Money evolution, representative money and commodity money; what you should know.

commodity money

Over the years, humans have evolved rapidly seeking ways to make transactions and exchange of goods and services very easy and quick.

One Of such avenue is the use of representative money. Simply put, representative money by definition is any medium of exchange, often printed on paper, that represents something of value, but has little or no value of its own.

On the other hands, a commodity money is money whose value comes from a commodity of which it is made from. It consists of objects having original value or use in themselves and a buying power for regular goods and services.


Brief History.

Tracing the brief history of representative money, is a very far journey. The most and first explicit evidence of representatives money dates back to Chinese of old who practiced this kind of exchange in which commodity warehouses issued certificate of deposits guaranteeing the holders of such money a portion of the goods stored in the warehouse. This way, such certificates are then used as legal tender in purchase of goods and services.

What you should know.

A genuine representative money must have something of intrinsic value supporting the face value you see. A representative money in itself does not have any value, but it indicates that the holder is entitled to a share of something of value just as enumerated above. Take for instance governments issued cheques and ATM credit cards. They are valued because they represent something of value. This way it could be valued for whatever purpose it was to be used.

What you must know.

Humans have used representative forms of money for a very long time. Things like deed of lease, wills, share certificate etc all count as kinds of representative money. One of the major merits of representative money over commodity is it’s easy movement and flexibility. Instead of carrying your land about or carrying a huge chunk of your cash, you simply just needed a thing to represent some portion of your store of goods. This is in contrast to commodity money that needed to have the value of the goods in real time during any form of exchange.


Published by Iykeman

Iykeman Online is a one Stop Blog. We are for education, enlightenment, and advice on all ranges of issue. We also carry contemporary National, Regional and Global trends. We are for media and celebrity news and sports.

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