On the first day of their holiday, the five friends meet at the water's edge to discuss the exchange of goods, the emergence of coins and the evolution of banknotes. Enlivened by the sound of young people's voices carrying information on their financial journey, the valley is suddenly transformed into a realm of knowledge, with crystal-clear laughter, serious expressions and, at times, amazement.

Ada: Hey, good to see you again! I've really missed our talks, and today seems like the perfect day to catch up. I'm curious to hear what you've discovered about bartering and money?

George: Apparently, in the Stone Age, when people became farmers, when they gathered their crops and raised animals, they realized that they were producing more than they could consume. That's how barter came about.

Rare: Barter was a cumbersome way for people to trade with each other. Extra goods were exchanged for things that were missing from the household.

Daniel: Salt, spices, tea, cattle or grain, even wood, were mankind's first "money". Somewhat later, ivory beads, polished stones, gold or silver nuggets were used in some societies.

Rareș: I find it fascinating that money arose out of the need to replace barter. Basically, that's how "commodity money" came about, but only certain commodities became the means of exchange.

George: The advent of money was an important step for trade, but transporting hard currency has always been inconvenient. My maths teacher told us that there was a coin so heavy and large that it was handled with rods. In fact, this coin exists and is still in use. I'll elaborate a little later.

Ada: I learned that in the past, money was mainly used in trade as a means of payment, in the form of coins.

Daniel: Yes, and later on, bank receipts (the ancestor of banknotes) and now, in the modern world, electronic means of payment and cryptocurrency.

George: Okay, but what were the first coins to appear and how did money become banknotes?

Ana: Let me tell you a story. By all appearances, the first precious metal coins appeared in the city of Lydia, a Greek colony in Asia Minor, now Turkish territory, a time marked by the historian Herodotus. The inhabitants of Lydia minted the first coins from electrum or white gold, an alloy of gold mined from the rivers of present-day Anatolia and silver, in equal proportions.

Daniel: From our history lesson, we learned that it was also then that the first banker, Pithius, and the Greek king, Cressus, minted the first gold coins.

Ada: I learned that the earliest records of the use of precious metals before the advent of the monetary system are from Mesopotamia and Egypt.

Ana: Regarding banknotes, I read that the founders of the first banknotes are considered to be the Chinese. They also invented paper. The development of the banknote began in the 7th century, during the Tang dynasty, but real paper money appeared in the 11th century, during the Song dynasty.

George: That's right! It seems that around 100 AD, a Chinese court official ground up a mixture of blackberry bark, rags and fishing nets and invented paper.

Rare: And a few centuries later, someone invented printing.

Daniel: In addition, Chinese merchants in the capital of Sichuan issued the first exchange policies, which were backed by goods. In other words, merchants kept coins in safes and issued receipts, on which they noted the total amount of money. Over time, the issued papers began to be used as means of payment, and their use gave rise to paper money.

Rareș: In practical terms, paper money was a new technology at that time, because it was based on paper and printing. I understand that's how this tool that facilitated trade was born. The increased exchange of ideas and greater economic specialization meant that people could grow more food and produce more.

Daniel: Yes, the advent of banknotes helped China become richer. But the biggest downside was that the government could print money like there was no tomorrow, which often led to periods of ruinous inflation for the population.

George: Ah, I know a juicier detail. On the first Chinese banknotes they wrote ˝All counterfeiters will be executed". It seems that from ancient times, taking responsibility was a cornerstone of Chinese culture.

Ada: Paper money apparently first appeared in Europe in the 13th century with Marco Polo's travels, but its spread was slow and tedious.

George: Yes, it seems that at the time, it was hard to accept that a piece of paper became as valuable as a coin.

Daniel: And I learned that the first banknotes printed by a state were issued by colonial governments in the northern part of the American continent.

George: Paper banknotes, from the 19th century onwards, were printed on a fine multi-layered paper that was very resistant to ageing and handling, and carried a watermark. In the last thirty years, more and more countries have switched to polypropylene banknotes, which are much more resistant to tearing and crumpling than paper notes.

