Engineer's Finance

Money is an essential commodity. I don’t know how many of you will be agreeing with me but it is just a commodity which is traded by one and all for something in return. Money is like any other commodity but the only difference is that it does not get perished as long as you believe in it and assume that it can be exchanged. Money functions as a medium of exchange, a unit of account, a standard of deferred payment, and a store of value. The dominant form of money is currency.

Theory by me on how currency could have originated:

The use of barter like methods may date back to at least 100,000 years ago. The barter system was not very useful as it was not convenient for all the people to trade. Consider if a person who had rice wanted to trade with a person who had sheep and did not find one due to various reasons, the person with rice will not be able to trade and otherwise if the person with sheep does not want to trade with a person with rice then the matters become complicated. There can be similar issues with bartering system and people would be sick of it.

So people would have started forming community so that there would be proper exchange of goods in the community using the barter system. This would have had its own issues like people from other communities providing better trading value than the ones in the current community and this would have irked some people. There would be some clashes and now the top-down hierarchy would have come into picture where a head of community would have started giving orders as to how commodities can be exchanged.

As time progressed the value of the commodities would have suffered because of various reasons. Consider that in a locality, growing apples is an easy task and growing rice is a difficult task and exchanging apples for rice won’t make sense to some people and this would have had problems with some people claiming that some commodity to be of more value than others. These kinds of issues would have been a major problem with people and they would be looking for a solution and that solution is currency.

Currency would have been invented for helping the businessman/trader to trade commodities without any problems. The value of currency and price of the commodities would have been decided by the head of the community and agreed with other neighboring communities for the fair trade.