What is Money? Its Evolution Over the Years

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Money is one of the most important discoveries of civilization, and it plays a crucial role in the development of trade and enhancing commodities. Before the invention of money, there was only the act of bartering, where two people exchange goods for something they both want.

These days, money is what everybody lives for, and its existence has become a fixed part of society and people’s daily lives. People work to earn money, purchase goods and services with cash, buy experiences with it, and so on. Indeed, it makes the world go round.

This begs the question, how does money work? To qualify as a payment method, money has to meet the three core functions:

● Medium of exchange – This refers to an item to be used for trading, which means both parties must agree that the money carries value.

● Store of value – Money has to maintain its value for a period of time to be considered a medium of exchange.

● Unit of account – It should serve as a means to price or measure goods and services consumers want to buy.

These days, money isn’t solely used to refer to paper money or fiat currencies. It has advanced to digital coins, otherwise known as cryptocurrencies, which are rising as a potential alternative. As an example, many people today put their money on Bitcoin as an investment.

Before money became what it is today, it went through an interesting development. The infographic below will walk you through the evolution of money over the years.