What is Money?

A lot of you probably heard of the word “Money” multiple times. It could be your parents giving you allowance for your chores, or your grandparents giving you money. The big idea is that money is the way of exchanging goods.

Wherever people go and buy stuff that they like, they use money. In the society that we live in, money has a value that everyone agrees upon. One U.S. dollar bill is worth $1 dollars because we as members of society agree that 1 dollar is worth 1 dollar.

We can exchange the currency with a product that is worth the same value. For example, if a bar of chocolate is worth $2, then we can trade it with $2.

By agreeing that the currency has a certain value, and that that they will accept certain forms of money in exchange for their goods and services is the fundamental understanding of money.

Where did it come from?

In the past, people did not have a currency like we do. Instead, they traded an item of their own. For example, people may have traded 5 goats to one cow because they are of equal values. However, many problems are connected with trading. Each person had to agree that the items being traded had an equal value. Also, each person had to have something that the other person wanted.

Therefore, people invented money to stop the challenging trade. People now could trade five goats to a certain value of money instead of trading it to a cow.

The first-ever money used was in the 600s bce the kingdom of Lydia (currently Turkey). The government of Lydia made the first-ever coins which the merchants used to trade with goods. Many ancient peoples, in addition, including the Greeks and the Romans, also used coins