The use of proto money may date back to at least 75,000 B.C., when shell necklaces were made in Blombos Cave in South Africa.

These necklaces would have provided the basic attributes needed of early money.

In cultures where metal working was unknown, shell or ivory jewelry were the most divisible, easily storable and transportable, scarce, and hard to counterfeit objects that could be made.

It is highly unlikely that there were formal markets in 75,000 B.C. (any more than there are in recently observed hunter-gatherer cultures).

Nevertheless, proto money would have been useful in reducing the costs of less frequent transactions that were crucial to hunter-gatherer cultures, especially:

and intertribal trade in hunting ground rights (“starvation insurance”) and implements.

In the absence of a medium of exchange, all of these transactions suffer from the basic problem of barter -- they require an improbable coincidence of wants or events.

Shells of the pea-sized snail Nassarius kraussianus.

Blombos Cave, South Africa, 75,000 B.C. wear marks indicate the shells were strung on a necklace.

In cultures of any era that lack money, barter and some system of in-kind "credit" or "gift exchange" would be the only ways to exchange goods.

Bartering has several problems on small transactions, most notably timing constraints.

If you wish to trade fruit for wheat, you can only do this when the fruit and wheat are both available at the same time and place.

That may be a very brief time, or it may be never.

With an intermediate commodity (whether it be shells, rum, gold, etc.) you can sell your fruit when it is ripe and take the intermediate commodity.

You can then use the intermediate commodity to buy wheat when the wheat harvest comes in.

Thus, the use of money makes all commodities become more liquid.

Where trade is common, barter systems usually lead quite rapidly to the emergence of several key goods with monetary properties.

In the early British colony of New South Wales in Australia, rum emerged quite soon after settlement as the most monetary of goods.

When a nation is without a fiat currency system, it is quite common for the fiat currency of a neighboring nation to emerge as the dominant monetary good.

In some prisons where conventional money is prohibited it is quite common for goods such as cigarettes to take on a monetary quality.

Gold has emerged naturally from the World of barter again and again to take on a monetary function.

It should be noted that the emergence of monetary goods is not dependent on central authority or government.

It is a quite natural market phenomenon.

The first instances of money were objects which were useful for their intrinsic value.

This was known as commodity money and included any commonly available commodity that has intrinsic value; historical examples include:

and (often) cattle.

In medieval Iraq, bread was used as an early form of currency.

Spices have been used as commodity money for long.

Definite indications are available that both black and white pepper have been used as commodity money for hundreds of years before Yashua-Jesus-Issa, as also several centuries thereafter.

Being a valuable commodity, pepper has naturally been used as payment.

Attila the Hun reportedly demanded 3,000 pounds in weight of pepper in 408 AD, as part of a ransom for the city of Rome.

Miles Williams Mathis: ROME – Library of Rickandria

In the Middle Ages, there was a French saying, 'As dear as pepper'.

In England, rent could be paid in pounds of pepper, and so a symbolic minimal amount is known as a "peppercorn rent".

Even in the industrialized World, in the absence of other types of money, people have occasionally used commodities such as tobacco as money.

This last happened on a wide scale after World War II when cigarettes became used unofficially in Europe, in parallel with other currencies, for a short time.

Miles Williams Mathis: More WWII Fakes – Library of Rickandria

Precious metals have been a common form of money, such as this gold from Sveriges Riksbank.

Sveriges Riksbank - Wikipedia

Another example of "commodity money" is shell money in the Solomon Islands.

Shells are:

which are then used during marriage proposals; for instance, a father may charge twenty shell money necklaces for his daughter's hand in marriage.

One interesting example of commodity money is the huge limestone coins from the Micronesian island of Yap, quarried at great peril from a source several hundred miles away.

The value of the coin was determined by its size — the largest of which could range from nine to twelve feet in diameter and weigh several tons.

Displaying a large coin, often outside one's home, was a considerable status symbol and source of prestige in that society.

(Due to the great inconvenience, islanders would often trade only promises of ownership of an individual coin instead of actually moving it.

In some cases, coins which had been lost at sea were still used for exchange in this way.

These agreements could be thought of as a kind of representative money, described below.)

An example is the 8-foot "coin" from the village of Gachpar, on Yap.

Once a commodity becomes used as money, it takes on a value that is often a bit different from what the commodity is intrinsically worth or useful for.

Being able to use something as money in a society adds an extra use to it and so adds value to it.

This extra use is a convention of society, and how extensive the use of money is within the society will affect the value of the monetary commodity.

So, although commodity money is real, it should not be seen as having a fixed value in absolute terms.

Its value is still socially determined to a large extent.

A prime example is gold, which has been valued differently by many different societies, but perhaps none valued it more than those who used it as money.

Fluctuations in the value of commodity money can be strongly influenced by supply and demand whether current or predicted (if a local gold mine is about to run out of ore, the relative market value of gold may go up in anticipation of a shortage).

Money can be anything that the parties agree is tradable, but the usability of a particular sort of money varies widely.

Desirable features of a good basis for money include being able to be stored for long periods of time, dense so it can be carried around easily, and difficult to find on its own so that it is actually worth something.

