Roots OF Modern Currency

When talking about currency, the very first which comes into anyone’s mind is colored piece of paper having a photo of some famous personality on it. The concept of paper money or the origin of modern currency is relatively new. If we see the history, the currency is defined as something recognized as valuable mutually by all. Let us consider the example of cacao beans, used for making yummy chocolate drink. The value of these beans was based on practical things. Because these beans were easy to transport, were uniform and thus made bartering simpler. In case a trade looked uneven, the trader used to add an extra scoop of the beans to balance things. Same way, the Romans used to value salt and used it as a measure to trade things. Coming to our original topic here, the roots of modern currency, let us have look at the following.

The start of modern currency initiated an important advancement in the economic life style of a society. The roots of modern currency marked an end to simply trading of items and it gave people the concept where people could determine value through something universal. The origin of modern currency facilitated exchanges to be more circular, rather than a chain of one to one transactions.

With the gradual growth of civilizations and ancient cultures, the trading became more sophisticated and advanced, however the traders found themselves back in the same barter system which was full of flaws. The issue was to find something that was recognized as valuable, even among different cultures with different languages and beliefs. The solution to this problem appeared in around 640 BC in a civilization on the coast of what is today known as Turkey and it marked the roots of modern currency exchange. The first ever international currency was invented that also marked the start of modern currency system - the metal coin.

The metal coins had long been recognized as an important and precious substance by many cultures. Gold was considered as one of the most valuable because of its alluring luster and its quality of never getting rusted. In 2500 BC, Mesopotamian clay tablets carried inscriptions that recorded the use of silver and gold as payments. But these payments were usually in large quantities. Gold was too scarce and valuable to be used in small exchanges. This led to the coins made from a naturally occurring mixture of gold and silver called electrum.

Although the Lydian empire soon crumbled, its innovation in using coins spread through the Mediterranean world. This was the first international economic system as we would understand it. It is here that we can first see the revolutionary impact that money has had on society. The value of money in the form of coins, however, was recognized between cultures. Sometime in the first millennium, paper made from mulberry tree bark was stamped with the Chinese emperor’s seal and backed up with gold. These bills, often the size of a modern sheet of notebook paper, were far easier to transport and use than the strings of bulky tokens. They are some of the first examples of paper money in history.