Types of Money

Types of Money Used Today
Whatever is used as money today must be what is known as “legal tender”. Legal tender means that the government approves it as the form safely accepted for the payment of goods and services. The person receiving the money can be confident that the government will stand behind the currency because it has approved it as legal.

The types of money used today include:

  • Coins
  • Paper currency
  • Bank drafts
  • Money orders
  • Stocks
  • Bonds
  • Treasury bills
  • Credit cards
  • ATM cards
  • Options
  • Gift certificates
  • Cheques
  • Travellers cheques
  • Many more

Money is Converted Into 2 categories
As already explained, money is a token widely accepted as a medium of exchange. This medium of exchange can be tangible, such as a coin or note, or it can be intangible such as a direct credit into a bank account. If the medium or token can be converted into something tangible, such as a bar of gold or a bag of rice, then the token is known as “commodity money”,

Money not able to be converted in this way is known as “fiat” money. This type of money lacks intrinsic value and must depend on some other method to maintain its exchange value. Most modern money systems today employ fiat money. Because of this, it would be much easier for people to consider money in terms other than relating to a commodity.

In commodity money, the government issuing the money has to rely on a sufficient supply of that commodity. In fiat money, there is no need for such reliance because it depends on the policy of the central bank of a country, which issues that currency.

The Many Forms of Money in the Past
Money, has taken many forms over the years.

Here are examples of a few of them.

  • In China in 140 BC White Deer Skin
  • In Malalita (in the Solomons) porpoise teeth - with red teeth being 20 times the value of white teeth
  • In New Guinea Boar Tusks
  • In Santa Cruz islands Red feathers of a jungle bird
  • In Egypt grain was used
  • In the Mediterranean countries Cattle was used
  • Coastal and Island peoples in India, China, the Middle East used strings of shell
  • In the New World Wampum (seashells) became the first currency.
  • In the 12th Century BC in China agricultural tools were used as currency and miniature tools were minted to act in the place on actual tools.
  • The first coins were minted by the Greeks in about 750 BC
  • In the 6th Century Croesus, the King of Lydia, minted coins of pure gold and silver.
  • Romans used salt as currency. The Roman word for Salt is Salarium which in its modern version is salary.
  • In the late twentieth century in New Guinea pigs were used; about 28 pigs were required to purchase a wife