medium for example money itself.
It’s called money for goods. Insufficient commodity money has contributed to metallic money (gold and silver) evolution. The problem of weight uniformity and precious metal purity contributed to public and private coinage.
The state finally took over this cycle as one of its essential features and gradually commodity money gave away to paper money, meaning currency notes. Recently, the use of paper money with coins made of copper, bronze or nickel, etc, has become almost common.
Since switching to a modern banking system with the ease of paper money we have today, money has gone through a long evolution. There are 5 stages of money before paper money exists which are commodity money, metallic money, paper money, credit money, and plastic money.
Every product that was commonly demanded and chosen by common consent was used as money in the earliest time of human civilization. For example, furs, skin, salt, wheat, etc were commonly used as money.
Commodity money has transformed into metallic money with the development of human civilization. Metals such as gold, silver, copper, etc have been used as they can be treated easily and their amount can be easily ascertained. It was the key form of money throughout the documented history’s largest portion.
The carrying of gold and silver coins from place to place was found both inconvenient and dangerous. So, the paper money invention marked a very important stage in money development. The country’s central bank (RBI in India) oversees and monitors paper money. Most of the money currently consists of currency notes or paper money issued by the central bank.
Money capital emerged almost side by side with paper money. People keep a portion of their money as bank deposits, which they can withdraw by checks at their convenience. The check itself (known as credit cash or bank money) is not money but performs the same functions as money.
Plastic money in the form of credit cards and debit cards is the new type of money. They aim to eliminate the need for cash transactions to be carried out
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