What is money?
Money is a specific commodity that is the universal equivalent of the value of other goods or services.
Money expresses the value of other commodities, since money is easily exchanged for any of them. Such a monetary value makes heterogeneous goods easily comparable in exchange. However, money does not make commodities commensurate, but vice versa: precisely because all commodities are materialized human labor and, therefore, are themselves commensurable in terms of the amount of labor expended, the value of all commodities is measured by the same specific commodity, turning this latter into a common for them the measure of value, that is, in money.
Usually, a commodity with high liquidity becomes money, that is, the commodity that is easiest to exchange for another commodity. In addition to being a measure of value for other goods, money is a medium of circulation (an intermediary in the process of exchange). In addition, the role of money can be played by various things, other property rights, obligations and property-obligation complexes.
In modern conditions, the role of money is not so much specific goods (for example, gold or other precious metals from which investment coins are made), but the obligations of the state or the central bank in the form of banknotes. Such money has no independent value and is only nominally equivalent. The state obliges citizens to accept banknotes and coins as legal tender in a given territory.
From the history
It is assumed that before the advent of money there was barter – a direct cashless exchange of goods.
In different regions of the world, various things (commodity money) were used as money: shells and pearls, stones, cattle, furs and animal skins, salt bars (in Russia), later these were bars, ingots, stumps of metals.
Gradually, the role of money passed to metals. Probably at first these were metal objects (arrowheads and spearheads, nails, utensils), then ingots of various shapes. From the 7th century BC e. minted coins appear in circulation. The rapid distribution of coins is associated with the convenience of their storage, crushing and connection, the relatively high cost with a small weight and volume, which is very convenient for exchange.