The invention of money

Salt, tobacco, dog’s teeth: mankind invented many means of payment. Even today, shells and stones are used to pay for.

Big coins: Such stone money still changes hands on the Ulithi Pacific atoll today.

Whe grew up with coins and bills, it is difficult to imagine other forms of money. That, for example, encrypted series of numbers, as they are based on Bitcoin and other so-called crypto currencies, should actually function like money is hardly understandable for friends of cash. It seems equally unreal that mussel shells are still accepted as a means of payment in parts of the world today. If sequences of digits, casings of molluscs and state-certified banknotes can coexist in the same function, then this allows only one conclusion: everything can be money. Depending on the world in which you are.

A look back at history shows that in principle everything is good for money, going back to the third millennium before the birth of Christ. At that time, Sumerians and other peoples began to abandon mere barter deals. Money was invented so that a potter who had a family to support did not necessarily have to find a hunter who would take a pot from him in exchange. From then on, the medium of exchange enabled everyone to acquire the goods or services they needed at any point in time, and at a certain price.

Agreement on a uniform means of payment

The need for payment arose almost simultaneously in many parts of the world. Even the most primitive economies developed some form of money. In the early days it was mainly raw materials that were used as the standard medium of exchange. First of all, the respective communities had to agree which material should serve as a means of payment. Some requirements had to be met. On the one hand, the raw material had to be generally available in the respective habitat. On the other hand, the members of a community had to agree that the selected natural product has a value and that everyone can trust that it will be accepted by everyone else as a means of payment. As soon as a community has agreed that a certain means is suitable for settlement, payment and storage of value, its appearance does not matter: whether it is paper banknotes, electronic Bitcoin or natural products such as sugar.

The fact that the forerunners of today’s money were mostly raw materials was also due to the fact that they usually had a use value, i.e. they were useful. They were also easy to transport, store and count. Eggs, for example, were completely unsuitable because they are fragile and therefore difficult to transport.

Salt also did not catch on as a means of payment in many places. In Africa, salt from the Sahara was recognized as a form of money because it guaranteed a certain hardness and durability. But salt was unsuitable in more humid regions of the world: if it gets wet, it dissolves – and the money is gone. So robust things usually became the currency of choice: mussels or coconuts, arrowheads or axes, bird feathers or rice. On some islands, people even paid with dolphin teeth and dog teeth, as Michael Vaupel and Vivek Kaul report in their book “The story (s) of money”.