Again, supply and demand play a key role in determining value.

Metals like gold and silver have been used as commodity money for thousands of years, being in the form of:

and assorted pieces.

Eventually the Lydians began coining gold and silver around 560 BC.

Gold and silver are both quite soft metals, and coins minted from the pure metals suffer from wear or deformation in daily use.

Fortunately, these metals are also easily alloyed with a less expensive metal, frequently copper, in order to improve the durability of the resulting coins.

Typically alloys of coinage metals, such as sterling silver or 22 carat (92%) gold, are used to make coins more durable.

These are alloys of 90% or more precious metal as alloys of less than 90% do not improve hardness or durability very much and so are typically considered to be on the slippery slope into monetary debasement.

It was the discovery of the touchstone that paved the way for metal-based commodity money and coinage.

Any soft metal can be tested for purity on a touchstone, allowing one to quickly calculate the total content of a particular metal in a lump.

Gold is a soft metal, which is also hard to come by, dense, and storable.

For these reasons gold as a money spread very quickly from Asia Minor where it first gained wide use, to the entire World.

Using such a system still required several steps and some math.

The touchstone allowed you to estimate the amount of gold in an alloy, which was then multiplied by the weight to find the amount of gold alone in a lump.

To make this process easier, the concept of standard coinage was introduced.

Coins were typically minted by governments in a carefully protected process and then stamped with an emblem that guaranteed the weight and value of the metal.

It was however extremely common for governments to assert that the value of such money lay in its emblem and to subsequently debase the currency by lowering the content of valuable metal.

Although gold and silver were commonly used to mint coins, other metals could be used.

Ancient Sparta minted coins from iron to discourage its citizens from engaging in foreign trade.

In the early seventeenth century Sweden lacked more precious metal and so produced "plate money," which were large slabs of copper approximately 50cm or more in length and width, appropriately stamped with indications of their value.

Metal based coins had the advantage of carrying their value within the coins themselves — they induced on the other hand manipulations:

the clipping of coins in attempts to get and recycle the precious metal.

The bigger problem was the simple co-existence of:

coins in Europe's nations.

English and Spanish traders valued gold coins at a higher rate of silver coins than their neighbors would do, with the effect that the English gold-based guinea coin began to rise against the English silver based crown in the 1670s and 1680s and with the consequence that silver was ultimately pulled out of England for dubious amounts of gold coming into the country at a rate no other European nation would share.

The Mysterious 18th Century – Library of Rickandria

The effect was worsened with Asian traders not sharing the European appreciation of gold altogether — gold left Asia and silver left Europe in quantities European observers like Isaac Newton, Master of the Royal Mint observed with uneasiness.

Stability came into the system with privately owned disguised as national banks guaranteeing to change money into gold at a promised rate.

The privately owned Bank of England (whose owners also owned the colonial East-India Company) risked a national financial catastrophe in the 1730s when customers demanded their money to be changed into gold in a moment of crisis.

Eventually London's merchants saved the bank and the nation with financial guarantees.

See also:

Roman currency, coinage metal, for conversions of the European coins before the introduction of paper money:

The Marteau Early 18th-Century Currency Converter:

The Marteau Early 18th-Century Currency Converter : Money, Prices Wages, Currencies, Exchange Rates, 17th Century, 18th Century, Baroque, Enlightenment

The system of commodity money in many instances evolved into a system of representative money.

In this system, the material that constitutes the money itself had very little intrinsic value, but none the less such money achieves significant market value through being scarce as an artifact.

Representative money such as paper currency and non-precious coinage was backed by a government or private bank's promise to redeem it for a given weight of precious metal, such as silver.

This is the origin of the term "British Pound" for instance; it was a unit of money backed by a Tower pound of sterling silver - hence the currency Pound Sterling.

For much of the nineteenth and twentieth centuries, many currencies were based on representative money through the use of the gold standard.

Because money is the fruit of power and can be used for wielding or gaining more power, the one who accepts gold as legitimate money gives power to the people who own gold's stocks.

Gold has been stable over thousands of years and has survived the test of time.

All the other materials have become less important as gold has proved itself the superior unit of account.

Basically, price fluctuations of gold are not because the value of gold has changed, but because the value of the currency has changed.

The same happens with some other materials, like food or energy or transport or accommodation.

A plate of food has always the same value, whatever its price is.

It is possible for privately issued money to be backed by any other material, although some people argue about perishables materials.

After all, gold, or platinum, or silver, have in some regards less utility than previously (their electrical properties notwithstanding), while currency backed by energy (measured in joules) or by transport (measured in kilogram*kilometer/hour) or by food) is also possible and may be accepted by the people, if legalized.

It is important to understand though that as long as money is above all an agreement to use something as a medium of exchange, it's up to the community (or to the minority elite who hold the power and politicians in their grip) to decide whether money should be backed by whatever material or should be totally virtual.

The Hidden History of Money: Credit/Floating/Fiat Money – Library of Rickandria

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The Hidden History of Money: First Instances of Money

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The Hidden History of Money: First Instances of Money – Library of Rickandria