Final answer:
Money first represented value instead of being intrinsically valuable during the inception of coinage in ancient Lydia around 650-600 B.C.E. Precious metals like gold and silver were used for their portability and durability, eventually backing paper currency during the Gold Standard era. Today, we use fiat money supported by societal trust rather than intrinsic value.
Step-by-step explanation:
The first time money represented value instead of being intrinsically valuable was in ancient Lydia around 650-600 B.C.E. Over time, various goods such as cowry shells, rice, barley, and even rum were used as mediums of exchange within societies. However, these items eventually shifted to precious metals like gold and silver due to their durability and portability. These metals were commodity money, which means they had value in themselves as commodities and were later used to back the paper currency.
During the Gold Standard era, currencies were often backed by gold, allowing holders to exchange paper notes for a fixed amount of gold. This is a clear example of money having a value assigned by society, separate from the intrinsic value of the metal. Even so, the first time this concept was fully realized was when the first coins were minted, allowing for the standardization of trade and establishing the symbolic meaning of money—a system that is the precursor to our modern cash, checks, and debit cards.
Today, we primarily use fiat money, which is currency without intrinsic value that has been established as money by government regulation. Fiat money derives its value from the trust and agreement of the people who use it, rather than the value of the material from which the money is made.