Money is a medium of exchange.
Early economies functioned on a barter system. If you had sheep and needed grain, then you would look for someone who had grain and hope they needed sheep--or, if they needed something else, hope you could find someone else who had what they wanted and needed your sheep to organize a tripartite trade.
Needless to say, this was profoundly inefficient.
Most societies discovered the usefulness of commoditized goods to...
Money is a medium of exchange.
Early economies functioned on a barter system. If you had sheep and needed grain, then you would look for someone who had grain and hope they needed sheep--or, if they needed something else, hope you could find someone else who had what they wanted and needed your sheep to organize a tripartite trade.
Needless to say, this was profoundly inefficient.
Most societies discovered the usefulness of commoditized goods to facilitate trades. These were goods that were all roughly interchangeable; durable; and portable; meaning that they could be assigned a fixed value and exchanged easily. So your society might decide that everyone needs arrowheads; a sheep is worth three arrowheads; and a bag of grain is worth one arrowhead; and therefore, you can sell your sheep for arrowheads when they're ready to go to market and cash in those arrowheads whenever it's time to eat. Note that the desirability of the common good need not be due to its utility; precious metals, gems, and other scarcities can serve a similar purpose.
Money is the next step from that commodity good. Money is a good created by a central authority with the intent that it be scarce, desirable, and consistently valued. In olden times, this was accomplished by the governments guarantee that money could be exchanged for a fixed amount said rare commodities. But now, most currency values are set by fiat, with no backing other than collective faith that the monies' backers won't overproduce and destroy those currencies' rarity.
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