The Origins of Currency

How did we start using money, or currency?

Let’s talk about one of the most fascinating parts of our everyday life: money. Some love it. Some argue that a world without money would be a much better place to live in. Some have a very hard time imagining life without it. The presence of money in our lives is also visible through many of the everyday expressions.

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We’re sure you’ve heard some of them at least a hundred times: 

• Time is money.

• Money talks.

• Money doesn’t grow on trees.

• Put your money where your mouth is.

• Money makes the world go around.

And there’s even a big chance that you started humming the famous Liza Mennelli’s and Joel Grey’s song when reading the last example. 

Money and currency are often used as synonyms, although money would be a general concept while currency would be a specific form of money, typical for one or several countries and used in international trading and exchange.

With this in mind, have you actually ever wondered what existed before money and currencies were invented?

What did humanity use before currency?

Before currency was invented, people relied on various forms of exchange to trade goods and services without using money as an intermediary. 

For example, a farmer might exchange a bucket of wheat for a cow from a herder, or a blacksmith might exchange a tool for a sack of flour from a baker. This system of exchange relied on mutual recognition and it required that both parties had something that the other desired.

The natural exchange had its limitations, however. For example, it was difficult to make exchanges if the two parties did not have matching needs. It was also challenging to determine the fair value of goods and services in the absence of a norm that would specify the value of something.

Which were the first currencies used?

The concept of currency dates back to ancient civilizations, where people used various items such as seashells, beads, and precious metals as a medium of exchange. The first standardized currency was likely the Lydian electrum coins, which were minted in the ancient kingdom of Lydia, located in present-day Turkey, in the 7th century BC.

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Over time, various civilizations developed their own currencies, such as the Greek drachma, the Roman denarius, and the Chinese yuan. With the rise of global trade and commerce, currencies have become more standardized and regulated, and are often issued by governments and central banks. Today, most countries have their own currency, and exchange rates between currencies determine the value of goods and services traded between nations.

Two extremes: the oldest and the newest currency

Throughout history, some currencies have disappeared, some have been around for more than a millennium, while others for only a decade.

The oldest currency that is still in use today is the British pound sterling, which has been in circulation in one form or another for more than 1,200 years. The pound sterling has its origins in Anglo-Saxon England, where silver pennies were first minted in the late 8th century. Over time, the currency evolved and underwent various changes, including the introduction of paper money in the 17th century. Today, the pound sterling is the official currency of the United Kingdom, and it is also used in a number of British Overseas Territories and dependencies.

On the other hand, the world's youngest currency is the South Sudanese Pound (SSP), which was introduced on July 18, 2011, after South Sudan gained independence from Sudan. The SSP replaced the Sudanese Pound (SDG) at a rate of 1:1. The introduction of the South Sudanese Pound was part of the peace agreement signed between Sudan's government and the Sudan People's Liberation Movement, which ended the long-standing civil war in the country. 

Most competitive currencies

The competitiveness of a currency depends on several factors, including its stability, inflation rate, interest rates, economic growth, and global demand. Here are some of the most competitive currencies based on these factors:

1. US Dollar (USD): The USD is the world's most widely used currency, and the US economy is the largest in the world. The currency is known for its stability, liquidity, and global acceptance.
2. Euro (EUR): The Euro is the second most traded currency in the world and is used by 19 European countries. The Eurozone has a stable economy, and the currency is widely accepted globally.

3. Japanese Yen (JPY): The Japanese Yen is known for its stability, low inflation rate, and the country's large economy. It is often used as a safe-haven currency.

4. Swiss Franc (CHF): The Swiss Franc is another safe-haven currency that is known for its stability, low inflation rate, and strong economy. It is often used in international trade and investment.
5. British Pound (GBP): The British Pound is a major currency, and the UK has a stable economy. However, the currency can be volatile due to political uncertainty, such as Brexit.

Other competitive currencies include the Canadian Dollar (CAD), Australian Dollar (AUD), Singapore Dollar (SGD), and Hong Kong Dollar (HKD).

One name, many currencies.

Some of the world's currencies share the same name but exist in many countries. And some of them have a very interesting history.

Peso

The peso is the official currency of several countries including Mexico, Argentina, Colombia, Chile, and the Philippines. The history of the peso dates back to the 15th century when Spanish colonizers introduced it as a currency in their colonies in the Americas and Asia.

The word "peso" is derived from the Spanish term "pesar," which means to weigh. Originally, the peso was a silver coin with a weight of 27 grams, and its value was determined by the amount of silver it contained.

In the 19th century, the Spanish Empire began to decline, and many of its colonies gained independence, including Mexico and the Philippines. These newly independent countries continued to use the peso as their currency, and it became a symbol of their national identity.

Over time, the peso has gone through various changes due to economic and political instability. In the 1980s, many Latin American countries, including Mexico and Argentina, experienced a severe debt crisis that led to hyperinflation and a devaluation of their currencies.

Despite these challenges, the peso remains an important currency in many parts of the world. Today, the Mexican peso is one of the most widely traded currencies in the world, and it is often used as a benchmark in international trade and finance. The Argentine peso, on the other hand, has faced several challenges in recent years, including high inflation and a sharp devaluation in 2018.

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Dollar

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We’re sure you’ve seen the $ countless times. But did you know that it comes from the peso? And that the same sign still symbolizes the peso throughout Latin America?

The "peso" was often abbreviated as "ps", and over time the "p" and "s" were written on top of each other, forming a $ symbol.

The word "dollar" has its origins in the German language. The word "Thaler" (pronounced "tah-ler") was a large silver coin used in Europe in the 16th and 17th centuries. In the English-speaking world, the Thaler became known as the "dollar." This was likely because the Dutch, who were a major trading partner of England at the time, had their own version of the Thaler called the "daalder," which was also used in English commerce. Over time, the spelling of "daalder" was anglicized to "dollar."

The United States adopted the dollar as its official currency in 1785, and it has since become one of the most widely used currencies in the world. Today, the word "dollar" is used to refer to the official currency of several countries, including the United States, Canada, Australia, and New Zealand.

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Dinar

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Slightly less known the dollar or the peso, the history of dinars is as equally as exciting. The word "dinar" comes from the Latin word "denarius," which was a silver coin used in ancient Rome.

One of the earliest uses of the dinar was by the Islamic empire, which began minting gold coins called dinars in the 7th century. These coins were used as a standard currency throughout the Islamic world and were also used for international trade.

The first Islamic dinar was introduced by the Umayyad Caliphate in the 7th century BC. It was a gold coin with a purity of 22 carats. The dinar was later adopted by other Islamic dynasties, including the Abbasids, Fatimids, and Almoravids.

In modern times, the dinar has been used by several countries as their official currency, including Tunisia, Iraq, Libya, and Serbia. The modern dinar is typically made of paper, although some countries still mint coins as well.

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to several countries using dinars, such as Jordan, Tunisia, Bahrein, Kuwait, Serbia and Northern Macedonia.

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