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The History of Money
The first people didn't buy goods from other people with money. They used barter. Barter is the exchange of personal possessions of value for other goods that you want.
At about 1200 B.C. in China, cowry shells became the first medium of exchange, or money.
A solution is to trade fruit for wheat indirectly through a third, "intermediate", and commodity: the fruit is exchanged for the intermediate commodity when the fruit ripens. The function of the intermediate commodity as a store-of-value can be standardized into a widespread commodity money, reducing the coincidence of wants problem. By overcoming the limitations of simple barter, commodity money makes the market in all other commodities more liquid.
Many cultures around the world eventually developed the use of commodity money. Ancient China, Africa, and India used cowry shells. The shekel was an ancient unit of weight and currency. A barley/shekel was originally both a unit of currency and a unit of weight.
When a nation is without a currency it commonly adopts a foreign currency.
The first known ruler who officially set standards of weight and money was Pheidon. The first manufactured coins seems to have taken place separately in India, China, and in cities around the Aegean sea between 700 and 500 BC.While these Aegean coins were stamped (heated and hammered with insignia), the Indian coins (from the Ganges river valley) were punched metal disks, and Chinese coins (first developed in the Great Plain) were cast bronze with holes in the center to be strung together. It is an electrum state of a turtle coin, coined at Aegina Island. This coin dates about 700 BC.
Other coins made of Electrum (a naturally occurring alloy of silver and gold) were manufactured on a larger scale about 650 BC in Lydia (on the coast of what is now Turkey). The use and export of... [continues]
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"History of Money." StudyMode.com. 08, 2012. Accessed 08, 2012. http://www.studymode.com/essays/History-Of-Money-1059440.html.