Where did the money come from?
Why does money From Seashells have value?
Money is a universal measure of value for material goods or services that are involv in exchange. It has no value in itself – both shells and paper banknotes can serve as money. However list of qatar cell phone numbers for their own convenience, people have agreto give it a certain meaning, and therefore value.
This value is defined by the functions that money performs. It is worth mentioning three of the most important ones: it is a medium of exchange, a measure of value, and a way of accumulating wealth.
6 main characteristics of money:
- universality – the mium of exchange is recognized by all parties to the transaction;
- durability – during long-term storage, money does not change its appearance significantly and does not deform over time;
- compactness – it is convenient to carry and transport;
- divisibility – it can be divid into other denominations;
- limited supply – money has to be in circulation in a certain amount in order to prevent loss of value.
The form of money has changed throughout history – here are the most important stages of its evolution.
#1. Barter
It is a system of direct exchange of goods or services, which takes place immiately and without the use of additional funds. Barter is consider the forerunner of money.
History:
The barter system has been known since the 6th millennium BC: it first appeared among the tribes of Mesopotamia, later adopted by the Phoenicians, and perfected by the inhabitants of Babylon. Later, barter reached the Romans, and from them spread to Europe. Until the Middle Ages factors to consider when selling an ecommerce business valuable goods were exchanged with foreigners in this part of the world: spices, tea, weapons, and salt were especially “revered”.
As early as the Middle Ages, Europeans traveled the world, exchanging furs and other handicrafts for exotic goods such as silk and perfumes. With the discovery of America, barter also appeared there – colonizers “bought” animal skins and wheat from the locals in exchange for musket From Seashells balls.
But in the 18th century, trade relations became increasingly complex and more and more different goods appeared. Sellers in France slowly began to abandon the barter system. The French were the first in Europe to move to fixed prices,
sparing buyers the trouble of barter.
Even with the advent of money, direct exchange has not ceased to exist and has returned in times of crisis. As in the United States during the Great Depression of the 1930s, in the Soviet Union in the late 1980s and in Venezuela in the 2010s.
The main advantage of barter is that it does not require money. As a result, no exchange rate fluctuations or hyperinflation affect the exchange of goods – for example, for 1 kg of rice you can get 1 kg of wheat, regardless of the market prices of both products.
For the same reason, barter is suitable for those who cannot afford to keep a stock of wealth in the form of money. Money quickly lost its value in the event of strong inflation, while salt could almost always be exchanged for other products.
However, there are many reasons why bartering is not profitable in modern society.
Here are four major disadvantages of such a system:
- the necessity of “double compatibility of desires” – for an exchange to occur, each party must have a commodity that the other party needs;
- lack of a uniform measure of value – in barter there is no law that determines, for example, how many kilograms of meat you can get for 10 bags of sugar. Both parties establish the terms of exchange in advance – if they agree;
- If the buyer needs a specific amount of a product, barter may not work From Seashells. Let’s say the buyer wants to buy half a cow for 5 kg of salt – direct exchange is not possible in such a case, because the other party only sells a whole live cow;
- it is difficult to store funds – it is easy to accumulate cpa email list a fortune in money, but in sheep it is much more difficult. Saving short-lived goods for the future is very impractical, so barter is not suitable for such purposes.
#2. Gold coins
In parallel to the use of barter, in the 7th century BC people invented coins, but their role then was very different from the modern one.
History:
The Lydian king Croesus did not create them for trade, but for tax collection.
Croesus set the standard for gold and silver in the coin, certifying its authenticity with a seal. Each stater had the same shape and weight. For convenience, it was divi into coins with a face value of 0.5 and 0.25 staters . This is how we moved into the age of money.