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What humans have used as money and how it evolved: barter and commodity money, the first coins, banking instruments and bills of exchange, paper money, the gold standard, central banking, the move to fiat, credit and digital money, and cryptocurrency.
What humans have used as money and how it evolved: barter and commodity money, the first coins, banking instruments and bills of exchange, paper money, the gold standard, central banking, the move to fiat, credit and digital money, and cryptocurrency.
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Before money, people swapped goods and services directly, but barter required a double coincidence of wants where each side had to want what the other offered. This friction pushed communities toward widely accepted goods that could stand in for value.
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Herding societies used cattle and other livestock as a measure of wealth and a means of payment. The Latin word for money, pecunia, derives from pecus, meaning cattle.
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Early Mesopotamian temples and palaces tracked stores of grain, livestock, and labor on clay tablets, one of the first uses of writing. These ledgers recorded credit and debt long before coins existed.
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Sumerian temple and palace economies measured debts, wages, and rents in fixed quantities of barley. Grain served as a standard of value alongside weighed silver.
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The shekel began as a unit of weight, roughly eight grams of barley or silver, and became a standard for pricing goods and settling debts. Payments were made in weighed silver rather than in stamped coins.
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Traders cut silver objects and ingots into pieces and weighed them out to make payments. This use of bullion by weight bridged commodity money and later stamped coinage.
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Hammurabi's law code fixed wages, fees, and penalties in weighed silver and grain. It shows a society using standardized value measures to regulate trade and debt.
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Cowrie shells circulated as money across parts of Asia, Africa, and the Pacific for millennia because they were durable, hard to counterfeit, and easy to count. Shang dynasty China used them widely, and the shells remained in use in some regions into the twentieth century.
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The kingdom of Lydia struck the first known coins from electrum, a natural alloy of gold and silver, stamped to certify their weight. Standardized coinage made trade faster by removing the need to weigh metal for each transaction.
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The Lydian king Croesus replaced electrum with separate pure gold and pure silver coins at a fixed ratio. This bimetallic system set a model for later coin economies.
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The island of Aegina struck silver staters marked with a turtle, among the earliest coins in the Greek world. Aeginetan coins circulated widely across the Aegean.
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Darius I introduced the gold daric and silver siglos as an imperial coinage for the Achaemenid Empire. The daric became a trusted gold coin across the ancient Near East.
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Athens minted silver tetradrachms stamped with the owl of Athena, backed by the rich silver mines at Laurion. The drachma became a leading trade currency across the Mediterranean.
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After unifying China, the Qin standardized currency on the round bronze coin with a square central hole, the ban liang. This shape defined Chinese cash coins for the next two thousand years.
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Rome created the silver denarius during the Second Punic War, and it became the backbone of Roman money for centuries. The coin's name survives in later currencies and in the abbreviation d for the penny.
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Emperor Wu of Han standardized the bronze wu zhu coin, which stayed in production in various forms for over seven hundred years. It gave China a stable and long-lived unit of small change.
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Salt was valued for preserving food and was traded across long distances as a form of payment. Its economic importance survives in words and phrases tied to wages and value.
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Maya and later Aztec societies used cacao beans as a common medium of exchange for goods in the marketplace. The beans could buy food and other everyday items and were counted out for small transactions.
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To fund wars and spending, Roman emperors repeatedly cut the silver content of the denarius until it held almost no precious metal. The falling quality of coins fed rising prices and eroded trust in the currency.
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Facing severe inflation, the emperor Diocletian set legal ceilings on the prices of goods and wages across the empire. The edict was widely ignored and did little to halt rising prices.
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Constantine introduced the gold solidus, which held its weight and purity for centuries and became a trusted currency across the medieval Mediterranean. Its stability earned it a reputation as the dollar of the Middle Ages.
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The Tang dynasty issued the kaiyuan tongbao bronze coin, which set the standard for East Asian cash for centuries. Its weight became a basic unit in the Chinese system of measures.
