Money is anything that is generally acceptable as a medium of exchange and in the settlement of debts. Money can also be defined as anything that is generally acceptable as a means of payment. Legal definition of money says: ' It is what the law says it is.' Before the advent of money, exchange took place by means of barter. The use of money facilitates exchange of goods and services. Money includes all those things that perform the functions of money. Money came to be employed as a result of the numerous defects of barter.
Money originated because of the various difficulties that arose from trade by barter. In the olden days, different commodities served as money in different countries. Cattle, cowrie shells, tobacco, salt and beard were used as medium of exchange at one period or another. Later, precious metals like silver and gold were used. The amount of metals were weighed out whenever a payment was to be made. With time, the metals were cut into pieces of definite weights and so, coins of limited face value were issued.
The use of paper money originated from the use of receipts issued by goldsmiths in exchange for deposits of precious metals. The receipts became bank notes and the goldsmiths became bankers.In recent time, people started accepting inconvertible paper money as medium of exchange.