Last Updated on October 1, 2024
The origins of money are murkier than many would have you believe and the oldest form of money is not entirely clear.
The standard story is that we moved in a gradual process from barter to using commodity money such as cows, shells and ultimately metal coins.
But that is not universally accepted.
David Orrell, for one, makes a convincing case that money actually developed as a means of accounting and he argues that there is no evidence of a barter economy in the archaeological record.
Regardless, whether we had barter or not, eventually humans worked out that to allow for efficient trade we needed to agree upon something that could be used as a store of value and means of exchange.
Early societies used goods such as cows as money.
The use of currency did not emerge until about 5000 years ago in the Middle East.
The oldest currency that we have in the historical record is the silver shekel of Ancient Sumeria.
The oldest coinage in history is the Lydian Stater.
The oldest currency still in use is the Great British Pound.
The Oldest Currency: The Silver Shekel
The first time money appears in the historical record is with the Silver Shekel of Ancient Sumer.
The Shekel was not a currency in the way we think of it today. It didn’t regularly change hands and wasn’t used for transactions.
It was held in secure vaults and used as a measure of value in which other things were priced in.
David Orrell explains:
“The Sumerian economy was dominated by the day-to-day running of temples and palaces, and everything from wages to rents to taxes was being calculated and paid for in terms of shekels. In this sense silver did conform to our standard picture of money; however, because the economy was centrally planned and controlled (one imagines a version of North Korea without the nukes), the main use of the shekel was as an accounting device for bureaucrats, with transactions recorded as marks in a ledger. The actual metal did not circulate widely but was kept in carefully guarded vaults. If someone had to pay the palace, they weren’t expected to show up with lumps of silver—they were more likely to use barley, wool, or some other commodity, with the value reckoned in shekels.”
Debts were recorded and put inside clay envelopes, with the envelopes themselves able to be traded as currency themselves.
The Sumerian system simultaneously used an accounting ledger, much like Bitcoin, and debt based money, much like the fiat system.
Understanding the nature of the silver shekel as accounting money is actually useful for helping understand Bitcoin.
Bitcoin is just a ledger. When you trade Bitcoins digital coins don’t move around the internet from one place to the other. All that happens is that the transaction is recorded on the blockchain and balances are updated to reflect that a transaction has been made.
The difference between Bitcoin and the Sumerian system is that Bitcoin is a distributed decentralised ledger system while the Sumerians operated a centrally controlled ledger that was managed by the temple.
The Oldest Metal Coin: The Lydian Stater
Alongside the shekel, various other ancient cultures used precious metals as money.
However, it was not until 600 BC that precious metals began to circulate as standardised coins backed by the stamp of the state.
King Alyattes of Ancient Lydia was the first to coin the stater. This was initially a gold-silver alloy known as electrum.
His son, King Croesus continued his legacy and minted the world’s first gold coins.
The important development brought about by the stater was the standardised weight that was guaranteed by government seal. This made trade more efficient by removing the need for coins to be weighed and inspected.
This is an inconvenient development for those who prefer the state to stay out of the business of money creation.
Gold and silver were recognised as the superior forms of money in the ancient world and it was not the state that decreed them to be so. However, the state did have a role to play in creating standardised money.
The Oldest Currency Still In Use Today: The British Pound
The oldest currency that is still in use today is the Great British Pound.
Although it has very different properties today to when it first emerged.
After the fall of Rome, the use of metal coinage in Europe declined. Gold and silver flowed East in the Byzantine Empire and into the Arab world.
Some silver and copper coins still circulated locally but not in a significant way and not on a national basis.
That changed in England in the late 8th century as silver coinage became more prominent.
The Anglo-Saxon monarch, King Athelstan then established the pound sterling in 928.
Existing silver coins called sterlings were already in circulation but the pound sterling created a standardised silver coin with a weight of 1 pound.
Today the pound sterling is a fiat currency no longer backed by silver or gold.
But the origins of the current pound lie in King Athelstan’s monetary standard and can trace a direct lineage back to 928.
Conclusion
The oldest form of money is unknown but it was probably something like a cow.
The oldest currency that historians are aware of is the silver shekel.
This wasn’t a circulating currency but was a form of ledger money, not unlike Bitcoin.
The silver itself would rarely move but everything was priced in shekels and when a transaction took place.
Image Credits
Herd of Cows by Jonas Koel on Unsplash
