Money is an object that we have been using for several centuries as a common material of exchange. It is precisely characterized by having an exchange value that allows us to generate transactions and acquire various goods, and its history has to do with the development of trade in Western societies.

In this article we’ll look at the origins of the currency and how it has developed.

Origins of currency: from barter to cash

The coin is a metal piece with an attributed value that functions as a common means of exchange. As such, it has emerged at the same time as the development of trade. Following this definition we can see that, in order to be valuable as money, the currency meets several requirements:

  • It is a means of change .
  • It is a deposit of purchasing value (you can acquire things because their value remains over time).
  • It is a unit of account (transactions can be posted).
  • Allows for deferred payment patterns (a payment may be considered today but made in the future).
  • It is accessible, portable, divisible and difficult to forge .

All of the above has gradually developed in different societies. In fact, throughout history, different objects have been used as common means of exchange. For example, in the barter system, livestock or salt fulfilled the function that currency now fulfils .

The difference is that this system was based on the direct exchange of one good over another. And when the currency appears, the parties interested in barter are divided; that is, it allowed the separation of production from sale, a matter that will be necessary later in the capitalist system (characterized precisely by the division of labor and specialization).

In short, the history of the currency precedes the current economic systems. This history also has to do with the concepts of gold and silver , which are the raw material of currency and are metals associated with wealth from the most classical philosophy. This advances to the establishment of payment systems that are different according to society and time.

For the same reason, the coin is not only the metallic object we have described. It is also a social and political institution , and is even an important element for the social bond.

Main stages

Money systems originate with the main purpose of maintaining the exchange value of the metallic object independently of the political powers being modified. In other words, it is created as a way to avoid arbitrariness in the decisions on that value and its use .

To summarize the origins of the currency, Viales Hurtado (2009) tells us that its history can be divided into three major stages: the heavy coin, the coin-count and the coin-truck.

1. The heavy coin

The heavyweight peel has its origins in Egypt, approximately 2000 years before our era. It was in the form of a piece or bar of raw metal (an ingot) and was used to acquire some goods.

2. The coin-account

Created approximately 800 years before our era as a product of the division of bullion or heavy currency. That is, it is the same coin as before, only it is smaller in size, which makes it easier to exchange . Its precursors were the Greek, Roman, Chinese, Indian and Middle Eastern civilizations.

3. The minted coin

Unlike the previous ones, this coin has an inscription, which is why it is known as a minted coin. This inscription has the function of indicating the exchange value of the piece, according to its weight . In the beginning, metals such as gold and silver were used in fixed quantities, and the seal functioned as a guarantee. Later these metals were mixed with others and their proportion varied according to the value that was to be indicated.

Moreover, its mintings have not been the same for all societies and all times, but have depended on the dominant economic doctrines and their commercial development. Thus, this currency is the one which finally starts the metallic money system.

Paper money

After the minted money, the next important step for the establishment of money systems was the creation of paper money; where, unlike the metallic money which in itself had a value for the material with which it was made; paper money has a value dissociated from its own raw material .

It has served as a facilitator of commercial transactions and has made it possible to avoid the transfer of large currencies, thus making trade more accessible. Paper money has its origins in China in the 9th century, although its circulation in Europe and the rest of the world began until the mid-12th century.

Bibliographic references:

  • Torres Miranda, J. (2015). Evolution of money. Recovered 15 October 2018. Available at
  • Viales Hurtado, R. (2009). The historical evolution of currency and monetary systems. Conceptual bases to study the monetary history of Costa Rica from the 16th century to the 1930s. Diálogos Revista Electrónica de Historia, 9(2): 267-291.