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economy 101-currency

Updated on March 23, 2016

The economy has existed long since the age of the ancient cavemen, and has thrived under the wisdom of the modern men. The economy can be called the veins of this world, pumping currency and goods through the world. The economy has changed dramatically throughout the flow of history, and one thing that acted as a catalyst in its evolution is the invention of currency.

How was currency invented? First, trading existed through the most primitive method- the barter system. As time went forward, the many disadvantages existing through this system soon became evident. One of the most off-putting disadvantages is the lack of a common standard. People barter with each other without a common goal. The things people barter for or with change from time to time, making trading difficult. People soon discovered that a common medium for trading should come in handy; hence the first coins were produced. Ancient coins consist of mainly gold, silver, iron, copper, and nickel. These metals are usually hard to obtain, therefore making chances of sudden increases in currency slight. This invention was the first step in the evolution of currency.

Paper bills, otherwise known as paper money, are the second big invention. Many people nowadays get the misconception that paper bills have actual worth. This idea is false. Paper bills are actually certificates for gold, or other precious metals with actual value. Paper bills are invented because people soon came to realize that it is inconvenient to carry large amounts of gold. The weight of these metals will cause enough trouble, let alone the risk of robbers and accidents. People therefore began trading using paper bills, which functions as a certificate that a person owes you a certain amount of gold. The same principles apply with the bank notes today.

Currency has been a great help in our economy. It plays the role as a medium where trading can happen, and a standard for the selling of products. Without the help of currency, we would still be using the conventional bartering system, and ecommerce, as well as online shopping can never exist.

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