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bag with money, protruding banknotes

Evolution of forms of money – from the exchange of goods to electronic money

Evolution of forms of money – do you know all its stages? Check what forms money has taken over the years.

The specific stages of the development of money went hand in hand with the economic development of the whole society. This transformation was also influenced by technological progress in the world, and ultimately also by the development of the banking sector. What were the different stages of the evolution of money and what were the results? What can await us in the future? Find out in the post below.

What is money and when was it created?

Nowadays, money is the basic means of payment in a given country. Basically, it is used to settle financial obligations, i.e. payments for specific services or products.

In addition, it is used to make transactions between institutions, enterprises and farms.

There is no certainty as to the date when money was created. It is estimated that it could have appeared around the 8th century BC.

the evolution of money, visualization of individual stages

Barter – the beginnings of means of payment

Originally, there was no need for any form of tender. Why? Specific groups dealt with the production of specific goods. The products that were made or produced were sufficient to meet the needs of a given community. After some time, when communities already had more than they needed, the manufactured goods began to be sold.

The first form of payment was the exchange of goods, also called barter. Therefore, it was important not only what a person had, but also what he was able to exchange. The transaction took place only when the other party considered our item valuable. In other words, worth replacing.

So what could be a commodity to be exchanged? It turns out that almost everything. Depending on what was available. According to sources, the most popular commodity was salt. Farmers used grain for this purpose, and shepherds used cattle. Exchangeable goods were also food, various types of tools and weapons. According to experts, there could be approximately 150 types of exchangeable goods.

However, this method could not be considered ideal, because in many cases it was impossible to determine the value of the products. Another problem was related to the compensation of costs, i.e. simply giving change. So we started looking for other possibilities. Thus, the creation of money was the result of the development of trade on an ever-increasing scale.

ores, gold bars

Money in the form of ore – precious metals

Over time, base metals began to be used as a means of payment. Bronze, iron and copper played the role of bullion money.

Then precious metals, or ores, took their place. Among them were mainly gold and silver, but not only. Platinum also appeared with less frequency. Their main advantage was their small size, thanks to which carrying them was not a problem. At first, they were in the form of irregular nuggets, and then they began to form in the so-called. bars and other shapes.

How was it legal? The monetary value of individual ores was determined on the basis of their weight.

Over time, coins appeared. Thus, the so-called monetary units – due to the material of manufacture. It was the ore from which a given coin was made that guaranteed its value. From that moment, the weighing of ore was abandoned in favor of counting coins.

This value, in turn, was one of the reasons why these metals were widely regarded as money. The second reason was their service life.

The concept of “money” appeared when precious metals began to be used as a means of payment.

coins and banknotes, polish zloty, wallet

Coins and banknotes, or what did the first real money look like?

The first money was metal coins that took the form of discs. The problem, however, was the fact that they came in three different versions – they were made of gold, silver and bronze. Therefore, their value also differed. In addition, the prices of individual metals fluctuated. This, in turn, meant that the prices of goods also changed – they were expressed in given metals.

This led to a situation where a two-metal system had to be created, which consisted only of gold and silver. The coins usually featured the emblems or seals of the rulers, as well as their likenesses.

Some time later, bills of exchange appeared, which are one of the types of securities. Such a document certifies that one party is obliged to pay a specific amount to the other party. Bills of exchange were an alternative to money, they could be used to buy products on credit.

Over time, there was an intensive development of commercial banks, which led to the creation of money in the form of a banknote. The main advantage of banknotes was definitely lower production costs.

With a large amount of bullion at their disposal, people increasingly took advantage of the possibility of depositing it with bankers. In return, they received banknotes that confirmed that they had specific deposit values. Interestingly, the value of these banknotes was determined on the basis of the possibility of exchanging them for a given metal. It was usually gold.

For a time, all the banks distributed their own notes, so there were a lot of them in circulation. This involved taking some steps to gain control over the variety of notes available. It was therefore decided to prevent any bank from issuing banknotes.

Therefore, only one was left, which was designated as the central bank. Only he could issue banknotes that were in circulation and acted as a means of payment. Besides, they were held in the reserves of domestic banks. As you know, banknotes are still used today.

credit card, card payment

Cashless payments and payment cards

The development of the economy led to the emergence of cashless money. How did it work? The customer brought bills and the bank opened an account for him. Appropriate entries were made in the bank books, which confirmed the amount of cash deposited. Thanks to this, people could store money in banks, and not – as before – in their homes. This was mainly due to security issues.

After some time, the so-called transfer order. It consisted in transferring a certain amount from the sender’s account to the recipient’s account. Settlements could be carried out even if customers had accounts in different banks.

A bank check was also introduced, which is another example of non-cash payment. Besides, it’s another type of security. This is a written order to pay a specific amount (from our funds) to the person named on the check. This order is received by the bank and it is its responsibility to pay this amount.

In turn, electronic money is, in a sense, another variety of non-cash money. It was created thanks to the rapid development of technology and electronics. There is a so-called network money, which is sometimes stored on electronic information carriers. These are both payment cards and smartphone applications. Today, you can pay not only with a contactless card, but also with a phone or a watch (smartwatch).

It is used for the same purposes as cash. The only difference is that electronic money exists as a form of recording on a specific medium. Interestingly, it is issued by banks as well as electronic money institutions.

cryptocurrency visualization, bitcoin stamp


However, electronic money is dependent on the banking system and is also subject to inflation. Therefore, other solutions were sought to avoid this. In this way, in 2009, the first cryptocurrency was introduced – bitcoin.

It functions only on the Internet, and does not have a physical form. A characteristic feature of bitcoin (as well as other cryptocurrencies) is that the payment takes place directly between network users. No bank or institution is involved. In addition, in Poland, cryptocurrencies are not subject to any control, at least for now.


Money has evolved tremendously over the years. In the beginning, they did not exist at all, because there was no need. Later payments were made with bullion – first in the form of irregular nuggets. Then they began to take on more familiar shapes, such as bars.

Then, the first forms of money resembling today’s coins, i.e. the aforementioned precious metal discs, began to appear. From the moment the banknotes appeared, everything began to move faster. Online payments have become so popular that now more people shop online than in-store.

Today, it is not surprising that in stores most people make payments using contactless cards, smartphones or smartwatches. More and more often we also pay using BLIK, i.e. a 6-digit code.

How will it develop further? Will the world completely abandon cash payments? We don’t know, but we have to admit that it seems quite possible.

The text was based on the article “Evolution of means of payment (payment): from cash to electronic money” by Małgorzata Rybiałek, source:, access on July 3, 2023.

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