Ada: Our banknotes are like this, but they've only been issued for a few years.

Rareș: I found out something surprising too! I found an article about a so-called Fiat coin. I found the evolution of the coin around the world interesting. It seems that this Fiat currency is a medium of exchange established as money that by government regulations can be declared a legal tender, not backed by a physical commodity.

Ana: What do you mean by that? I don't understand!

Rareș: The value of Fiat currency derives from the ratio of supply and demand in the market and not from the value of the material from which the money is made.

George: I would also add that historically, most currencies have been based on physical commodities (commodity money), such as gold or silver, while Fiat currency is based solely on the trust and credit that traders give to the economy.

Rareș: In other words, Fiat currency has no intrinsic value and no utilitarian value (inherent utility, like a cowhide or a beaver pelt). It only has value because a government maintains its quota or because the parties engaging in economic exchange agree on its value.

Ada: Aaaa... This is getting complicated for me. I don't think this information helps me...

Daniel: Okay, I agree with Ada. But what are the functions of money? I know I've already opened the subject, but what makes money important?

George: I think money contributes to the development of financial mathematics in the field of risk analysis and contributes to the development of mankind with the emergence of debt problems, deficits, market bottlenecks, bankruptcies, crises, income inequality, corporate profitability, etc.

Daniel: Money influences the development of technologies, the path to understanding the phenomena George mentioned, and develops through innovation, becomes more efficient and is not inherently good or bad.

Ada: Hey, George, Daniel, you've really gone too far. I can not process so much information. It's way too complex what you're saying here.

Rareș: That's okay, I say we can delve deeper later when we're ready. Information is always valuable.

George: Before we part ways, let me tell you about an unusual coin called the Rai coin. This is the stone coin of the island of Yap, located about 400 miles southwest of Guam and 250 miles from Palau in Micronesia in the western Pacific Ocean. Although the US dollar is now the currency of circulation, locals still use aragonite discs, resembling millstones with a hole in the middle, handled with rods, for land purchases, wedding gifts, etc. In the past, Rai coins were used as a means of payment to buy food, land, houses, canoe boats or as gifts at various ceremonies. In 1910, a coin with a diameter of 3 palms was worth 1,000 coconuts or a 40-50 kg piglet, or 50 baskets of grain.

Rareș: Wow! Very interesting, especially since it's still used occasionally!

Ada: Oh, but let's not forget digital currency, from nowadays. I read just now that a theme running like a golden thread through the history of money is the tension between governments and private coin-issuing firms as digital currency evolves.

Daniel: Related to that, I'm really curious about the economic challenges people faced in different eras and how they managed their finances. I think we could learn valuable lessons from their successes and failures for our hyper-digital future.

A hushed silence hung over the valley as Ada stood in front of the masterpiece she had just worked on, to transfer the conversation she had with her four friends into art. Her brush danced across the canvas, capturing the essence of the history of money and the abundance of information they had conveyed today. It was as if the painting was whispering secrets about the emergence of currencies and their evolution over time, reminding him/her that the real challenge was soon to extend beyond physical currencies, encompassing the experiences that were foreshadowed to come with the digital currency of the future.

DIARY PAGE | The History of Money written by you

If I have succeeded in piquing your interest, I challenge you to delve deeper into the subject by accessing information on the internet and books that address the subject.

In addition, in order to capture as memorably as possible the information you have learnt by reading this chapter and then researching it, please create a sketch, write an essay, compose a song or poem, invent a dance or choose any form of expression that is natural to you. Be creative and have fun! Then show your work to others.

Plus, tell your siblings, cousins, friends and schoolmates about money and its history.

Did you know that...

In America in the mid-19th century, almost any bank could print its own paper money, and as a result, at one time private banks printed more than 8,000 different types of money. This risk did not disappear until the 1930s, when the federal government began insuring most bank deposits.

But now, worldwide, modern banks create public or private money, which in turn is guaranteed by the government of the state issuing the currency.