From shells and furs to electronic currency: how money appeared and what they could be

January 2
Economy and entrepreneurship

Money is a universal measure of value and a medium of circulation familiar to everyone. If in ancient times shells or furs were used as money, today one does not need to have banknotes in a pocket, a plastic card or a smartphone is enough to buy. When the first money appeared, what they are and how much money Moscow has, is in the continuation of the series of publications “Moscow Economy in Simple Language”.

The history of coins and the first banknotes

The first money appeared in the 7th century BC. Stones and shells were used as means of payment. Cowrie shells became especially famous: due to their small size, they were convenient to transport and use. Shells were used for payments in Africa, India, China and the Pacific Islands. Pearls, valuable products (rice, salt, fish, cocoa beans), cattle and skins of rare animals were also used for payments.

In Russia, money began to be used in the 9th century. Goods were exchanged for stones, food and furs, which were also highly valued in other countries, for example, in the Byzantine Empire. Gold and silver coins came to Russia from there and were exchanged for furs.

Own copper money appeared in Russia in the late 10th century. The first silver coin was minted in Nizhny Novgorod. The coin itself was called a ruble, and its half — a poltina.

History of paper money began in the 7th century in China, when merchants were writing down debts of citizens on sheets of paper. These records are considered to be the first banknotes. In Europe, banknotes began to be used in the 17th century — first in Sweden, and a little later in England, Norway, Denmark and France. Paper money appeared in Russia, a century later — during the Catherine II reign. They looked like IOUs and were called notes.

One can find monuments to coins in some Russia cities. There is a monument dedicated to five kopecks in Moscow. It is located in the park of the 850th anniversary of Moscow and is called the Lucky Five-Kopeck Coin.

Photo by Yulia Ivanko,

Unique shapes

Money has several different types. Some of them are outdated, others are still in demand.

Valuable items, products, animals and everything that could be useful in everyday life or trade are called commodity or in-kind money. For example, skins were required to make cloth, and salt was necessary for cooking. In the 16th-17th centuries, money made of gold and silver was considered a commodity, because they could be melted down into household items or jewelry. Today, such means of payment are no longer used.

Secured or representative money is not in use either. These are certificates or items that could be exchanged for goods. The most famous of them are clay figurines of sheep and goats, which ancient Sumerians exchanged for real animals. By providing a certificate, one could get gold and silver.

Another form of money familiar from films or personal experience is credit money. These are funds that are used to pay for a thing or service within a certain period of time, but not immediately. This form of money has several types. Initially, it was a promissory note — a written obligation of the debtor to pay the agreed amount of money within a certain period of time in a certain place. By the way, these securities appeared in ancient Greece, but they acquired their name later in German principalities.

Another form of credit money is a check. According to this document, one person can receive money from another person’s account. To do this, a check owner must have a bank account and a paper form where he should indicate the amount and put a signature.

Real money

Coins, banknotes and electronic money daily used by modern people, are called symbolic. They are also known as fiat, or decreed.

The main feature of symbolic money is that they acquire value only when the state regulator has assigned them a status and declared their value. Production of such money is much cheaper than their face value, so over time they became the main method of payment. And only the state central bank is entitled to issue fiat money, in our country it is the Bank of Russia.

Coins are made of metal of a certain weight and denomination. They can be used for payment, investment, or as a collectible gift. For example, in the 1920s there was a half-kopeck coin in the USSR, and in 1991 a 150-ruble coin was issued. Today, collectors estimate the cost of the latter at about 40 thousand rubles.

Paper money is made from cotton, less often from flax or abaca (a herbaceous plant). Some banknotes consist of fabrics and special types of plastic and are called hybrid money.

Today, banknotes are made using innovative technologies. For example, new Russian banknotes of 200 and 2000 rubles are issued using augmented reality. If you examine them using a special application, you can see flying birds or cars riding along the bridge.

Electronic money is money of the future

One of the youngest types of money is electronic money. They were first mentioned in the USA in 1918, when Americans managed to make the first money transfer by telegraph. Half a century later, a special clearing house for electronic services appeared. It was possible to make remote financial transactions using personal checks.

In the 1960s and 1970s, electronic money was stored on computers in the form of tables and registers. In the 1980s, bank cards came into use, and in another 10 years the first electronic wallets appeared. The first Russian payment system — PayCash — was organized in 1998.

The money that is stored in virtual accounts cannot be cashed, they are non-fiat. They can be used only to receive electronic services: to pay utility bills or the Internet, to replenish balance of a mobile phone.

One of the most discussed types of today’s money is cryptocurrency. Actually, it is not exactly electronic money, but a complex mathematical code. It exists only virtually and is not tied to any existing currency. Such a currency has an unstable exchange rate depending only on supply and demand. There are more than 800 types of cryptocurrencies across the world, and the first of them were bitcoins.

Photo by Maxim Denisov,

City budget

The city budget is a sophisticated financial mechanism, which operation requires explicit planning. Moscow pays special attention to this issue. The city makes a three-year plan and a forecast regarding the amount of money to be allotted to each sphere, the industries to be invested with the purpose of returning money in the increased amount.

Moscow's budget is socially oriented — over half of the funds are allotted to developing healthcare, education, and supporting vulnerable citizens. The capital also supports infrastructure improvement projects, invests in road construction, transport development, and creation of comfortable urban environment.

The Moscow budget expenses amounted to 1.2 trillion rubles in 2021. They were channeled to implementing the most important urban programs for developing the transport system, education, healthcare, culture and other spheres. The Open Moscow Budget portal presents plans for the next few years, information regarding expenses planned and how much money was spent.

Moscow's main source of income is taxes. Besides, the budget is replenished by funds coming from renting the city property, providing paid services, selling assets, administrative payments, fines and private investments.

The first quarter of this year saw the increase of funds invested into the city's economy by 17 percent, and over the past 10 years the volume of investments increased three-fold, said Vladimir Efimov, Deputy Moscow Mayor for Economic Policy and Property and Land Relations.

Moscow is among the top most attractive megalopolises in the world. Thanks to balanced management decisions, explicit planning and focusing on investments, the Russian capital equaled many European cities in terms of living standards and well-being of citizens.


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