This is a history of money from the ancient kingdom of Lydia and its electrum coinage to bitcoin and blockchain. The history of money is rich and varied. As we will learn, the first known minted coins in the world were the Lydian electrum and money has been around in one form or another for far longer.
Arguably the world's oldest known form of currency. For Siberian tribes it was reindeer. In Borneo it was buffalo. For the Hittites it was sheep.
From China to Africa cowrie shells have been used as a currency but had the clear limitation of not being universally valued or desired.
Primitive metal started to replace cowrie shells as they were more physically robust.
Silver and gold
Archaeologists have identified Lydia, an ancient city in what is now Turkey, as the first location where stamped silver and gold coins were in use. The Lydians made the first coins between 640-630 BC, of electrum, a naturally occurring mixture of gold and silver, writes Jack Weatherford in his excellent book The History of Money.
They made the electrum into oval nuggets and each was stamped with the emblem of a lion's head. The stamping process began the transition into a flat, circular coin. The standardisation of currency in terms of weight and value made it much harder to cheat in a commercial transaction. It also encouraged growth in commerce, Weatherford explains.
The legendary Greek King Croesus (he of rich as Croesus fame) reigned Lydia from 560-546BC. He created new coins of pure gold and silver rather than electrum. This helped pave the way to specialist retail markets in goods and services, including very personal services.
Gold acts not only as a unit of account and a medium of exchange, two of the classic functions of money, but also as a store of value, the third such function. This is one of the principal reasons why it retains a firm foothold in international monetary systems.
In the history of money, gold has longevity far beyond other ephemeral materials.
Slaves could be used as a means of calculating the value of other goods and services. As with any product or commodity, some slaves were more valuable than others. There are known records of transactions in which human beings were used as collateral.
Cloth and grain
Cloth and grain played key roles in the history of money in China, Korea and Japan. Silk functioned especially well as a measure of value or unit of account, a medium of exchange and a store of value.
During the T'ang dynasty the Chinese monetary system was based on a dual coin-textiles standard. The price of rice and debt contracts were calculated in numbers of rolls of heavy silk cloth (see Money: A History, published by the British Museum Press).
The rise of China's modern currency, the renminbi, has been marked in recent years. But further progress will surely be hampered by its lack of full convertibility into other currencies and continuing concerns about official manipulation of the currency.
Leather money circulated in China for a time when coins were in short supply. The one-foot square pieces of white deer hide with colourful borders are thought to be in effect the world's earliest bank notes.
Paper money is thought to have begun circulating in China in the era of the T'ang dynasty (618-907 AD). Cash had been around since hundreds of years before the common era. Several states in what would become China issued shaped money in the form of knives or spades.
Other shapes included imitation cowrie shells and round discs with a hole in the centre. China began issuing silver dollar notes in 1899. Paper money has many uses but it is a notorious driver of inflation as hit the German mark in the Weimar Republic 1921-24.
The most common spice to be used as a currency, across China, North Africa and the Mediterranean. The word 'salary' derives from the Latin word for salt. Roman soldiers are widely thought to have been paid in salt. Hence the expression that someone is worth his or her salt.
Stone is used for money on the island of Yap in Micronesia. Rai stones are circular, come in different sizes up to 12 feet in diameter. They have a hole in the middle to enable them to be transported, though their sheer weight made that difficult.
Credit and debit transactions were recorded on the larger stones. The wealthiest family on Yap was the family with the biggest stone. Even though it had long vanished into the sea, the family was still regarded as the wealthiest.
This illustrates almost perfectly the role of credit, or confidence, even blind faith, in the functioning of an economy, ancient or modern.
Kissi pennies made of iron and varying in length from nine to 15 inches were used as a general purpose currency in west Africa in the late 19th century according to the liberiapastandpresent.org website.
Kissi pennies were tied in bundles of 20 and used for a variety of purposes. At the beginning of the 20th century a cow would cost 100 bundles, a virgin bride 200 bundles and a slave 300 bundles. Today they are used only for cultural and ritual purposes.