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How currency gains value and acceptance for payment transactions

Financial freedom to trade was one of the moving factors in the creation of coinage which was the dominant money form until the 13th century when paper money was introduced. Money takes on various forms, as long as it is accepted and considered to have value by society. 


Instead of bartering 

Centuries ago, there were unconventional payment transactions that were linked to ceremonial activities such as making a payment to the family of the bride. Financial freedom with a form of money was able to foster the development of professionals that got paid for their services like mercenary soldiers and brought about economic growth. Instead of bartering which was noted to be an inefficient payment system, there were also the wants of people for an exchange of a particular commodity. By using an efficient payment system such as coinage to make a payment transaction, people were able to standardize the value of commodities.

Fraudulent payment transactions 

Although coins as a tool provided an advanced payment solution that was able to address what bartering lacked, even during those years, there were fraudulent payment transactions due to the counterfeiting of coins. The deception of value became an obstruction to trade, hampering economic activity. Minted coinage brought about the assurance of authenticity, bring about the trust in the form of money to be accepted for exchanges.

Origin of coinage

During  640-630 B.C., silver and gold coins originated from Lydia, a country located in Asia Minor. These coins allowed people to purchases with ease. Their coins are considered as proper coinage as the metal was sculpted to create variations in weight for the creation of coins that had comparable value. To add to that, these coins were minted for authenticity and give their currency credibility.

Ancient Greek coins

The Lydian coins became the inspiration for the minting of coins in ancient Greek cities and Persia. This rise in what is considered as true coinage greatly benefited the marketplace and even was instrumental to the warfare of ancient Greece. Alexander the Great, during the Hellenic Empire, paid mercenary soldiers with coins that were used by them to buy goods in the region, successfully spreading the coins and making these accepted as a trusted currency. The defeated citizenry was taxed and only these coins were accepted to make that payment transaction.

Trusted currency

Greece was able to make a payment transaction for the services of such mercenary soldiers instead of using bartering and get their new citizens to use Greek coinage. When a form of money is used often, the trust in the currency increases, and it gains in value. The advantage of the currency made it possible for Alexander the Great for taxes to be imposed on their new citizens. The payment transaction for taxes was in Greek coins, instead of having their mandated forced labor. The warfare was supported by coins, greatly contributing to the rise in power of the ancient Greeks. History shows us how a form of money gains value when it is used to make a payment transaction.