Evolution of Money

In the beginning of mankind, there was obviously no money. People used to follow barter system, they traded items which had a practical value. Gradually, particular commodities began to be treated as the standards against which we would determine the value of other items. Metal specially gold was more practical than other forms of primitive money obviously it had a practical value. In a huge leap toward the further abstraction of money, paper money was introduced.

Barter System

Initially the entire money supply of the world was backed by gold but now followed by USA, all the countries of the world  removed the gold standard & bank notes became free float currency. Do you know that the bank notes and coins in your pocket is not the real money? Well, yes. Your 100 rupee or 5 dollar bank note in your pocket is a piece of paper without any intrinsic value.




Now, much of our money is so abstract that its only physical reality is in the form of electrons - in the electronic processes of our online banking, credit cards, internet commerce, automatic teller machines, electronic funds transfers, etc.