Important information of Money

 Main Topics

• Barter system
• Exchange with Money
• Evolution of Money
• Paper Money

Barter system 

If a person need rice but he had pulses and another one need pulses but he had rice. So for the needful they exchange their goods directly with each other without use of money. This is called barter system. In exchange of some goods problems has been raised through barter system. The reason is in this system they only exchange the rice, salt, pulses etc. And lack of double coincidence.

Exchange with Money

If we use money, for the exchange of goods, there will be no problem in exchanging commodities. Then, a person who has something in excess will not have to necessarily find another person who needs it and has something also to give in return. Money acts as an intermediary or an in between step, something that is held for sometime because it can be used further. Money can be exchanged for goods because it is acceptable to all. Those who wish to sell something will accept money as a payment and similarly, those who wish to buy something will only have to offer money in exchange. Any commodity or service can be exchanged for money, and money can be exchanged for any commodity or service. Money, by itself, may have no use means money cannot use by itself exchanging. It is needed because of the role it plays in the process of exchange. One can also borrow and pay back in the form of money.

Evolution of Money 

No one know that who created Money, but the first time money used in 5,000BC. In older time silver coins, metal coins are used. Over time, people preferred scarce and attractive metals as a medium of exchange. Copper, bronze, silver and gold are durable, can be divided into parts and be carried around. Since they were scarce, they became acceptable by all. However, some problems remained and new problems came up. For every exchange, the metal had to be weighed and later on, traders were not sure about the quality of the metal. What one might get in exchange may not be pure gold or silver. After sometime, there was a serious problem of trust in the quality of metal that was used as money for exchange. In the Roman period, "Besant" a gold coin, was the standard currency and in the Mauryan period, "pana" a silver coin, was the standard currency. Coins became the acceptable form of money by traders and people.

Paper Money 

     People who had to buy and sell in large quantities had to carry large amounts of gold or silver coins for their transactions. So, they started looking for safe places to keep them. They went to goldsmiths, where their money would be protected. The goldsmiths charged fees for keeping their valuables safe and making them available whenever they wanted. This practice became popular and the trust in some of the goldsmiths or shroffs grew.

These goldsmiths give a receipt of that how many gold or silver coins is there. Leading to a new system of paper money when the person want to buy anything from others by giving them gold or silver coins they give the receipt of goldsmith. So, the seller should take the required amount from the goldsmiths by showing the receipt.

This gives the chance to evolution of money. This system is trusted for always paying up the receipts that are brought to him. 

Do you know?

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country. Money is in various forms. They are metal coins, paper currency, cheque, credit and debit cards.

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