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The Umayyad caliph Abd al-Malik issued a purely Islamic coinage, the gold dinar and silver dirham, bearing inscriptions rather than images. These coins circulated widely across the Islamic world and beyond.
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Charlemagne standardized coinage on the silver denier and set the accounting system of pounds, shillings, and pence. This framework shaped European money for a thousand years.
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Merchants in Tang China used paper certificates called feiqian, or flying cash, to transfer value over distance without carrying heavy strings of coins. These credit notes were a forerunner of true paper money.
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Islanders on Yap used large carved limestone disks called rai as a store of value and for major transactions. Ownership could change without moving a stone, since the community tracked who held each one.
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Private merchants in Sichuan issued paper notes called jiaozi, and the Song government took over their issue in the early eleventh century. This was the world's first government-backed paper currency.
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Florence struck the gold florin, which held a consistent standard and became a leading currency for European trade and banking. Its reliability made it a benchmark for merchants across the continent.
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Under Kublai Khan the Yuan dynasty made paper money the main currency across its empire and required its acceptance. The traveler Marco Polo described the system with astonishment in his account of China.
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Venice introduced the gold ducat, which kept its weight and purity for over five centuries. It became one of the most widely accepted trade coins in the Mediterranean and the Levant.
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The Ming dynasty issued the Great Ming Treasure Note as a single national paper currency. Overissue without adequate backing led to steep loss of value over time.
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Indigenous peoples of the northeastern woodlands strung beads made from shells, called wampum, and used them for exchange and record keeping. European colonists later adopted wampum as legal tender in several colonies.
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Stockholms Banco, led by Johan Palmstruch, issued the first banknotes in Europe as receipts that could circulate in place of heavy copper coins. The bank later collapsed after printing too many notes.
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The Bank of England was founded to lend money to the government and began issuing notes payable in gold. Its notes became a trusted paper currency and a model for later central banks.
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As master of the Royal Mint, Isaac Newton set the mint price of gold in a way that overvalued it against silver. This pushed Britain toward a de facto gold standard well before it was made official.
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The Scottish financier John Law set up a French national bank that issued paper money tied to the Mississippi Company. The scheme ended in a speculative bubble and a crash that soured France on paper money for decades.
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The Continental Congress printed paper money to fund the American Revolution. Rapid overissue caused the notes to lose almost all value, giving rise to the phrase not worth a Continental.
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Revolutionary France issued paper notes called assignats, backed by confiscated church land. Heavy overprinting drove severe inflation until the notes became nearly worthless.
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Britain formally tied the pound to a fixed quantity of gold and made banknotes redeemable in gold coin. This anchored the currency and set the pattern other nations would follow.
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To finance the Civil War, the Union issued paper notes called greenbacks that were legal tender but not redeemable in gold. They marked a major move toward government-issued paper money in the United States.
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By the late nineteenth century most major economies had pegged their currencies to gold, creating fixed exchange rates and a broadly stable system for global trade. The arrangement lasted until the outbreak of the First World War.
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The United States ended the free coinage of silver and moved toward a gold standard, a change critics called the Crime of 1873. The decision fed decades of political conflict over the money supply.
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William Jennings Bryan attacked the gold standard and called for the free coinage of silver to ease debt burdens on farmers. His speech made bimetallism a central issue in American politics.
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Congress formally placed the United States on the gold standard, ending the long dispute over silver. The dollar was defined in terms of gold alone.
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Germany printed vast amounts of money to cover debts and reparations, and prices spiraled so fast that banknotes became nearly worthless within hours. The episode became the classic example of hyperinflation destroying a currency.
also in Money and finance, The central bankers and the road to war
Amid the Great Depression Britain abandoned the gold standard, letting the pound float. Many other countries soon followed, marking the collapse of the interwar gold system.
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Allied nations agreed to a system of fixed exchange rates in which currencies were tied to the US dollar, and the dollar was convertible to gold. The deal also created the International Monetary Fund and the World Bank.
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Diners Club launched a card that let members charge meals at participating restaurants and pay the bill later. It was the first widely used general charge card and a step toward modern payment cards.
