Money was created to meet a requirement of humanity, which arose when civilization advanced beyond its initial stage. Early humans relied on hunting, with each individual hunting solely for themselves, their families, or their tribes.
During a time when strangers were avoided or forced to leave, money and trade were not needed. Once people learned to tame wild animals, they lived a nomadic and pastoral lifestyle, continuously moving as they led their flocks and herds to new grazing areas. As owning animals was the pathway to wealth, traditional money was not yet necessary, although the animals themselves served as a form of currency. It made sense for craftsmen to be paid with livestock and for farmers and herdsmen to use the same method of payment.
As human communities started to settle down and focus on cultivating the land instead of continuously moving with their animals, the division of labor increased, leading to specialization in crafts and trades. Most men specialized in producing something that was only needed in small quantities by others.
So they had to dispose of their excess. In return, they desired something that would grant them the ability to choose from the surpluses of others. While some transactions could occur through direct trade or barter, only specific items could be exchanged in this manner. For instance, it is unlikely that a shoemaker in need of corn for his family would always find a farmer willing to trade for shoes. It would be more convenient if there were other objects that both the shoemaker and the farmer always found useful.
Once the people determine what these objects should be and agree to always accept or offer them as payment, then we have the primitive form of money. This serves as the intermediary in all business transactions, also referred to as a “medium of exchange” by economists.
