Why Was Money Invented?

Money was invented to address the shortcomings of the barter system. Prior to money, people had to exchange objects and services to carry out transactions. However, determining fairness and establishing agreement with an exchange could be difficult.

The first money was made on metal over 7,000 years ago. Metal served as the primary form of money for thousands of years due to its availability and ability to be reused. The first paper money did not surface until after 900 A.D. and first appeared in China. Paper money was introduced in the United States in 1862, in $5 increments from $5 through $20. Paper money was initially a kind of representative money, meaning that the money could be exchanged for its value in gold or silver, with the standard being gold in the United States into the 20th century.