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What is money?

Money is something you use every day. But what do you know about money? Find out the most interesting facts right now!

We use money every single day. We need it to buy food, pay taxes, travel and study. We need money for everything. But what is money? What is money cost? What makes it so important in our lives?

what is money

The barter system

barter system

If we want to understand how ‘money works’ we must go to the origins. To the barter system. So how does it work? If a person had a surplus of something (meat, wood, eggs, milk) he could exchange it for something he needs (oil, bread, cloth). People created an exchange rate. For example, 1 bottle of oil cost 10 eggs and so on. So this is how a barter system appeared. People were looking for other people who had the goods they needed and wanted the goods the first ones had. So they exchanged.

Sometimes a person had an apple and he needed a bottle of oil. But the guy who had a bottle of oil didn’t need apples, he needed milk. So the first one exchanges his apples for a bottle of milk, then came to this guy and exchanged a bottle of milk for a bottle of oil. This is how double coincidence of wants appeared.

How does money originate?

origin of money

People were trying to solve the double coincidence of wants. At first they use gems or precious material. But it was difficult to find them and use. They needed something special. So they created something that everyone needed. Money was created as a medium of exchange. And trading became much easier! Now everyone could provide his goods having money in return.

nigerian money

READ ALSO: 10 ways to make money quickly – best tips for Nigerians

What makes a commodity useful as money?

a lot of dollars

Money as one of the most important things in our lives has some strict characteristics. Here are 5 main of them:

  1. Money must be divisible. So people could exchange their goods for any sum of money.
  2. Portability. People are rushing somewhere all the time. And they need money. So if it was heavy or huge we wouldn’t have a possibility to carry it. Portability of money is very important.
  3. Money must be durable. It would be very pity if money got torn in your pocket all the time. Money must be used without any fear to damage it.
  4. Money must be recognizable. So no tourist is confused where money is. That was very important to prevent money counterfeiting.
  5. Money must be scarce. Why? Because people exchange money for their goods. If everyone had millions of dollars who would like to exchange products for money? The most important thing what money gives is value. People should know what money cost is. So that’s why money laundering appeared.

History of money

A lot of cultures around the world developed the use of money. Some of them used cowry shells, a unit of rice, gems and others. Then there was the era of coinage. People started to make coins between 700 and 500 BC. Usually they used bronze or alloy of silver and gold. Coins were very useful so people didn’t need other variations of money.

Only in the 11th century Chinese people presented paper money. But the development of the banknote began only with issues of paper currency. People didn’t want to carry heavy coins any more. So they liked the idea to make paper money. People began to make different banknotes in different regions and countries. Sometimes the pictures on banknotes showed the history of the country, sometimes the culture. People were proud of their money. They were trying to make it more durable and beautiful than their neighbors had.

virtual money

Since then only 1 change has happened. Money has become virtual. After 2000 virtual currency has become so widely spread that sometimes we can say that there more virtual money than real. Credit cards, loans, deposits. These words have become well-known for everyone. MoneyGram is a leading money transfer company that works all over the world. It’s very safe and convenient. Now we can send money wherever we want extremely fast. Could people of the 11th century think it would go so far? Guess not.

What is money market?

money market

Now we can talk about difficult financial systems all around the world. There appeared money markets. It is a segment of the financial market in which financial instruments with high liquidity and very short maturities are traded.

Now you know a bit more about thing that you have in your pocket every single day!

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Newbie
2 comments

Money alone is only a means of exchange, their existence is impossible without the production of goods and of people who is able to produce. Money give weight and shape fundamental principle: people who want to deal with each other must communicate through sharing, giving back one of the other values. In the hands of idlers and beggars, with tears begging for the fruits of your labor, or the bandits, taking them from you by force, money loses meaning, cease to be a medium of exchange. Money has become possible thanks to the people who know how to produce. Apparently, they think the source of all ills?

In that moment, when you accept money as payment for their work, you do so with the condition that they will be able to exchange them for the results of the labor of others. The value of Money is not filled with beggars or bandits. A whole ocean of tears and all the weapons in the world will not be able to transform sheets of paper in your wallet into bread you need to live.

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Student
Answered 10 months ago.

For me personally the money - it's freedom of choice and as a movement. Due to lack of money I have to do is not exactly what I like and thus reap, and the same results. Certainly the presence of the infinite amount of money, I would please their loved ones, because they do so with dignity. And then, after living a little for myself, I would have to occupy the center of donations and constantly have allocated most of their earnings to the needy. And then, I think the world would be a little happier!

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Newbie
Answered 10 months ago.
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