Money began as a standard medium of exchange for a trading community. Money could be in any form, which depends on the location of the community. Some textbooks state the function of money in four matters; as a medium of exchange, a unit of account, a standard of deferred payment, and a store of value. Money has develop in pace and parallel with human civilization from the barter-system, the commodity money, the evolution of the fiat money to the technology of e-money.

The Barter System

Barter system is an old-age method that was created adopted by people to exchange their services and goods for other goods or services in return. During ancient times, barter system was a local phenomenon, which involved people in the same locality. The history of bartering-system can be traced back to 6000 BC where it is believed that barter system was introduced by the tribes of Mesopotamia. This system was then adopted by the Phoenicians, who bartered their goods to people in other cities located across the oceans. People used to exchange their goods for weapons, tea, spices, and food items and sometimes, even human skulls were used for barter.

The advantage of bartering is that it does not involve money. You can buy an item in exchange for some other thing you currently have, but don't want. But despite the advantages, the main drawback of this system was that there were no standard criteria to determine the value of goods and services, and this resulted in disputes and clashes. Another disadvantage is some of the trade items or items to be bartered are perishable items, especially foods which have high tendency to rot. It is also difficult to set value for such items with short life span and moreover, most of the items are not easily carried around. The systems may also be impractical sometimes as it takes a lot of time and work for implementation and implementers may