Money is something people use to buy things: sellers agree to take it in exchange for what they sell. Before money, people used barter, which means trading things you have for things you want, with no money. Barter's double coincidence of wants means that a trade only works when both people have something the other wants, and it also lacks a standard unit of measure, so setting the terms of a trade is hard. Money solved many of these problems, and it has to do three jobs: it is a medium of exchange, a store of value and a unit of account. Money acts as a unit of account, a ruler for measuring value, but it does not set that value; the costs of making a thing and people's desire for it do. Barter is slow and hard to arrange, which is why money helped trade.

People used cowrie shells, small white shells, as money in many places for thousands of years. Bronze objects from China made around the 13th century BC show cowrie shell designs, a sign the shells were valued as money, and the oldest written evidence of cowrie shells being used as money was found in China. The Chinese began making imitation cowries from bone or bronze, and the cowrie became the model for one of China's oldest metal currencies. Cowries reached West Africa through trade: they were exported there from the 14th century by Arab, then English and German merchants, and in some places they were still used as money until the 1900s. People also used cattle, cacao beans, grain and giant stones as money. The shells came from the warm waters of the Indian Ocean, near the Maldives, and traveled far by trade.

Around 630 BCE, someone in Lydia stamped a piece of precious metal with a mark, which made people trust its weight and purity. Coin stamping gave no new value to the metal; it only let people trust the stamp instead of re-weighing and re-testing the lump each trade. Early Lydian coins held about 55 percent gold, less than natural electrum, which suggests the Lydians refined the metal and added silver. By about the middle of the sixth century BCE the Lydians were making pure gold coins with a design on one side. Experts call the early royal Lydian coins croesids after King Croesus, who ruled Lydia from about 561 to 546 BCE, and the Lydian stater is considered by numismatic historians to be the first coin officially issued by a government, and the model for nearly all later coins. Early coinage may have started as a series of private acts, but it grew into a state monopoly as it gained public importance.

For a long time China's basic money was a bronze or copper coin with a hole in the middle for stringing, and by 1085 China's government made more than 6 billion coins a year, ten times what it made under the Tang dynasty, and large payments in China were counted in strings of coins, but the strings were too heavy to carry far. Paper money in China began when merchants traded receipts from deposit shops instead of carrying heavy strings of coins, and in the 1020s China's government took over the paper receipt system, making the world's first government-issued paper money. A European traveler described paper money in the Yuan dynasty of China and astonished the Western world. In Tang-dynasty China, merchants used flying money: a paper receipt for money left with local officials that could be redeemed somewhere else, so they did not have to carry heavy strings of coins.

Colonial paper money in America was legal tender in many colonies, and by one estimate made up 50 to 75 percent of the money in circulation. Benjamin Franklin printed colonial notes with leaf prints, raised patterns cast from real leaves, to make them harder to counterfeit. During the Revolutionary War the Continental Congress issued paper money that quickly lost its value, which gave rise to the phrase "not worth a Continental." Congress let the Treasury issue Demand Notes in 1861 to pay for the Civil War, and the term greenback was first used for those notes because of their green ink. Before 1869 U.S. bills were printed by private banknote companies, and the Bureau of Engraving and Printing began printing the faces and seals that year. The first paper money made in the American colonies was issued by Massachusetts in 1690, to pay for a military expedition.

Bills are printed from engraved steel plates: the portrait, scrollwork and numerals are cut as fine lines. In intaglio printing, ink in the grooves of the plate is pressed onto paper under great pressure, giving a slightly raised image, and each BEP intaglio press weighs 57 tons and prints with up to 20 tons of pressure. Bills are printed in layers: offset printing adds background colors first and intaglio adds the engraved layer, so each step builds in security. The ink on the back of a bill dries for three days before the face is printed, and U.S. bill paper is made for the Bureau of Engraving and Printing by a company in Dalton, Massachusetts, and it is illegal for anyone else to have it. As of November 2026, the BEP printing process in Washington, D.C., can have up to $300 million in various stages of production at once.

Bills are inspected by a computer system that splits each note into 125,000 pixels, scanning sheets at 2.5 sheets a second, and each U.S. denomination has several key security features, such as a 3-D ribbon, a portrait watermark, color-shifting ink and a security thread. A $100 bill has a blue 3-D ribbon where tiny bells change to 100s as you tilt the note, and the ribbon is woven into the paper, not printed on it. Microprinting on a $100 bill is tiny text, such as THE UNITED STATES OF AMERICA on a portrait collar, that you may need a magnifier to see. A large gold 100 on the back of the $100 bill helps people with visual impairments tell the denomination. U.S. bills of $10 and higher use color-shifting ink in the lower right corner of the front. Currency is redesigned mainly to stay ahead of counterfeiters, and the percentage of counterfeit notes in circulation remains small, but new counterfeiting techniques keep appearing.

The biggest note ever printed was a $100,000 Gold Certificate in 1934-35, and it was only used between Federal Reserve Banks. The U.S. government has never issued a $1 million note. Bills above $100 were retired in 1969 because fewer people wanted them. As of November 2026, the $100 bill is the highest-value U.S. bill the Federal Reserve currently issues. A bill's lifespan depends on its size: higher bills like the $100 stay in circulation longer because they are held as a store of value and change hands less often. The Federal Reserve estimates in May 2025 that a $100 bill lasts 24.0 years, a $20 bill 11.1 years and a $5 bill 5.8 years. The Federal Reserve checks bills it receives with machines, and those in good condition circulate again while the rest are destroyed. All U.S. currency issued since 1861 remains valid and can be redeemed at full face value.

In 1907 the U.S. had another financial crisis, and it was the only major financial power without a central bank. The 1913 law that set up the Federal Reserve required it to hold gold worth 40 percent of the money it issued, and in March 1933 the Federal Reserve Bank of New York could no longer swap currency for gold, and the president declared a national banking holiday. From 1958, when the Bretton Woods system became operational, U.S. dollars could be exchanged for gold at a fixed $35 an ounce. In August 1971 the U.S. ended the dollar's convertibility to gold, which soon brought an end to the Bretton Woods system. U.S. money today is fiat money: it is not tied to gold or any other asset. The Federal Reserve Banks started issuing Federal Reserve notes in 1914, after the Federal Reserve Act of 1913.

The euro was launched on January 1, 1999, as an invisible accounting currency for the first three years. Euro coins and notes began on January 1, 2002, replacing national money such as the Belgian franc and the German mark at fixed rates. In 2026, euro banknotes and coins are legal tender in 21 of the 27 European Union member states, and Bulgaria was the latest to join. In 2016 cash was about one-third of U.S. payments, and about one in seven U.S. payments in 2025 was made with cash, and cash use has stayed steady at about six or seven payments a month. In the 2023 survey, for the first time in the Diary of Consumer Payment Choice, cash was not the most-used way to pay for small purchases of $25 or less. Fiat money has no metal backing: people use it because they trust that governments and central banks will not wreck its purchasing power. Money works because people trust it: the money system is based on confidence.

Words to know

• croesids: early Lydian coins
• intaglio: engraved printing
• convertibility: ability to swap
• numismatic: about coins
• monopoly: sole control