Where money came from
Long ago people swapped goods: grain for cloth. This is barter. It was hard because both people had to want what the other had. So people started using things everyone accepted: shells, salt, metal pieces. Later, metal coins with a stamp from a ruler or bank made payment easy to trust. Paper notes came next because they are light to carry. Today much money is only numbers in bank accounts and phones.
Good money should be accepted by all, easy to carry, hard to copy, long-lasting and divisible into small parts.
Who makes money?
In most countries the central bank controls how much cash is made and gives out notes. The government usually makes the coins at a mint. Printing too much money is dangerous because prices rise (this is called inflation, see the lesson on inflation). Many central banks run museums where you can see old coins and notes, and learn how money changed.
How a coin is made
- Metal is melted and rolled into a long sheet.
- Round discs called blanks are cut from the sheet.
- The blanks are cleaned and heated to make them soft.
- A press with two dies (steel stamps) squeezes each blank. The picture, the value and the edge pattern appear in one hit.
- Coins are counted, checked and bagged.
Some coins have two metals (a ring and a centre) or a ridged edge. These are hard to forge.
How a banknote is made and checked
Notes are printed on special paper (often cotton) or on plastic called polymer. Printers use fine lines and many layers of ink. Common security features:
- Watermark: a faint picture seen when you hold the note to the light.
- Security thread: a thin strip inside the paper, seen as a dark line against the light.
- Colour-shifting ink: a patch that changes colour when you tilt the note.
- Raised print: some parts feel rough to the touch.
- Micro-text: tiny letters that need a magnifier.
Use Look, Tilt, Touch to check a note.
Numismatics: collecting coins and notes
Numismatics is the study and collection of coins, notes and medals. Collectors learn history from them. Some countries issue commemorative coins to mark an event or a person. These are made for collectors, but they can usually still be spent. Keep coins dry and hold them by the edges so the surface is not scratched.
Key formulas and definitions
- Barter: goods for goods (needs a double match of wants)
- Qualities of good money: accepted, portable, durable, divisible, hard to copy
- Check a note: Look (light), Tilt, Touch
- Coin steps: blank โ heat โ die press โ count
Worked examples
1. A shop gets a note with no thread and no watermark in the light. What should the shopkeeper do?
Treat it as suspect. Do not accept it, and report it to the bank or police. A real note has both features.
2. A mint cuts 500 blanks and 20 are damaged. How many coins are made?
500 โ 20 = 480 coins are made from the good blanks.
3. You have 3 coins of 5, 4 coins of 2 and 6 coins of 1. What is the total?
3 ร 5 = 15, 4 ร 2 = 8, 6 ร 1 = 6. Total 15 + 8 + 6 = 29.
4. Why is barter hard in a village where one farmer has rice and wants a plough?
The blacksmith with the plough must also want rice. That match is rare. Money removes this problem because everyone accepts it.
5. Why are ridges put on the edge of some coins?
Ridges make a coin hard to copy and let people feel the coin type. They also show whether the edge was shaved.
Common mistakes
- Judging a note only by colour or size. Fakes can match these; the hidden features are the proof.
- Thinking printing more money makes a country richer. It only makes prices rise.
- Thinking commemorative coins cannot be spent. Many can, but they are worth more to collectors.
- Checking only one feature. Use all three checks: look, tilt, touch.