Definition
Money is an instrument employed by individuals to meet their social and economic needs, serving as a means to transact payments for the goods and services they acquire from providers (McCumiskey, 2021).
Historical Development
The first minting of money in history was conducted by the Lydians, a community in Anatolia, during the 7th century BCE. It is understood that the initial coins were minted primarily through a technique known as striking, provided there was a stable surface beneath. To elaborate further, coins were created by hammering a metal blank against a solid base. Additionally, during the reign of Sultan Mehmed the Conqueror, the world’s largest mint was established in Istanbul, Anatolia (General Directorate of the Mint and Stamp Printing House, 2021).
From the emergence of humanity to the present day, individuals have existed as either consumers or producers within the economy. The form of money we utilize today was primarily realized through barter in ancient times. The sluggish pace of transactions conducted through this method eventually led to the search for alternative solutions. Subsequently, basic commodities, alongside precious metals, began to replace barter as a means of exchange (Alpago, 2018, p. 412).
Due to fluctuations in economic conditions, the funds used for goods and services have evolved over time. These funds have taken on various forms, including currencies such as coins, banknotes, bank reserves, and credit cards (Öztürk, 2011).
It is understood that the need for individuals to exchange something they value for another item of perceived worth has historical roots. Initially, exchanges were made using items such as salt and sea shells, as individuals preferred not to reacquire goods they had already procured. Over time, they began to produce and exchange small metal discs, envelopes, and documents, thereby facilitating the fulfillment of individual needs. In this manner, the concept of money was established (Menger, 1892, pp. 239-241).
Characteristics of Money
For an entity to be defined as money, it must possess certain characteristics. These attributes include:
Portability: Money must be portable and easy to use.
Durability: Given that money frequently changes hands, it should be durable.
Divisibility: Currency must be divisible to facilitate transactions of varying amounts; it should be exchangeable in specific denominations and convertible amongst different forms.
Standardization: Money must maintain the same value everywhere.
Counterfeit Resistance: As a critical security feature, it is imperative that money cannot be counterfeited; otherwise, the proliferation of counterfeit currency could arise (Orhan & Erdoğan, 2002).
Similarly, payment instruments considered as currency must fulfill three essential functions: exchange, unit of account, and wealth accumulation.
Exchange Function: A significant role of currency as a medium of exchange is to ensure that goods and services are transacted efficiently.
Unit of Account Function: It must serve as a unit of account in the buying and selling of goods and services.
Wealth Accumulation: It is necessary for money to preserve its intrinsic value, indicating that maintaining purchasing power is crucial (Ülgen, 2010, p. 12).
Money serves as a medium of payment, facilitating the exchange of commodities, and is defined as a measure used to determine prices (Ertuğrul, 1994, p. 4).
The function of money as a store of value emerged as humanity began exchanging goods for currency and retaining it in their possession (Paya, 2002, p. 16).