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Bank of America issued BankAmericard, which offered revolving credit rather than a bill due in full each month. It grew into the network that later became Visa.
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Barclays installed the first automated teller machine, letting customers withdraw cash without a bank teller. The machine began the shift toward self-service banking.
also in 1971: the dollar unchained, Anatomy of a superpower: the American state, Money and finance
President Richard Nixon suspended the dollar's convertibility into gold, ending the Bretton Woods system. The move ushered in an era of floating exchange rates and fiat currency.
also in 1973: the postwar order breaks, From Bretton Woods to the euro: monetary regimes around Japan, Money and finance
After the fixed-rate system broke down, major economies let their currencies float against one another with values set by markets. Floating exchange rates became the norm for the world's leading currencies.
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Banks created SWIFT, a shared messaging network for sending secure instructions about international payments. It became the backbone of cross-border money transfers between banks.
also in Princes of the Yen: Japan built, bubbled, and broken, Quantitative easing begins in Japan
The German economist Richard Werner introduces the term quantitative easing (ryoteki kanwa) in Japan, arguing the central bank should expand credit creation directly rather than only cut interest rates.
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PayPal grew out of a startup founded in 1998 and let people send money by email, which made online commerce practical for individuals and small sellers. It became a leading way to pay on the early internet.
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Through the late twentieth century many countries gave their central banks legal independence to set interest rates and target inflation without direct political control. The founding of the European Central Bank reflected this widely adopted model.
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Eleven European countries adopted the euro as an accounting currency, fixing their exchange rates and pooling monetary policy under the European Central Bank. It was the largest voluntary currency union in modern history.
also in Money and finance, Princes of the Yen: Japan built, bubbled, and broken, Quantitative easing begins in Japan
The Bank of Japan becomes the first major central bank to adopt an explicit quantitative easing policy, targeting the level of bank reserves after interest rates hit zero.
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Euro banknotes and coins replaced national currencies such as the mark, franc, and lira in everyday use. Millions of people began handling a shared currency for the first time.
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Safaricom launched M-Pesa, letting people store and send money using basic mobile phones and a network of agents. It brought financial services to millions without bank accounts and became a global model for mobile money.
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Zimbabwe experienced one of the worst hyperinflations on record, with prices doubling in a matter of days and the government printing notes in the trillions. The country eventually abandoned its own currency in favor of foreign money.
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In response to the financial crisis the Federal Reserve begins large-scale asset purchases, buying mortgage-backed securities and Treasuries to inject money into the system.
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After the financial crisis, central banks created new money to buy government bonds and other assets, a policy known as quantitative easing that Japan had pioneered earlier in the decade. It became a major tool for supporting economies when interest rates were near zero.
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An anonymous developer using the name Satoshi Nakamoto launched Bitcoin by mining its first block, creating a decentralized digital currency with no central issuer. It introduced the blockchain as a way to record transactions without a trusted middleman.
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The Fed launches further rounds of quantitative easing, ultimately quadrupling its balance sheet to over four trillion dollars before tapering the purchases in 2014.
Economists and critics argue that quantitative easing, by lifting asset prices, widened wealth inequality and financed governments indirectly, making it a documented instrument of state and financial power as much as a technical policy.
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Tether launched a cryptocurrency designed to hold a steady value pegged to the US dollar. Stablecoins like it became a widely used bridge between traditional money and crypto markets.
also in Money and finance, Quantitative easing begins in Japan
Under Mario Draghi the ECB begins a bond-buying program to fight deflation in the euro zone, extending quantitative easing to Europe years after Japan and the United States.
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Ethereum launched a blockchain that could run programmable contracts, extending the technology beyond simple payments. It enabled new forms of digital assets and applications built on smart contracts.
Central banks unleash unprecedented quantitative easing during the COVID-19 crisis, expanding balance sheets by trillions; the surge in money is later linked by critics to the inflation that followed.
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China began public trials of a digital yuan issued directly by its central bank, one of the largest tests of a central bank digital currency. Many countries began studying or piloting similar official digital money.