Before we answer your question, we’ve got another one.
What is money?
Well, money is something we use to pay for goods and services. What we call ‘money’ can be completely worthless on itself, for example, it can be a piece of paper, a shell or animal fur. But we, people, give the money it’s value. If we were to offer you to exchange a simple stone with a hole in the middle for a piece of meat, would you think it’s fair? Well, people for Yap islands in Micronesia would think that, because for them the stone was valuable.
So, now that we know what money is, why was it invented? Scientists aren’t completely sure but probably just to save time. You see, for a long time people used barter to get stuff. They gave someone goods or service, and got something in return. But it became hard to find a person who needs what they are offering and has what they need at the same time. So, people invented their first currency.
It’s hard to point out the exact place and time the money first appeared. The same process was happening all around the world. Firstly, different objects were used as money, like the ones we’ve listed above. After some time, metal became currency, like ingots, bars and stumps of metals, then metal objects — the tips of spears and arrows, nails and utensils. The first coins, according to historians, appeared in the ancient Lydian kingdom, as well as in China in the 700 BC. The most ancient specially issued money is considered the Miletus monetary system named after the city Miletus in ancient Greek. In the 500 BC the Persian king Darius officially introduced common metal coins, abolishing barter in the country. They were made out of an alloy of gold and silver. Then, these coins were replaced by gold coins minted during the reign of Alexander the Great in 400 BC. The value of these coins was equal to the cost of the material from which they were made.
At the same time coins were made from iron in China. The concept of “face value” was introduced, and money itself was cheaper than the value they had.